On 17 August 2024, Assembly of the Republic of Montenegro adopted the Law on the Use of Energy from Renewable Sources, which was published in the Official Gazette of Montenegro, issue no. 082/24 (hereinafter: the “Law”).The first law of its kind enacted in Montenegro establishes a solid foundation for encouraging investment in renewable energy sources, with an emphasis on reducing carbon dioxide emissions and increasing the production of energy from clean and sustainable sources.What should be emphasized from the outset is that this Law fully implements EU Directive 2018/2001 on the promotion of the use of energy from renewable sources, thereby achieving complete alignment with these regulations.The Law establishes a comprehensive framework for promoting and regulating renewable energy. It defines the share of renewable energy, offers incentives for production, and outlines the process for obtaining preferential status as a producer. It also mandates issuing guarantees of origin for renewable energy, specifies the roles of buyers, producers, and renewable energy communities, and sets conditions for integrating renewable energy into heating, cooling, and transportation sectors. Additionally, it includes criteria for sustainability and emissions reduction, fosters regional cooperation, and addresses other important aspects of renewable energy utilization.Under the Law, renewable energy sources include non-fossil sources such as wind energy, solar energy (both solar thermal and photovoltaic), geothermal energy, ambient energy, tidal energy, wave energy and other marine energy, hydropower, biomass, landfill gas, gas from wastewater treatment plants, and biogas.

Banking & Finance

The Venezuelan Central Bank (VCB) established the interest rates applicable to the obligations derived from employment relationships (59.20% and 47.60% - May and July 2024) and to transactions with credit cards (60.00% annual maximum lending rate and 17.00% annual minimum lending rate - June and August 2024). (Official Gazette of 08/16/2024. Official Notice. Entry into force: Upon publication in the Official Gazette).

Tax

A Presidential Decree exempted the net taxable income of territorial source obtained by Cooperative Associations organized under the Decree with the Force of Special Law of Cooperative Associations from payment of income tax. The benefit of exemption will have a duration of one (1) year as from the date of publication of said Decree in Official Gazette and it may be extended for one (1) year. The exemption will be applied to the fiscal years in progress when the Decree becomes effective. (Official Gazette of 08/12/2024. Decree No. 4.976. Entry into force: Upon publication in the Official Gazette).

The National Integrated Service of Customs and Tax Administration (Servicio Nacional Integrado de Administración Aduanera y Tributaria - SENIAT) established the rate applicable to the calculation of late payment interest accrued during March, April, May, and June 2024. It was established that the weighted average interest rate for loans of the six (6) principal commercial and universal banks of the country with the highest volume of deposits, excluding portfolios with prime rates, set by the Venezuelan Central Bank (VCB) for March, April, May, and June are: 58.98%, 58.98%, 59.20%, and 59.25% respectively, which rates are to be increased 1.2 times for the calculation of late payment interest accrued during said months (Official Gazette of 08/21/2024. Administrative Rulings Nos. SNAT/2024/000068, SNAT/2021/000076, SNAT/2021/000077, SNAT/2022/000081).

The SENIAT legalized the issue and circulation of liquor warranty seals. (Official Gazette of 08/21/2024. Administrative Ruling No. SNAT/2024/000082. Entry into force: Upon publication in the Official Gazette).

A Presidential Decree extended until 12/31/2024 the effectiveness of Decree No. 4.907, published in Official Gazette No. 6.784 Extraordinary of 12/29/2023 and extended by Decree No. 4.967, published in Official Gazette No. 6.818 Extraordinary of 06/28/2024, which Decree No. 4.907 establishes the exemptions from import duties and value added tax for the importation of goods indicated in Chapter II of said Decree.

Therefore, the exemptions or benefits indicated in Decree No. 4.907 continue to be in effect, in the terms and conditions that said Decree establishes. (Official Gazette of 08/30/2024. Decree No. 4.985. Entry into force. As from 09/01/2024).

Miscellaneous

The Ministries of the Popular Power for Economy, Finance, and Foreign Trade and for Transportation established, through a Joint Resolution, the regulation of the “Exporta Fácil Postal” service, which consists in an exportation service via mail, by means of the operating platform of the Instituto Postal Telegráfico de Venezuela (IPOSTEL) (Postal Telegraph Institute) or another authorized postal operator. The purpose of said Resolution is to establish the procedures for exportation of the products of startup entrepreneurs, micro, small and mediumsized entrepreneurs and artisans of the country, in order to achieve a fast process for the exit of the goods via mail. (Official Gazette of 08/15/2024. Resolution No. 005- 2024 and Resolution No. 034. Entry into force: Upon publication in the OfficialGazette).

A Presidential Decree: 1. Ordered the elimination of the Ministry of the Popular Power for Youth and Sports and created the Ministry of the Popular Power for Youth and the Ministry of the Popular Power for Sports; 2. Ordered the elimination of the Ministry of the Popular Power for Urban Agriculture, the competence of which will be transferred to the Ministry of the Popular Power for Communes and Social Movements, which will now be called Ministry of the Popular Power for Communes, Social Movements, and Urban Agriculture (Official Gazette No. 6.830 Extraordinary of 08/27/2024. Decree No. 4.980. Entry into force: Upon publication in the Official Gazette).

A Presidential Decree assigned the National Institute for Socialist Training and Education (Instituto Nacional de Capacitación y Educación Socialista - INCES) to the Ministry of the Popular Power for the Social Process of Work. (Official Gazette of 08/28/2024. Decree No. 4.983. Entry into force: As from the date of its publication in the Official Gazette).

Uruguay: Pioneering a Green Energy Future

Uruguay has solidified its position as a global leader in renewable energy, with more than 90% of its electricity matrix powered by renewables between 2016 and 2022. Now, the country faces a new challenge: decarbonizing its transportation and industrial sectors, which still rely on fossil fuels. In this context, green hydrogen emerges as a key solution in the transition towards a fully sustainable energy matrix.

a) Why Invest in Green Hydrogen in Uruguay?

Proven Expertise and Leadership: Uruguay successfully completed its first energy transition, with 98% of its electricity demand met by renewable sources. Now, with a focus on green hydrogen, the country is advancing towards full decarbonization.

Unmatched Natural Resources: Uruguay's abundant solar and wind resources enable the competitive production of green hydrogen, with projected costs of USD 1.2–1.4 per kg by 2030.

Robust Infrastructure and Stability: With strong regulatory frameworks and political stability, Uruguay offers an ideal environment for long-term investments in clean energy projects.

b) The HIF Project in Paysandú: A Milestone for Uruguay

The announcement of the construction of a green hydrogen and eFuels plant in Paysandú, led by HIF Global, marks a US$ 4 billion investment. This plant is set to produce 256 million liters of eGasoline annually, contributing to the decarbonization of more than 150,000 vehicles per year. The investment includes US$ 2 billion for the construction of the plant and an additional US$ 2 billion for the development of wind and solar parks that will supply the renewable energy required to generate green hydrogen.

This project is a landmark in Uruguay’s second energy transition, placing the country at the forefront of green energy production worldwide. Uruguay’s first energy transition, completed over the past decade, enabled 98% of its annual electricity demand to be met by renewable sources such as wind, biomass, solar, and hydropower.

With sustained economic growth, social and political stability, forward-looking legislation, and privileged natural resources, Uruguay has become a global leader in renewable energy. Now, with green hydrogen and the promotion of electric mobility, the country aims to complete its transformation into a fully sustainable energy economy.

Strategies for reducing taxes: adapting to the new rules of the Tax Reform in Brazil

In this article, we explore effective strategies for reducing taxes and ensuring compliance with the new rules of the Tax Reform in Brazil. Tax planning is a recurring topic on business and family agendas, especially with the imminent tax reform in Brazil. The new regulations will significantly impact the incidence of taxes on inheritances, donations and private pension plans.

What will change in inheritances with the new rules of the Tax Reform?

The main topic is the changes to the Causa Mortis and Donation Transfer Tax (ITCMD). Currently, each Brazilian state sets its own rate, which can be fixed or progressive, with a ceiling of 8%. With the reform, the ITCMD will become progressive, increasing according to the value of the estate.

In addition, the ITCMD will also be applied to open-ended private pension plans, including Free Benefit Generator Plans (PGBL) and Free Benefit Generator Life (VGBL). Amounts invested more than five years ago in the VGBL will not be taxed in the event of death.

Another significant change is the inclusion of ITCMD on inheritances and donations of assets abroad, a tax that until now did not exist for beneficiaries domiciled in Brazil. The Treasury estimates that the ITCMD represents 0.4% of the national tax burden, in line with the average for OECD countries.

Strategies to Minimize the Impacts of Tax Reform Creating Family Holdings: One of the main strategies is to structure family holdings. For those who own a lot of real estate, for example, it is possible to set up a real estate holding company, transferring the real estate to the company and leaving the holding shares to the heirs. Allocating resources abroad: For larger assets, allocating part of the resources abroad can be an alternative. This practice, if done legally and with income tax declared, helps to mitigate the “Brazil risk”. Lifetime Gifting: Anticipating the transfer of assets while you are still alive is another strategy. With the tax reform, donating real estate and other assets before the new rules come into force can minimize future tax impacts. Specialist advice: It is essential to rely on the advice of professionals who specialize in tax and succession planning.

The changes brought about by the tax reform require a careful review of estate planning. Anticipating and properly structuring the succession of assets can lead to significant tax savings and guarantee financial security for generations to come.

EXEMPTION FROM PAYMENT OF INCOME TAX FOR INCOME OBTAINED BY COOPERATIVE ASSOCIATIONS

Decree No. 4.976, dated August 12, 2024, was published in Official Gazette No. 42.939 of the same date. Said Decree exempts the net taxable income of territorial source obtained by Cooperative Associations from payment of income tax (the “Decree”). Below are some of the most important aspects of the Decree:  

Beneficiaries:

The beneficiaries will be the Cooperative Associations organized in accordance with the provisions established in the Decree with the Force of Special Law of Cooperative Associations, which:

Must update their Sole Fiscal Information Registry, in order to which they must file the valid Certificate of Compliance issued by the National Superintendence of Cooperatives. Must file the annual declaration of taxed and exempt overall net income, as appropriate, in the terms and conditions established in the Regulations to the Income Tax Law. Loss of the exemption benefit:

The beneficiaries that fail to meet the requirements and perform the obligations established in Decree, as well as in the Decree with the Status, Value, and Force of Income Tax Law, its Regulations, and other applicable rules will lose the exemption benefit.

Losses resulting from exempted activity:

The losses resulting from the exempted activity may not be imputed in any fiscal year to the income resulting from the activity taxed with income tax.

In the cases in which the Cooperative Associations perform activities taxed with income tax and exempted in the terms of the Decree, the common costs and deductions applicable to the revenues resulting from said income will be proportionally distributed.

Duration:

The period of duration of the exemption benefit will be one (01) year as from the date of publication in the Official Gazette of the Bolivarian Republic of Venezuela, which period may be extended for one year. The exemption will be applied to the fiscal years in progress when the Decree becomes effective. 

In order to access the Decree, please click here.

TAXA Presidential Decree extended until 12/09/2024 the effectiveness of Decree No. 4.525, published in Official Gazette of 06/09/2021 (Decree of Optimization and Revitalization of Exportation Processes). Therefore, the exemptions from the legal regimes for exportation indicated in said Decree No. 4.525 continue to be in effect, in the terms and conditions established in the same. (Official Gazette No. 6.820 Extraordinary of 07/01/2024. Decree No. 4.970. Entry into force: As from 06/09/2024). The National Integrated Service of Customs and Tax Administration (Servicio Nacional Integrado de Administración Aduanera y Tributaria - SENIAT) authorized the issue and circulation of liquor warranty seals. (Official Gazette Administrative of Ruling 07/12/2024. No. SNAT/2024/000046. Entry into force: Upon publication in the Official Gazette). A Presidential Decree set at zero percent (0%) the rate of the Tax on Large Financial Transactions for transactions made by the following taxpayers: (i) Legal persons and unincorporated economic entities, categorized as special taxpayers, for the payments made by them to the debit of their accounts with banks or financial institutions; (ii) Legal persons and unincorporated economic entities, categorized as special taxpayers, for the payments made by them without the intervention of financial institutions. Cancellation is understood as the offset, novation and extinction of debts; (iii) Legal persons and unincorporated economic entities, legally related to a legal person or unincorporated economic entity, categorized as special taxpayer, for the payments made by them to the debit of their accounts with banks or financial institutions or without the intervention of financial institutions; (iv) Natural and legal persons and unincorporated legal entities that without being legally related to a legal person or unincorporated economic entity, categorized as special taxpayer, make payments for their account, to the debit of their accounts with banks or financial institutions or without the intervention of financial institutions. (Official Gazette No. 6.821 Extraordinary of 07/12/2024. Decree No. 4.972. Entry into force: As from 07/15/2024).

MISCELLANEOUSThe National Assembly enacted the Law on Promotion of Non-Oil Exports. The purpose of the Law is to establish and develop mechanisms intended to facilitate the exportation of non-oil goods and services, generated in the Bolivarian Republic of Venezuela, in order to increase Venezuelan products’ participation and competitiveness in international markets, according to the commitments and obligations undertaken in the frame of the multilateral, regional, and bilateral trade mechanisms and for the country’s integral and sustainable development. Title IV of the Decree with the Status, Value and Force of Law of Banco de Comercio Exterior is repealed, as well as the other provisions of said Decree related to the promotion of exports and all provisions contrary to the Law on Promotion of Non-oil Exports. (Official Gazette No. 6.824 Extraordinary of 07/18/2024. Entry into force: Upon publication in the Official Gazette).

The Ministry of the Popular Power for National Trade declared the following standards as Venezuelan COVENIN Standards of national character; the content of said standards will be published in the institutional web site of the Deconcentrated Service of Standardization, Quality, Metrology, and Technical Regulations (Servicio Desconcentrado de Normalización, Calidad, Metrología y Reglamentos Técnicos - SENCAMER) (www.sencamer.gob.ve). (Official Gazette of 07/10/2024. Entry into force: Upon publication in the Official Gazette).

Resolution No.Venezuelan COVENIN Standard No.It substitutes for Venezuelan COVENIN Standard No.080/20245035:2024 “Food for celiac persons, non-celiac gluten-sensitive persons, and wheat allergic persons.”081/ 20241431:2024 “Bottled drinking water. Requirements. (1st. Review).”1431:1982

On 12 August, Regulation (EU) 2024/2019 of the European Parliament and of the Council of 11 April 2024 (the “Regulation”) was published in the Official Journal of the European Union, introducing several substantive and/or procedural amendments to Protocol no. 3 on the Statute of the Court of Justice of the European Union (the “Statute” and “Court of Justice”).

Below is a summary of the amendments introduced by the Regulation.

Granting of preliminary ruling jurisdiction in specific matters to the General Court

The Regulation introduces Article 50-ter conferring jurisdiction on the General Court of the European Union (the “General Court”) to hear and make references for a preliminary ruling under Article 267 of the TFEU falling within one or more of the following matters:

the common system of value added tax; excise duties; the Customs Code; the tariff classification of goods in the Combined Nomenclature; compensation and assistance to passengers in the event of denied boarding or delay or cancellation of transport services; and the greenhouse gas emission allowance trading scheme.

Regarding points (a) to (d), Recital 9 of the Regulation clarifies that “Those area cover, at the time of the adoption of this Regulation, matters such as the determination of the tax base for the assessment of value added tax or the conditions for exemption from payment of that tax; the interpretation of the general arrangements for excise duty and of the framework relating to duties on alcohol, alcoholic beverages, tobacco, energy products and electricity; the elements on the basis of which import or export duties are applied in the context of trade in goods, such as the Common Customs Tariff, the origin and customs value of goods; import and export procedures, including the incurrence, determination and extinction of a customs debt; specific customs arrangements; the system of relief from customs duties as well as the interpretation of specific tariff headings and the criteria for the classification of certain goods in the Combined Nomenclature laid down in Annex I to Council Regulation (EEC) No. 2658/87”.

With reference to point (e), recital 10 of the Regulation clarifies that these matters “cover matters that are at the time of the adoption of this Regulation regulated by Regulations (EC) No. 261/2004 [air transport], (EU) No. 1177/2010 [maritime transport], (EU) No. 181/2011 [bus and coach transport] and (EU) 2021/782 [rail transport] of the European Parliament and of the Council”.

With reference to point (f), recital 10 of the Regulation clarifies that this scheme “at the time of the adoption of this Regulation is regulated by Directive 2003/87/EC of the European Parliament and of the Council and by the acts adopted on the basis of that Directive”.

Notwithstanding the foregoing, pursuant to paragraph 2 of the new Article 50-ter, the Court of Justice will retain jurisdiction to hear and make references for preliminary rulings raising “independent questions concerning the interpretation of primary law, public international law, general principles of law or the Charter of Fundamental Rights of the European Union”.

Furthermore, under paragraph 3 of the new provision, references for preliminary rulings under Article 267 must be made to the Court of Justice. The Court – “as soon as possible” and in accordance with the procedures laid down in its Rules of Procedure – will then determine whether the request falls exclusively within the matters under the General Court’s jurisdiction and, if so, will transfer the case to the General Court.

Participation in the proceedings by the European Parliament, the Council and the European Central Bank

The Regulation amends Article 23 of the Statute to stipulate that, where a matter is referred for a preliminary ruling, the decision of the national court or tribunal to stay the proceedings must be notified by the Registry of the Court. This notification must be made not only to the parties involved, the Member States, the Commission and the Union institution or body or entity that adopted the act whose validity or interpretation is being challenged, as already provided for in Article 23 – but also to the European Parliament, the Council and the European Central Bank.

Under the newly added paragraph 2, if the European Parliament, the Council and the European Central Bank consider that they have “a particular interest in the questions raised by the reference for a preliminary ruling”, they may submit statements of case or written observations within two months of receiving the notification.

Under the new paragraph 3, pleadings or written observations submitted by an interested party will be published on the website of the Court of Justice “within a reasonable time” after the case is closed, unless that interested party objects to the publication of its pleadings or written observations.

Election of Advocates General to handle references for preliminary rulings assigned to the General Court

The Regulation introduce Article 49-bis of the Statute, establishing that, in the handling of references for a preliminary ruling, the General Court shall be assisted by one or more Advocates General, elected for a term of 3 years – with the possibility of one renewal - from among the Judges of the General Court.

Establishment of the Intermediate Chamber of the General Court

The Regulation amends Article 50 of the Statute to introduce, with reference to the composition of the General Court, an intermediate chamber positioned between the chambers composed of five judges and the Grand Chamber.

According to the wording of the new Article 50, the General Court may convene in: (a) chambers of three or five judges; (b) an intermediate chamber; and (c) the grand chamber. In addition, consistent with the existing provisions, the General Court may in some cases make decisions by a single judge.

The new provision provides that, in proceedings relating to a matter referred for a preliminary ruling, the General Court will convene in an intermediate chamber at the request of a Member State or an institution of the Union involved in the case.

Referral of cases to the Court of Justice or the General Court for preliminary rulings

The Regulation amend Article 50 of the Statute to establish, in line with the provisions regarding the handling of cases:

if the General Court determines that it lacks jurisdiction to hear a reference for a preliminary ruling, it shall refer the case to the Court of Justice; if the Court of Justice finds that it lacks jurisdiction to hear a reference for a preliminary ruling, it must refer the case back to the General Court, which cannot refuse jurisdiction in such instances.

In connection with the above-mentioned referral mechanism, recital 18 of the Rules of Procedure further clarifies that “the General Court may, pursuant to Article 256(3), second subparagraph, TFEU, refer to the Court of Justice a case that falls within its jurisdiction but requires a decision of principle likely to affect the unity or consistency of Union law”.

Expansion of the procedure for the prior admission of appeals

The Regulation revises Article 58a to broaden the scope of the procedure for prior admission of appeals by the Court of Justice. This expansion includes:

appeals against a decision of the General Court regarding the decision of an independent Board of Appeals of a body or entity of the Union which, as of 1 May 2019, had such a Board of Appeals but was not expressly covered by the previous version of Article 58a.

These Union bodies/entities include: (a) the European Union Agency for the Cooperation of Energy Regulators; (b) the Single Resolution Board; (c) the European Banking Authority; (d) the European Securities and Markets Authority; (e) the European Insurance and Occupational Pensions Authority; and (f) the European Union Railway Agency; and

litigation concerning the enforcement of contracts containing an arbitration clause. Introduction of the consultation procedure for applications or proposals to amend the Statutes

The Regulation introduces Article 62-quinquies which mandates that before submitting an application or a proposal to amend the Statute, the Court of Justice or, where appropriate, the Commission must first conduct “extensive consultations”.

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The Regulation will enter into force on 1 September 2024 and includes a transitional arrangement as follows:

- any references for preliminary rulings pending before the Court of Justice on 1 October 2024 will in any event continue to be handled by the Court of Justice itself;

- appeals concerning:

(i) decisions of the General Court relating to a decision of a Board of Appeals of one of the bodies/entities of the Union listed in points (a) to (e) of paragraph 6 above; and

(ii) decisions concerning the enforcement of a contract containing an arbitration clause

that are before the Court of Justice on 1 September 2024 shall not be subject to the aforementioned procedure of prior admission of appeals.

LAW ON PROMOTION OF NON-OIL EXPORTSThe Law on Promotion of Non-Oil Exports was issued by the National Assembly and published in Official Gazette No. 6.824 Extraordinary, dated July 18, 2024 (the “Law”). The purpose of the Law is to establish and develop mechanismsintended to facilitate the exportation of non-oil goods and services, generated in the Bolivarian Republic of Venezuela, in order to increase Venezuelan products’ participation and competitiveness in international markets, according to thecommitments and obligations undertaken in the frame of the multilateral, regional, and bilateral trade mechanisms and for the country’s integral and sustainable development.Below are some of the most significant aspects of the Law:1. FORMATION AND ACCESS TO THE INTERNATIONAL MARKETThe State will implement a national plan of integral formation that promotes an exporting vision, as well as education in the administrative, managerial, financial, technical-scientific and other important areas for the diversification of exports. Also, the National Executive must: i) Take the necessary actions to promote access to and exportable offer of non-oil goods and services, in order to further the commercialization of the same in the international markets; ii) Resort to different commercial promotion instruments; and iii) Implement measures and incentives that encourage the production and exportation of non-oil goods and services by the communes, small and medium-sized industries, and startups.2. SIMPLIFICATION OF PROCESSESThe National Executive may suppress all administrative processes that are not essential for the development of exportation. To that end, the Executive may optimize and automate the administrative processes of the exporting activity, giving celerity to the compliance with the requirements established in the legal frame, facilitating the registration and control of the same by means of expeditious verification mechanisms, and establishing reasonable maximum periods of time for carrying out the processes; it may issue regulations on the information and communication systems and technologies applicable to the administrative processes relating to exports; and it may adopt mechanisms for supervision and control in relation to the simplification of the administrative processes, establishing the necessary periods of time for the implementation of the same.3. Sole Foreign Trade WindowThe Ventanilla Única de Comercio Exterior (VUCE) (Sole Foreign Trade Window) is created as a technological tool for the centralization and digital management of the information and documentation necessary for the exporting process. The natural or legal persons interested in exporting non-oil goods and services must be registered with the VUCE and obtain the relevant certificate, as an essential requirement to perform any operation in the area, and to have access to the benefits and incentives established in the Law.The agencies and entities of the National Government with competence in exportation matters must incorporate into the platform the mechanisms allowing for the obtainment of the permits required for the exportation of non-oil goods and services, within a period of ninety (90) days following the entry into force of the Law. After said period of time, no authority may establish any permit that may not be processed through the VUCE as a requirement for exportation.

Rate for use of VUCE: The use of VUCE will be subject to the payment of a rate per each kind of process, in an amount of bolivars equivalent to up to one hundred and fifty (150) times the official rate of exchange of the currency with the highest value, as published by the Venezuelan Central Bank (VCB). The Ministry of Economy, Finance, and Foreign Trade will establish, by Resolution, the amount of the rate applicable to each type of process.4. GENERAL DECREE OF EXPORT DUTIESThe National Executive will publish the “General Decree of Export Duties”, which will comprise all duties required by the agencies and entities of the Public Administration for the processes required in order to export non-oil goods and services. The President of the Republic may exempt the payment of the duties in relation to the processes and services required for the exportation.5. TAX, FINANCIAL, AND OTHER INCENTIVESThe National Executive may establish tax incentives that reduce or remove the tax burden on the producers with non-oil exporting potential. For purposes of the Law, the incentives are:Draw Back: The Executive will establish a procedure for determination, verification, certification, payment and competent authority in order to expeditiously carry out the Draw Back of non-oil exports. As an exception, the Executive may make the Draw Back of other national taxes for non-oil exportation.Strategic production sectors: The President of the Republic may establish non-oil export strategic productive sectors with special economic incentive regimes, oriented to productive activities with a high national added value.Credit insurance: The necessary measures to facilitate the establishment of a credit insurance mechanism for non-oil exportation will be adopted, with the purpose of covering the risks of lack of payment of the services or goods sold to abroad.Financial incentive: The Executive will further public policies that facilitate access to financing for the acquisition of machinery, raw material, and consumable supplies that are intended to productive processes with non-oil exportationpurposes.6. EXPORT PROMOTION AGENCYThe Agencia de Promoción de Exportaciones (APE) (Export Promotion Agency), assigned to the Ministry of Economy, Finance, and Foreign Trade, is created. It will be the competent level of authority for promoting the exports and advancing the positioning towards international markets of non-oil goods and services.Although the Banco de Comercio Exterior will be the specialized financial institution for the financing of the exportation of non-oil goods and services, its functions in the area of promotion of exports will be assumed by the APE. Also, the National Fund for Exportation is created. It is assigned to and administered by the APE, with the purpose of financing the activities related to the promotion of the exportation of non-oil goods and services. Said entity will obtain its funds, among others, from a contribution of up to zero point five percent (0,5 %) of the value of the imports, payable upon the elapsing of thirty (30) days following the publication in the Official Gazette of the Resolution issued by the Ministry of Economy, Finance, and Foreign Trade. The contribution will be paid by the relevant importers, at the time of payment the import customs duty.7. CENTRO NACIONAL DE COMERCIO EXTERIOR AND CORPORACIÓN VENEZOLANA DE COMERCIO EXTERIOR. (NATIONAL CENTER OF FOREIGN TRADE AND VENEZUELAN CORPORATION OF FOREIGN TRADE)The Centro Nacional de Comercio Exterior (National Center of Foreign Trade) will be suppressed. Its functions will be assumed by the Ministry of the Popular Power for Economy, Finance and Foreign Trade.Likewise, the functions in the area of centralization, simplification, and facilitation of exportation of non-oil goods and services, attributed to the Corporación Venezolana de Comercio Exterior (Venezuelan Corporation of Foreign Trade), will be assumed by the Ministry of Economy, Finance, and Foreign Trade.The Law became effective upon publication in the Official Gazette.

EXECUTIVE SUMMARY

The Artificial Intelligence Act (Regulation (EU) 2024/1689 or the “AI Act”) integrates into the European legislative framework with the aim of establishing a harmonized set of rules for the use of artificial intelligence within the European Union. Proposed in 2021 by the European Commission and adopted on May 21, 2024, by the Council of the European Union, the AI Act is a fundamental part of the EU’s digital strategy, aiming to promote innovation and ensure safe and responsible use of AI technologies. It provides, indeed, the EU with the most advanced regulation on Artificial Intelligence (“AI”) among all the major geopolitical players in the world, aiming at ensuring the generalized application to all AI systems throughout the main industries and the development of safe and trustworthy AI systems.

While some countries have set forth rules to deal with specific issues where AI is involved, the AI Act takes an innovative - and more wholesome - approach. It provides a specific definition of AI, which delimits its scope of application. Then, it classifies specific developments of AI systems into four levels of risk (i.e. the risk-based approach), each one imposing specific duty to developers. AI systems classified in the unacceptable risk category (such as governmental social scoring) are prohibited. High risk systems must be closely monitored by the European institutions and must be subject to risk assessment and risk mitigation practices. Limited risk systems must undergo public disclosure of relevant information to enhance their transparency. Lastly, minimal risk AIs (the category that counts most types of AI) remain free to use. The international nature of the AI Act and its all-embracing regulatory ambition aim at influencing positively other international players such as the United States and China.

The AI Act, being fully and directly applicable in all the MSs, interacts with other regulations and provisions such as the General Data Protection Regulation (“GDPR”), the Cybersecurity Act, and the Digital Services Act, creating a coherent and comprehensive regulatory environment covering various aspects of digital technologies and data protection. In addition, few States already have some kind of legislations that directly involve AI, Greece being the most remarkable example. Others have a mix of different legal sources that directly or indirectly influence the development of AI, setting forth provisions that might impact the AI future development. Moreover, some States have already taken action to complement the AI Act’s provisions, introducing a stricter regime for some specific technologies while others like France and Spain, are still considering the need of introduce complementary legislation to avoid risks related to errors in AI-generated decisions, or cybersecurity issues.

While individual countries within the European Union were not directly providing funding specifically earmarked for compliance with the AI Act itself, as it primarily focuses on regulatory frameworks rather than direct funding initiatives, countries like Switzerland, Sweden, France, Germany and Hungary and the EU as a whole have been actively investing in AI-related research, development, and innovation through various programs and funding mechanisms. These initiatives are generally aimed at supporting the broader digital transformation goals of the EU, which includes enhancing AI capabilities and competitiveness.

But what is the future of the concrete application of the AI Act? To answer this question mark, it is needed to dig into the preliminary characteristics of individual States as well as their potential intervention in terms of finance by asking: (i) Do States already regulate AI at national level? (ii) Do they plan to complement, or even enhance, the AI Act’s provisions? (iii) Do they want overall to financially support the development of AI systems?

The following analysis provides a critical overview of the most relevant countries in Europe, namely Albania, Belgium, Bulgaria, Cyprus, France, Germany, Greece, Hungary, Italy, North Macedonia, Portugal, Romania, Serbia, Sweden, Switzerland and Spain.

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Albania

Albania is gradually integrating AI into its digital programs to enhance efficiency and innovation in the public sector. Law 87/2923 ratifies the agreement for the adhesion to the “Digital Europe” program, which focuses on advanced digital skills in general, though specific details on AI are not set forth. Law 43/2023 regulates electronic public services that do not require the physical presence of the applicant, while the Decision of the Council of Ministers No. 370/2022 approves the Intersectoral Strategy “Digital Agenda for Albania”, which promotes AI to improve public services, AI integration in the public sector, and data management. It also established a High-Performance Computing Center. Unfortunately, official information on governmental funding of AI is not yet available.

Belgium

In Belgium there isn’t a specific regulation on AI. However, Collective Bargaining Agreement No. 39 is applicable to these systems. The bargaining requires businesses with more than 50 employees to preemptively inform and consult trade unions, if they invest in technologies that impact on 10% of the personnel, or more. Additionally, the collective labor agreement enacted by the Royal Decree of 21 February 2024 in the banking sector makes it mandatory to train workers in the use of AI. Additionally, acts and resolutions adopted by the Belgian legislative branches regulate the use of AI in sectors such as defense, public administration and automotive (especially relevant is the permission to run tests on automated vehicles). Government funding is split into regional and state levels. The Flemish region allocated 32 million euro for AI Research and Development. It also set forth fiscal incentives for supporting the cost of labor. On the other side, the Walloon region launched the “Application and Research for Trusted Artificial Intelligence” project for the development of AI systems that enhance the competitiveness of Walloon’s businesses and awarded it 32.3 million euro. Brussels also offers many grants and subsidies to businesses in the AI industry. These three regional levels all complement the Federal programs, which mostly invest in defense.

Bulgaria

The Bulgarian Government adopted the “Concept for the Development of Artificial Intelligence in Bulgaria until 2030”, which recommends conducting a detailed analysis for a legislative proposal to be carried out only after the entry into force of the AI Act. No proposals will be forwarded until then. In the meantime, Bulgaria plans to use the European Structural Funds, the “Horizon 2020” programs, the National Recovery and Sustainability Plan, and the state budget to fund projects in the AI sector. Moreover, Bulgaria established the “Institute for Computer, Science, Artificial Intelligence and Technology” (“INSAIT”) and invested 85 million euro in it through the Ministry of Education and Science. The INSAIT is set to be the most advanced research institution in Eastern Europe, as it can rely on world-class partnerships with the most important players in the field, such as Switzerland’s “ETH” in Zurich and “EPFL” in Lausanne (two prestigious technical universities), as well as donations by Google, Amazon Web Services, DeepMind, SiteGround, VMware and other tech entrepreneurs.

Cyprus

Cyprus declared that the AI Act will be the first legislation that directly regulates AI. It presented a Strategic Plan for 2024-2026 which has allocated 282 million euro until 2026 for digitalization in general, including AI. However, much information on the development of AI in the country is lacking.

France

France’s own regulation of AI systems mostly revolves around the GDPR, and the “Loi Informatique et Libertés” of 6 January 1978, which apply to the processing of personal data. However, France is one of those countries that also legislate on more specific applications of AI systems, namely automated decisions. Individuals subject to those decisions have a right to obtain a human review of their personal situation, to express their point of view, to obtain a precise motivation in support for the decision, but also to challenge it (in line with Article 22 of the GDPR). On 12 September 2023, French representatives of the Assemblée Nationale proposed a legislation to regulate copyright-related issues, but the proposal was deemed unfeasible, and it was blocked. In 2021, President Emmanuel Macron launched its France 2030 plan, investing 2,5 billion euro in AI Research and Development. On 19 September 2023, the Government established the “Generative Artificial Intelligence Committee” to provide better guidance to the Cabinet for its decisions in the AI sector.

Greece

In Greece, Law 4961/2022 covers multiple technological developments, including smart contracts, the Internet of Things and AI. Only a few modifications are required for the Law to be fully compatible with the AI Act, which testifies Greece’s ability to legislate carefully in the area. In terms of Government funds, the Ministry of Digital Governance issued between 150 and 200 million euro for the development of AI.

Germany

Germany declared that the AI Act will be the first legislation that directly regulates AI. In 2018, Germany adopted a federal strategy for AI, significantly increasing the invested funds in the sector. Indeed, the Federal Ministry of Education and Research annual budget for technology investment increased by 20 per cent since 2017, reaching 1,6 million euro in the current legislature. These funds will be invested in eleven specific areas, including enhancing research to be a driver of innovation, setting up an agenda to expand the AI infrastructure, building the AI infrastructure, promoting social dialogue with stakeholders to responsibly integrate AI into Germany’s institutional systems, and ultimately drafting and enforcing a more effective, innovative and agile AI regulation, that fosters innovation.

Hungary

In Hungary, Government Decree 1573/2020 sets forth the national strategy on AI. This strategy has been developed by the Artificial Intelligence Coalition, which comprises more than 70 Hungarian and International companies, universities, and research groups. The Coalition’s main goal is to place Hungary as a leading power in AI, and to strengthen national businesses’ competitiveness with it. The strategy focuses on transformative programs in the manufacturing, healthcare, energy and logistics sectors. It aims at enhancing Hungary’s technologies and infrastructures, while also fostering the public comprehension of AI and its applications. The Hungarian government, through the venture capital program “Széchenyi” made funds available to support the development of AI. The funded projects include the “AI Innovation and Competence Centre and Data Asser Management”, which promotes the application of AI systems to Hungarian small and medium enterprises, the development of AI-based technology for various purposes and the establishment of the national “Laboratory for Artificial Intelligence”.

Italy

In Italy, the GDPR and copyright legislation are the main tools used to regulate the application of AI and its functioning. In particular, these are significantly important as far as the training process of AI models is concerned, since training sets may incorporate and process personal data or copyrighted work, triggering legal obligations, prohibitions and sanctions. Additionally, Italy plans to further regulate the topic, complementing the upcoming AI Act. Indeed, the Italian Government recently proposed to the Italian Senate the introduction of a new law (Disegno di legge 1146/2024 - “DDL”), which is currently being discussed by the relevant committees. The announced goal is to strike the right balance between the protection of human rights on the one hand, and the development of innovative and beneficial tools on the other. In other words, the DDL dictates general principles to follow, in order to prevent AIs from negatively impacting on human autonomy, excluding humans from the processes in which AI is employed, and depriving them of their individual decision power. Thus, the DDL safeguards freedom of information and communication, fairness in the use of data, and transparency in the training of models. The DDL also proposes to introduce more sector-specific provisions, authorizing, for example, the use of AI systems in public administration and in intellectual professions only in secondary activities in support of the core one. The Italian Government has allocated 1 billion euro to the acquisition of shares in Italian innovative businesses, including those that develop AI systems. It also plans to facilitate partnerships between the public and the private sector, for the development and the employment of fair and efficient AI systems in the public administration.

North Macedonia

In North Macedonia the main regulation that deals with AI is the national Data Protection Law, which is harmonized with the GDPR, while no other specific proposals targeting AI are planned. In 2023, the Government launched “ADA”, an AI-powered digital assistant, which provides information to citizens and businesses. Moreover, the Governmental “Fund for Innovation and Technology Development” has invested approximately 138 million euro since 2013, to support start-ups and innovative projects in North Macedonia.

Portugal

Portugal plans to align its legislation on AI with the AI Act. Portugal is one of the first countries to have developed a national strategy. In fact, in 2019 it adopted the “National Strategy on AI”, which fosters innovation in healthcare, agriculture and education. In line with the AI Act, the National Strategy too is based on a risk-based approach that aims at developing ethical and human-rights-oriented AI. Importantly, Portugal’s strategy includes the establishment of sandboxes, which are secure environments where AI systems can be tested, under the supervision of public authorities, before getting released to the public, mitigating risks related to privacy and security.

Romania

The Romanian Senate has started public discussions on 19 March 2024 for a new legislative proposal on AI. As of today, the proposal would prohibit the automatization of the flow of human resources, as well as the use of biometric data of natural persons (except for crime prevention and detection purposes). It is worth highlighting that the Romanian approach might conflict with the AI Act, therefore it might me heavily modified to align with it. In February 2024, the Ministry of Investments and European Projects published Order No. 464/2024 for the approval of a state aids scheme, and a scheme of contributions to support entrepreneurs in the development of advanced digital technologies. These schemes allocate 3 million euro in grants to foster the development of advanced technologies, including AI.

Serbia

As of today, Serbia set forth voluntary guidelines and recommendations in the AI sector, such as the “Strategy of Development of Artificial Intelligence in the Republic of Serbia for 2020-2025”, and the “Conclusion on Adoption of Ethical Guidelines for Development, Application and Use of Reliable and Responsible Artificial Intelligence”. Besides providing guidance for the development of safer AI models, these acts also envisage the enactment of new regulations and the amendment of existing laws to better face the risks posed by AI (such as a new Data Protection Law). Serbia is currently developing its 2024-2030 national strategy on AI, which is expected to be adopted by the end of the year. As Serbia is also preparing to become an EU Member, it is also likely that it will transpose and issue a law on AI that parallels the AI Act. The Serbian Government also financed AI-related projects with 1 billion euro per year, in the 2020-2025 period. The Fund for Science currently funds 12 projects under the “Program for Development of Projects in the AI Field”.

SwedenThe Swedish Government is currently collecting information to draft a national law on AI, that is in line with the AI Act. But Sweden’s most important tool to get ahead in the AI race comes in the form of investments in the AI field, and the focus on the training of human capital. In fact, Microsoft announced a 3 billion euro investment in AI-related projects, and the training of 250,000 people, highlighting the attractiveness of Sweden in the industry. In 2023 the Government established a commission on AI to enhance the competitiveness of businesses in the sector, which concluded that the public administration would benefit approximately of 14 billion euro per year thanks to the integration of AI in its processes. Sweden also established “AI Sweden”, a government-funded national center for the application of AI, in partnership with entities in both the public and the private sector, as well as universities.

Switzerland

As of today, Switzerland chose a sector-specific approach to AI regulation, including the federal data protection law of 2020 which disciplines automated decisions, granting enhanced transparency and other individual rights that are similar to those granted under the GDPR. However, the legislation might soon be integrated by a new tool, as the Federal Council started an analysis to develop general legislation on AI, by 2025 (which is set to consider the norms of the EU and of the European Council). The goal is to provide Switzerland with a clear and AI-compatible normative landscape. Additionally, the Swiss Federation supports digitalization and technological development projects, including AI programs, in partnership with universities and research institutions, such as the “ETH” in Zurich, or the “EPFL” in Lausanne. Also, “Digital Administration Switzerland” and “AI Switzerland” promote innovation and training in AI-related fields.

Spain

Spain’s main tool to regulate AI is the “National Strategy for Artificial Intelligence 2024”, in line with the AI Act. The Spanish strategy mainly focuses on cybersecurity, which is an essential element for the digital transformation of the economy. In fact, Spanish institutions are currently discussing a Cybersecurity Law, which is set to enter into force in late 2024, to grant a better protection of digital systems. Additionally, Spain established the “Spanish Agency for Artificial Intelligence Supervision” (“AESIA”), with the purpose of granting ethical and transparent practices in the use of AI. The National Strategy allocates 1,5 billion euro – from the National Recovery and Sustainability Plan – and 600 million euro from the State budget, which have already been mobilized. The plan includes investments in supercomputing, the development of language models in Spanish and other co-official languages, the promotion of talents in the AI field, and the expansion of AI in the public and private sectors, with special attention for small and medium enterprises.

United Kingdom

The United Kingdom heavily relies on the GDPR to regulate AI (which also influences automated decisions). The “Artificial Intelligence Regulation Bill” was a tentative to provide the country with horizontal regulation on AI, although its progress was stopped due to the UK’s early elections. However, the Government has already launched several initiatives in support for AI. The “AI Sector Deal” of 2018 invested 1 billion pounds for Research and Development, training and ethical research on AI. Additionally, the “AI and Data Grand Challenge” provides businesses with 2,6 billion pounds from the public sector, and 3 billion from the private one. The “United Kingdom Research and Innovation” program further invested 300 million pounds for proper computing, 250million pounds for the development of AI in healthcare and zero-emission economy, and 100 million pounds in academic centers for technological talents.