Legislative interpretations and guidelines applicable to project and business support in the Rural Development Programme in Uusimaa

Approved by the Rural Division of the Regional Cooperation Group on 24 March 2021

To be applied to projects financed with funds from the transitional period 2021–2022

Policies for development projects

• For funding, the ELY Centre prioritises projects promoting industries. Measures aimed solely at rural residents are mainly financed through the Leader groups.
• The ELY Centre will only finance local development projects, such as investments of general interest, in exceptional cases, if they are particularly important for rural development and livelihoods.
• Improving telecommunications connections is considered particularly important in rural development. Activation of broadband and water supply projects can be supported through Leader groups, but investments only from the ELY Centre. Investments are expensive and the funds of the Leader groups are not sufficient to finance them. However, Leader groups can support the connecting of shared facilities to the internet.

Policies on business support and companies involved in the group

• The objective of the programme is to develop rural areas. For this reason, support is not provided to companies located in outer or inner urban areas unless the supported activities have a clear connection to Finnish agricultural products or the local strategy of the Leader groups.
• Business that takes place solely online (entirely location-independent with other physical premises in addition to the home office) is only supported if the company is located in a rural area with a low population density or in a rural area close to the city, unless the supported activities have a clear link with Finnish rural areas or the local strategy of the Leader groups. The primary criterion for the location of such an undertaking is the place where the relevant decisions concerning the general management of the undertaking are taken.
• Retail and wholesale trade are not supported for competitive reasons unless the measure is related to the sale of Finnish agricultural or natural products or to securing the availability of important services in rural areas. A prerequisite is that no similar service is available in the municipality.

• The company must have the prerequisites for continuing profitable business operations (that provides employment). For example, if the operation is solely based on the short-term lease of holiday cottages, the number of cottages after the investment must be at least three, while in horse keeping activities where operations are based solely on the lease of full-service stables, the number of stable places following the completion of the planned investment must be at least 15.
• If the amount of the grant authorisation during the selection period in relation to the grant applied for in projects promoting the objectives of the programme is low, the approved cost for large projects can be limited to EUR million (only applies to funding from the ELY Centre).
• According to section 36 of the Rural Business Aid Decree, the funded investment must be used and owned by the beneficiary for at least three years from the date of the final payment decision. For a specific reason, the granting authority may set a period of use of five years. The ELY Centre considers that, as a general rule, a five-year durability should be required in the procurement of a building or in the construction of a new building, so that the aid does not have an impact that promotes speculation.

• Investments not supported in Uusimaa:
  • purchase of heavy earthwork construction machinery
  • investments related to machinery contracting for agricultural work
  • the purchase of multi-purpose timber harvesters or load-carrying forestry tractors
  • procurement of vehicles registered for traffic use
  • provision of basic statutory services under the responsibility of municipalities or the state
  • maintenance workshops for a company’s own machinery
  • yards and traffic areas

Justification for the above:

• Construction is a capital intensive and competitive sector. Supporting the procurement of equipment is considered to have little effect on the demand for labour, whereas it may put some operators at an advantage. For competition reasons, the purchase of heavy construction machinery is not supported.
• According to the Rural Development Programme, investments related to primary agricultural production are not supported on farms that engage in or exercise other business activities. (Measure 8.2.4. Development of farm and business activities / general description of the measure). This rules out the possibility of supporting the mechanical contracting of agricultural works as an ancillary business of the holding. The ELY Centre considers that, for the sake of clarity, support for investments related to machinery contracting in agricultural work should be completely abstained (according to section 31 of the Rural Development Act, the object of support may not be used permanently or to a significant extent for activities other than those under support).
• Investment aid is not granted for the purchase of multi-purpose timber harvesters or load-carrying forestry tractors. Machinery investments for the processing and production of forest-based raw materials may be supported if the applicant is able to present a verifiable plan (supply contract for the project, etc.) which shows that this is an investment which promotes the development of renewable forms of energy (particularly bioenergy) and which also increases energy efficiency.
• According to section 22 of the Rural Business Aid Regulation, investment aid may only be granted to a company operating on the local market if the company can be assessed as a substitute for products or services procured outside the area or a complementary locality or regional supply where the companies operating are not reasonably able to meet the demand. Municipalities or the state are responsible for providing statutory basic services (Local Government Act 365 / 1995, Act on central government transfers to municipal basic services 1704 / 2009); the ELY Centre interprets that no business support can be granted for the provision of statutory basic services, as it is a local service that must be arranged in accordance with the law to meet demand in any case.