Greece’s new development law, the draft of which will be open to public consultation until 13 March, introduces for the first time a dedicated support framework for investment projects linked to the defense sector, with a particular focus on “dual-use” activities—technologies and products that can be used for both military and civilian purposes. The proposed legislation expands the scope of Greece’s development framework by establishing a separate investment regime for strategic industries connected to defense, vehicle manufacturing and the aerospace sector. The government’s aim is to stimulate investment in high-technology industries and provide incentives for companies to set up new production facilities or upgrade existing infrastructure in these fields.
Projects eligible for inclusion under the new regime would cover a broad range of activities, including the manufacture of weapons and ammunition, the production of motor vehicles, the development of electrical and electronic equipment for vehicles, the manufacturing of vehicle components and parts, as well as the construction of aircraft and related machinery. The framework also provides for the financing of investments related to the production of military combat vehicles. To qualify, submitted investment plans must constitute comprehensive initial investments, meaning they involve the establishment of new production activity, the substantial expansion of an existing facility or a significant modernization of equipment and infrastructure.
The scheme would allow financial support for a wide range of investment-related expenses. Beyond core spending on industrial facilities and production equipment, the law provides for subsidies covering advisory services for small and medium-sized enterprises, energy-efficiency measures, renewable energy generation, high-efficiency cogeneration systems and the installation of energy-efficient technologies. It also includes support for environmental remediation projects, waste recycling and biodiversity protection initiatives. In addition, companies may receive funding for employee training, participation by SMEs in international trade fairs and recruitment costs, particularly when hiring workers from vulnerable social groups or people with disabilities.
The law also outlines several types of financial incentives for companies investing in these sectors. One of the key measures is an enhanced tax deduction for investment expenditure, which could reach up to 100 percent of eligible costs, allowing businesses to significantly reduce their tax burden. Other forms of support include direct grants, subsidies for equipment leasing, incentives for the creation of new jobs and tax exemptions.
Access to financing is also part of the framework. Small and medium-sized enterprises would be able to obtain funding through the Hellenic Development Bank, while large-scale investment projects could receive loans from the European Investment Bank backed by a guarantee from the Greek state, subject to the bank’s own assessment of the investment.
