Michał Gosek

Tax adviser (Poland)
Associate Partner
Phone: +48 61 624 49 39

dotacje unijne, status mśp

The maintenance of the SME status, declared by the enterprise and evaluated by the authorities during project assessment and then again while signing the funding agreement is important not only at the stage of applying for funding but also at the stage of implementing the project (the impact of the SME status on the eligibility for non-repayable support, among others, has been precisely discussed in the previous article).

When concluding an agreement on funding the beneficiary's project, the beneficiary agrees to be bound by strict rules concerning the implementation of the project specified in the agreement; failure to comply with them may force the beneficiary to return the received aid (including interest like that charged on tax arrears). This is why it is so important to pay particular attention to the terms and conditions of the funding agreement which specify:

  • what changes to the project are allowed;
  • what form of approval of such changes is required (annex or only approval from the competent authority);
  • what deadlines should be met to ensure that the proposed changes are implemented effectively.

As a rule, the beneficiary may make changes to the project provided that they are notified to the competent authority (being a party to the funding agreement) in writing even before making them; otherwise those changes will be null and void. At the same time, it should be borne in mind that this authority may refuse to accept the proposed changes to the project. In such a case, the beneficiary is obliged to implement the project in accordance with the existing version of the application for funding or may choose to discontinue its implementation. The authorities granting support check the change application for its compliance with the terms and conditions of the funding agreement, including in particular: how the proposed changes will affect the further fulfilment of the project selection criteria by the project; whether the conditions and limitations concerning the proposed changes are met.

Loss of the SME status

In the case of a planned change to the project, it should be noted that the beneficiary implementing such an EU-funded project is obliged to implement it in accordance with the previously submitted application for funding and its annexes. As regards the SME status, the application should be accompanied by the Statement on meeting the size-related criteria for micro, small, medium or large enterprises. This status may change due to the natural growth of the company's activities and may result from exceeding the thresholds for company parameters estimated on the basis of the books of account at the moment of closing or due to changes in the ownership structure of the applicant company (e.g. acquisition of shares and/or assets of the company by a third party). In the former case, it should be borne in mind that if, on the date of closing the accounts, the indicators of the enterprise concerned exceed or fall below an employment or financial threshold specified in the application for funding, the status of a medium-sized, small or micro enterprise is acquired or lost only if this repeats in two consecutive accounting periods. If the project implementation period exceeds two years, then the risk of changes in the company’s status during the term of the funding agreement increases. This can contribute to a reduction in the amount of the granted support as the authorities may want to adjust it to the new status.
Thus, if a company loses the SME status at the stage of implementing the project, the terms and conditions of the funding agreement should be checked for changes that are acceptable during the project implementation, and then the entity should immediately notify the competent authority of the situation in writing.

Standpoint of managing authorities and intermediate bodies

In this year's most popular investment and research calls for proposals for enterprises, intermediary bodies and managing authorities have treated the admissibility of changes to the open projects in the following way:

  • Measure 1.4 “Support for small- and medium-sized enterprises” as part of the Regional Operational Programme 2014-2020 of the Podkarpackie Province. Based on Article 19(11), after receiving the notification of the planned change, the managing authority verifies whether the implemented project would cease to meet the project selection criteria (the meeting of which is essential for receiving the support) if the proposed change was introduced. It should be noted that the status of the applicant company is usually reviewed based on formal criteria the meeting of which is essential for the applicant company to be granted support. If the authority concludes that there is a risk that the implemented project will no longer meet the criteria after the change, the project will be referred for another review to see if it meets the criteria. Not acceptable are any changes that make the implemented project cease to meet the project selection criteria based on which the project was selected as eligible for funding.
  • According to measure 3.2.1 “Market research” and measure 1.1.1 “Industrial research and development work carried out by enterprises” as part of Smart Growth Operational Programme 2014-2020, it is inacceptable to make any changes to the agreement which would lead to a situation where the project would have been refused funding at the time when it was first evaluated during the project selection phase, but this does not apply to situations where the relevant criterion should be met only at the time of granting the support. Thus, in this case, the change of the SME status during the implementation of a project will not affect its further implementation.

Changes in the ownership structure and other

In the case of a change of the SME status due to changes in the ownership structure which arise from circumstances unforeseen at the time of submitting the application for funding and which may result in the transfer of rights and obligations to another entity, most funding agreements will basically not allow such changes on existing financing conditions, unless with prior approval of the competent authority. Changes may be made only upon written approval; otherwise the funding agreement may be terminated. A good example here is Article 14(2)(2) of the model agreement for measure 3.2.1 Smart Growth Operational Programme – “Market research”, which reads that the intermediate body may suspend the funding or terminate the funding agreement with one month's notice, in particular if [...] the beneficiary has made legal and organisational changes to its status and these changes jeopardise the proper implementation of the project or the achievement of the project objectives, or has not informed the intermediate body of its intention to introduce such changes. This means that such changes may not lead to a situation where, as a result of changes in the organisational and legal structure of the beneficiary, the project would cease to be implemented in compliance with its assumptions stipulated in the accepted application documentation.

We invite you to contact Rödl & Partner experts who advise businesses on EU funds and support companies in the process of applying for funding. We are there for you in our offices in Gdansk, Gliwice, Cracow, Poznan, Warsaw and Wroclaw.

Katarzyna Adamiec