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Global investment and innovation incentives updates: February 2019

Global developments benefiting business

This monthly publication provides a summary and updates on the latest global developments in research and development (R&D) credits, grants, and other incentive arrangements. More than 50 countries offer specific incentives and this newsletter focuses on identifying and outlining what could be the right incentives for your organization.

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Australia

Proposed R&D amendments deferred

The Australian government has accepted the recommendations of a Senate Committee to defer consideration of the proposed amendments to the R&D incentives, in particular, a controversial intensity threshold and an annual cap on the refundable offsets. The bill currently before parliament will lapse when the Australian federal election is called in April.

As a result, the future path of the R&D tax incentive will depend on the outcome of the election expected in May 2019. The current opposition, the Australian Labor Party, is leading the polls to date and previously committed to preserve the current R&D regime and to double Australia’s R&D output by 2030 to three percent of GDP.

Learn more form a recent tax@hand article and links to other related articles.

Contact your Australia representative

Roisin Arkwright
principal
+61 2 9322 7412

Belgium

Deadline set for pre-filing requests relating to transfer pricing, innovation income deduction and patent income deduction

At its board meeting held on 12 February 2019, the Belgian Ruling Commission decided that pre-filing requests (or ruling requests, if there is no pre-filing) relating to transfer pricing, the innovation income deduction, and the (grandfathered) patent income deduction must be submitted by 15 March 2019, at the latest if they impact the (resident or nonresident) corporate tax return for tax year 2019 (financial year 2018).

If the financial year does not coincide with the calendar year (e.g. financial year 1 April 2018–31 March 2019), the pre-filing request must be submitted no later than six months before the due date for the corporate tax return.

This timing should allow the Ruling Commission to decide on the ruling request before the tax return is due.

Contact your
Belgian 
representative

Renaud Hendrice,
partner
+32 2 600 6721

Czech Republic

Technology program call announced

Call IX in the technology program has been published. Eligible applicants include small and medium-sized enterprises and qualifying activities include acquisitions of new machinery, technology equipment, and integration of those technologies into the production process by means of autonomous two-way communication. Subsidies cover tangible and intangible fixed assets, and amounts to 45 percent for small entities and 35 percent for medium-sized entities. The subsidy ranges from CZK 1 million to CZK 20 million.

Scheme budget CZK 700 million
Type of incentive Cash grant
Deadline 13 June 2019


Marketing program call announced

Call IV in the marketing program was published. Eligible applicants include small and medium-sized enterprises and qualifying activities are those participating in foreign exhibitions and trade fairs aimed at facilitating the company’s access to foreign markets and related services, such as transportation of exhibits, exhibition stands, including equipment use for transport to and back from the trade fair or exhibition abroad, promotional marketing materials, etc. The subsidy may be provided to no more than 10 participations at foreign trade fairs and exhibitions. The support per project is up to 50 percent of eligible expenses and ranges from CZK 200,000 to CZK 4 million.

Scheme budget CZK 200 million
Type of incentive Cash grant
Deadline 31 May 2019


Two new innovative programs announced

The Research, Development, and Innovation Council has approved two new programs: The “TREND” program and the “Environment for Life” program. The TREND program aims to support the implementation of the outcomes of industrial research and experimental development into practice and help with access to new markets. New digital technology increasing the degree of automation and robotization are included in the supported activities. The Environment for Life program aims to respond to the current climate issues. Aid will be provided to projects focusing on air, soil, and water protection, as well as waste management.

Scheme budget TREND: CZK 15 billion
Environment for Life: CZK 5 billion
Type of incentive Cash grant

Contact your Czech Republic representative

Luděk Hanáček,
partner
+420 606 654 304

European Union

Brexit may impact EU funding projects

EU-funded projects with UK partners may be affected if a withdrawal agreement is not concluded before the United Kingdom leaves the European Union on 29 March 2019, because, in the event of a “hard Brexit,” the UK partners no longer will be eligible for funding. In addition, UK partners will not be taken into account in determining the minimum number of participants in a project to be eligible for funding. As a result, existing or planned EU projects with UK partners should begin to take steps to mitigate any adverse consequences.

Type of incentive EU funding
Deadline 29 March 2019


INTERREG offers funding opportunities in North-West Europe

The INTERREG North-West Europe (NWE) funding scheme has opened its ninth call for project proposals, this time within Priority 1 (Innovation) and Priority 3 (Resource and material efficiency). The deadline for first stage proposals is 14 June 2019.

Type of incentive Funding
Deadline 14 June 2019

Germany

Funding call on field tests for energy transition (Reallabore)

The implementation of the transformation of the energy system in Germany requires extensive restructuring of the system including all production and consumption sectors. For this reason, the federal government has supplemented its funding under the 7th Energy Research Program with the funding format of Reallabore.

As test rooms for innovation and regulation, they are intended to accelerate the transfer of technology and innovation: In real laboratories/field tests, project partners can test new technologies and business models in a holistic approach under real conditions.

The current funding call focuses on the following fields of technology:

  • Sector coupling and hydrogen technologies,
  • Large-scale energy storage in the electricity sector, and
  • Energy-optimised neighborhoods.
Scheme budget Eligible applicants: Commercial companies, state and non-state universities, non-university research institutions, associations and other organizations with an interest in R&D (with a registered office or branch in Germany)

Funding for commercial companies can be up to 50 percent of eligible project costs
Type of incentive Non-repayable cash grant
Deadline 5 April 2019 (first application step)

Funding call for “MobilityFutureLab 2050”

The purpose of this funding call for systemic, transdisciplinary, and implementation-oriented mobility research by the Federal Ministry of Education and Research (BMBF) is to showcase solutions to make complex mobility systems more sustainable. The aim is to ensure the individual mobility of people, improve the quality of life and the environment, especially in cities, and strengthen the innovative capacity of the German mobility sector.

The following topics are included in the call:

  • Social change and mobility behavior (mutual influence of social developments, individual dispositions, and mobility); and
  • Sustainable innovation and transformation management (to create a sound basis for long-term innovation and transformation management to achieve effective changes in the mobility system).
Scheme budget Eligible applicants are industrial companies, universities, non-university research institutions, local authorities, and public administration institutions (with a registered office or branch in Germany) 

Funding for commercial companies can be up to 50 percent of eligible project costs
Type of incentive Non-repayable cash grant
Deadline 28 April 2019 (first application step)


Funding call for digital transformation of food industry

The purpose of this call for proposals is to support innovative industrial research and experimental development projects aimed at the intelligent networking of machines and processes in the food industry supported by information and communication technology.

In particular, projects should focus on the potential of the digitization of the following:

  • Production of single pieces and small quantities with the help of innovative solutions to meet the special challenges within complex manufacturing processes;
  • Optimized decision-making by means of digital innovations, which enable continuous transparency in real time (e.g. via blockchain);
  • Value creation potential, e.g. through innovative, downstream services (such as Big Data solutions);
  • Flexibility for a dynamic design of business processes in different dimensions such as quality, time, risk, robustness, price, environmental compatibility, etc.
  • Increasing resource productivity and efficiency through innovations for the individual optimization of production processes across the entire value-added network.
Scheme budget Eligible applicants: Commercial companies, state and non-state universities, non-university research institutions (with a registered office or branch in Germany)

Funding for commercial companies can be up to 50 percent of eligible project costs 
Type of incentive Non-repayable cash grant
Deadline 23 May 2019 (first application step)

Contact your Germany representative

Isabel Antholz
service line leader
+49 (0) 40 32080 4910

Italy

Budget Law 2019 extends hyper depreciation schemes

Italy’s 2019 budget law extends hyper depreciation to new Industry 4.0 tangible assets and to Industry 4.0 intangible assets purchased by 31 December 2019 (or 31 December 2020, provided the relevant purchase order is made and at least 20 percent of the purchase price is paid by 31 December 2019). The new assets must be used in production facilities located in Italy. However, as from 1 January 2019, the increase in the depreciable base of new tangible assets is modified (from the previous 150 percent) as follows:

  • 170 percent for investments up to EUR 2.5 million (increased from the 150 percent proposed in the draft budget law);
  • 100 percent for investments between EUR 2.5 million and EUR 10 million; and
  • 50 percent for investments between EUR 10 million and EUR 20 million.

An increase in the depreciable base no longer is available for investments over EUR 20 million per year.

Super depreciation for Industry 4.0 intangible assets, which provides for a 40 percent increase in the depreciable base of the assets, is extended to hyper depreciation and remains at 40 percent. In addition, the incentive has been extended to costs incurred for software supplied through the cloud.

Super depreciation for qualifying tangible assets, which provides for a 30 percent increase in the depreciable base of the assets and is available for new assets purchased by 31 December 2018 (or 30 June 2019, provided the relevant purchase order was made and at least 20 percent of the purchase price was paid by 31 December 2018), has not been extended.

Scheme budget N/A
Type of incentive Hyper depreciation
Deadline 31 December 2019/31 December 2020 (provided the seller accepts orders by 31 December 2019 and at least 20 percent of the price is paid by the same date) 


Budget Law 2019 makes changes to R&D tax credit

Italy’s 2019 budget law contains changes to the research and development (R&D) tax credit rules that may limit the amount of the credit.

The maximum annual credit for each beneficiary is reduced from EUR 20 million to EUR 10 million, and the credit is reduced from 50 percent to 25 percent for certain types of expenditures. In particular, the tax credit is 25 percent for expenditure related to self-employment, depreciation, R&D subcontracted to other companies, costs of purchased technical knowledge, and patents.

However, the tax credit remains at 50 percent for expenditure related to employees, R&D subcontracted to universities and research institutions, and R&D subcontracted to innovative small and medium-sized enterprises or innovative start-up companies not belonging to the same group. The cost of materials and supplies to be used for R&D activities, which previously was not eligible for the R&D tax credit, has become eligible expenditure (for a 25 percent credit).

Finally, audit certification has become mandatory for all enterprises seeking to claim an R&D tax credit. This measure applies as from the 2018 fiscal year (i.e. as from 1 January 2018, for calendar-year taxpayers).

Scheme budget N/A
Type of incentive Tax credit
Deadline Available for FYs 2015 through 2020


Budget Law 2019 introduced reduced tax rate on reinvested profits

Italy’s 2019 budget law introduces a reduced tax rate for profits reinvested to acquire new assets or to increase employment.

In certain cases, a 15 percent corporate tax rate (rather than the standard 24 percent rate) may be applied to profits reinvested in the acquisition of new assets or to increase employment. The investments must be made in production facilities located in Italy. The amount of profits eligible for the reduced tax rate each year regarding investments in the acquisition of new assets is equal to the depreciation on new tangible assets up to the overall increase in the cost of all tangible assets.

The amount of profits eligible for the reduced tax rate each year regarding investments to increase employment is equal to the amount by which the expenditure related to employees exceeds the expenditure related to employees in the fiscal year in progress on 31 December 2018, but only if there is an increase in the number of employees compared to the employees at 30 September 2018.

Scheme budget N/A
Type of incentive Reduced tax rate
Deadline N/A

Contact your Italy representative

Ranieri Villa
partner
+39 3488757224

Portugal

Incentives for Technology R&D (R&D Units – Individual projects)

Incentives are available to SMEs that aim to create internal R&D and innovation management units in a sustainable manner and based on a plan of activities. The structured units to be created must be exclusively dedicated to R&D activities.

Scheme budget EUR 4.5 million
Type of incentive Non-repayable cash grant of 50 percent of eligible costs, except for projects in the Lisbon region, where the maximum is 40 percent
Deadline 29 March 2019

Contact your Portugal representative

Sérgio Paulo Oliveira
partner
+35 12 1042 7527

United Kingdom

Integration of proven technologies into UK rail industry

Support is available across four themes associated with infrastructure resilience, operational resilience, freight, and noise and the environment. An organization of any size can apply, working alone or collaborating with other firms. Eligible costs can be between GBP 250,000 and GBP 350,000 (including VAT) and projects will be 100 percent funded. Sixteen projects are expected to be funded across the four themes.

Scheme budget GBP 5 million
Type of incentive Cash grant
Deadline 17 April 2019

Contact your United Kingdom representative

Alistair Davies,
director
+44 (0)29 2026 4272

For more information

For more information on any of the programs listed above, please contact the in-country representative or your usual contact.

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Global investment and innovation incentives updates: Global developments affecting research and development

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