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Global investment and innovation incentives updates: March 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.

Czech Republic

Energy accumulation

Call IV under the Low-Carbon Technologies program has been published. Innovative activities focused on introducing technologies for the storage of energy are supported under this call, and eligible applicants are small, medium-sized, and large enterprises. Subsidies are provided for machinery and equipment, underground utilities, engineering activities, and construction, and will amount to 80 percent for small entities, 70 percent for medium-sized entities, and 60 percent for large entities and will be granted in an amount ranging from CZK 50,000 to the maximum amount according the de minimis regime (i.e. up to EUR 200,000).

Scheme budget CZK 100 million
Type of incentive Cash grant
Deadline May 31, 2019


Secondary raw materials

Call IV under the Low-Carbon Technologies program will provide support for activities leading to the introduction of innovative technologies to extract secondary raw materials, the introduction of innovative technologies to produce products from secondary raw materials, and the extraction of valuable secondary raw materials from used products. Eligible applicants are small, medium-sized, and large enterprises. Subsidies are provided for machinery and equipment, underground utilities, engineering activities, and construction, and will amount to 45 percent for small entities, 35 percent for medium-sized entities and 25 percent for large entities and range from CZK 1 million to CZK 100 million.

Scheme budget CZK 500 million
Type of incentive Cash grant
Deadline May 31, 2019


Electromobility

The Call IV within the Low-Carbon Technologies program was published. Activities supported within this call involve innovative technologies in the area of low-carbon transportation, i.e. purchasing an electric vehicle from supported road vehicle categories and acquiring non-public (rapid) charging stations with a possibility of adding an electric vehicle accumulator. Eligible applicants are small, medium-sized, and large enterprises. Subsidies are available for the acquisition of vehicles, machinery and equipment, underground utilities, and engineering activities. The support amounts to 75 percent for small entities, 65 percent for medium-sized entities and 55 percent for large entities and will range from CZK 50,000 to CZK 10 million.

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

Contact your Czech Republic representative

Luděk Hanáček,
partner
+420 606 654 304

Germany

R&D tax grant under consideration

Germany’s Ministry of Finance (MOF) is considering issuing a legislative proposal that would provide for the introduction of a new research and development (R&D) tax incentive equal to 25 percent of qualifying expenditure during the four-year period from 2020 to 2023. The proposal from the MOF (which has not yet been officially published) is based on the following parameters:

  • The R&D incentive would be open to corporations and individuals that are subject to German income taxation, regardless of their size or business activities. R&D activities that would qualify for the incentives are fundamental research, industrial research, and experimental development.
  • The incentive would be available for activities carried out by a single entity, as well as for projects that are carried out through cooperation between unrelated entities and for projects that are contracted for by an independent third party.
  • The tax incentive would be calculated based on the salaries and wages of the employees that are engaged in qualifying projects. Contract R&D activities, therefore, would not qualify for the incentive at the level of the principal.
  • To obtain the cash grant, the taxpayer would be required to file an electronic application with the local tax office and the application would need to be accompanied by documentation substantiating that the conditions to qualify for the incentive are fulfilled.
  • The new incentive generally would be available in combination with other R&D incentives, provided the same expenses do not benefit from multiple incentives (no double funding)

The incentive would be available for qualifying projects that are initiated after the law enters into force. Qualifying expenses would have to be incurred in the period on or after January 1, 2020, and before January 1, 2024.

Eligible beneficiaries Corporations and individuals, regardless of their size or business activities, that are subject to German income taxation
Scheme budget The maximum base for calculating the 25 percent R&D incentive would be limited to EUR 2 million annually per taxpayer (on a consolidated basis for a group of companies). As a result, the maximum annual amount for the R&D incentive would be limited to EUR 500,000 per taxpayer
Type of incentive Tax incentive
Deadline December 31, 2023


Energy efficiency and process heat from renewable energies–Grants and loans

The German federal government's goal is to reduce primary energy consumption by 50 percent by 2050 compared with 2008. To achieve this goal, the Federal Ministry of Economic Affairs and Energy set up an investment program that funds the procurement of energy or heat-efficient equipment relating to the following modules:

  1. Plant equipment and machinery (cross-sectional technologies)
  2. Solar thermal collectors, biogas or biomass facilities
  3. Sensors and control for energy management
  4. Building system engineering or redesign of processes and techniques
Eligible participants Eligible applicants are industrial companies, municipal utilities, and energy providers
Scheme budget Funding between 30 percent and 55 percent of the eligible cost base (depending on the type of equipment and size of the company). The maximum funding is limited to EUR 10 million (EUR 200,000 for module 1 cross-sectional technologies)
Type of incentive Non-repayable cash grant or loan with repayment subsidy
Deadline December 31, 2022


Sustainable mobility through automated driving and networking

This program addresses automated driving in higher automation levels up to the driverless operation, as well as networking in road traffic, including the consideration of interfaces with other modes of transport. Funding will focus on measures that contribute to improving road safety and to efficient and emission-reducing mobility and enhancing public acceptance. The focus of funding also is on analyzing the potential effects of digitization, including automation and networking, safety, the environment, and transportation.

Eligible participants Eligible applicants are industrial companies, universities, research institutions, and federal agencies
Scheme budget Funding rate ranges from 25 percent to 100 percent, depending on the applicant and the degree of novelty
Type of incentive Non-repayable cash grant
Deadline December 31, 2021

Contact your Germany representative

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

Greece

Third call for proposals on state aid scheme for mechanical equipment under Development Law 4399/2016

On February 18, 2019, Greece’s Ministry of Economy and Development initiated the third call for proposals for the state aid scheme, “Aid for Mechanical Equipment.” Eligible costs include the purchase and installation of new machinery and used machinery that is not more than seven years old (conditions apply), payments for the lease of new modern machinery and other equipment, the purchase of vehicles to be used at the plant site and expenditure to modernize special facilities (unrelated to buildings) and mechanical installations.

Scheme budget EUR 150 million
Type of incentive Tax exemption
Deadline December 13, 2019, or until the budget is exhausted


Tax incentive for energy efficiency and water conservation

A joint ministerial decision published on December 12, 2018, provides details on the process and documentation required for the Greek tax incentive for energy efficiency and water conservation, which applies as from June 14, 2018. The incentive introduces a 200 percent super depreciation of CAPEX related to energy efficiency and water conservation (e.g. buildings, mechanical equipment, and other interventions). If the initial depreciation rate is higher than 10 percent, the increased rate may not exceed 10 percentage points. A mechanical engineer must certify the energy efficiency and water conservation costs and demonstrate the eligibility of the expenditure. The certificate for energy efficiency expenditure is submitted to the Ministry of Environment and Energy.

Scheme budget Indefinite
Type of incentive Tax super depreciation
Deadline Annual submission, aligned with the filing of the corporate income tax return

Contact your Greece representative

Stelios Sbyrakis,
Tax Principal Gi³
+30 210 678 1196

Hungary

EKD cash grant

As from March 1, 2019, investments (both with and without the creation of jobs) and R&D projects in Hungary may qualify for a non-refundable cash grant under more favorable conditions. The minimum investment cost and job creation-related thresholds are lowered (potentially EUR 5 million and 50 new jobs). The cash grant also is available for projects implemented by two linked enterprises even if no new jobs are created (if the costs exceed EUR 20 million).

The eligible costs for R&D projects have been expanded to cover personnel costs, depreciation, material costs, and contracted research, and the eligible costs for investments have been expanded to better match the current investment needs/trends.

Scheme budget Maximum aid intensity (exact grant amount to be determined by the government):
• 20-50 percent for investment projects
• 25 percent for R&D projects

Maximum grant amount
• No limit for investment projects
• EUR 15 million for R&D projects
Type of incentive Cash grant
Deadline All year round

 

Energy efficiency tax allowance

The energy efficiency tax allowance has been expanded to encourage the implementation of energy efficient technologies in Hungary. In addition to investments, the tax allowance also is available for renovations aiming at energy efficiency. The aid amounts have been increased to the maximum limits in EU regulations. Taxpayers may utilize the tax allowance to reduce their corporate income tax liability (up to 70 percent of the payable corporate income tax) over a six-year period after the project end date.

Scheme budget Maximum aid intensity:
• Large enterprises: 30-45 percent
• Medium-sized enterprises: 40-55 percent
• Small enterprises: 50-65 percent

Maximum tax allowance: EUR 15 million
Type of incentive Tax allowance
Deadline Annual


Training grant

A non-refundable cash grant is available under more favorable conditions for companies creating at least 50 new jobs and organizing internal or external training for their employees. Eligible costs include personnel costs of individuals participating in the training, costs of the training staff, administrative costs, and travel expenses. The maximum training period is 24 months and the maximum grant is EUR 4,000 per participating employee (capped at EUR 2 million).

Scheme budget Maximum aid intensity:
• Large enterprises: 50 percent
• Medium-sized enterprises: 60 percent
• Small enterprises: 70 percent

Maximum grant amount: EUR 2 million
Type of incentive Cash grant
Deadline All year round

Contact your Hungary representative

Csaba Márkus,
partner
+36 1 428 6800

Italy

Budget Law 2019—Extension of tax credit for training costs relating to Industry 4.0 development plan

Italy’s 2019 budget law extends the tax credit on personal expenses incurred for training activities in the tax period following the period in progress at December 1, 2018, relating to the Industry 4.0 development plan (i.e. big data, cybersecurity, robotics, internet of things, and data analysis). However, as from January 1, 2019, the tax credit is modified (from the previous 40 percent) as follows:

  • 50 percent for small-sized enterprises, up to EUR 0.3 million;
  • 40 percent for medium-sized enterprises, up to EUR 0.3 million; and
  • 30 percent for large-sized enterprises, up to EUR 0.2 million.
Scheme budget N/A
Type of incentive Tax credit
Deadline December 31. 2019

Contact your Italy representative

Ranieri Villa
partner
+39 3488757224

Poland

GameINN—Sectoral R&D projects (Measure 1.2 of the Smart Growth Operational Program)

Administered by the National Centre for Research and Development (NCRD), the next edition of the GameINN program (dedicated to the video games industry) supports industrial research and experimental development work or experimental development work carried out by enterprises or consortia consisting of at least two entrepreneurs or at least one entrepreneur and one scientific unit. Projects must be located outside the province of Mazowieckie.

Scheme budget EUR 23 million
Type of incentive Cash grant

The grant may range from 25 to 90 percent in the case of de minimis aid on pre-implementation activities of eligible costs (up to EUR 200,000), depending on the type of activities, company size, cooperation with third parties and dissemination of project results.

The grant is available for the following areas:
• Designing video games
• Platforms, engines and processing techniques
• Applications of artificial intelligence
• New tools and interaction mechanisms
• Digital distribution and multiplayer online games
• Tools and knowledge supporting the gaming process
• Extending the applications of technologies and tools to other areas
Deadline June 14, 2019


Support for investment in R&D infrastructure of enterprises (Measure 2.1 Smart Growth Operational Program)

Administered by the Ministry of Development, measure 2.1 is dedicated to supporting the creation and development of R&D centers. The program targets enterprises complying with National Smart Specializations and cooperating with SMEs or research institutions.

Scheme budget EUR 93 million
Type of incentive Cash grant

The grant may range from 10 percent to 70 percent of eligible costs, depending on the type of activities, company size, and location of the project

The grant is available for the following expenditure:
• R&D infrastructure and equipment;
• Construction work and materials;
• Installment payments made for real estate leases or the purchase of real estate (up to 10 percent of eligible costs)
Deadline April 30, 2019


Fast Track (Submeasure 1.1.1 of the Smart Growth Operational Program)

Administered by the National Centre for Research and Development (NCRD), the next edition of the Fast Track program supports industrial research and experimental development or experimental development activities carried out by enterprises or consortia consisting of at least two entrepreneurs or at least one entrepreneur and one scientific unit. Projects must be located outside the province of Mazowieckie.

Scheme budget EUR 232 million
Type of incentive Cash grant 

The grant may range from 25 percent to 90 percent in the case of de minimis aid on pre-implementation work of eligible costs (up to EUR 200,000) depending on the type of activities, company size, cooperation with third parties, and dissemination of project results.

The grant is available for the following expenditure:
• Remuneration of employees involved in R&D
• Subcontracting (up to 70 percent of costs)
• Depreciation of fixed and intangible assets used in R&D (equipment, buildings, and land)
• Materials used in R&D activities
• Indirect costs (lump sum amount up to 25 percent of direct costs, excluding subcontracting)
Deadline July 1, 2019

Contact your Poland representative

Dominika Alicka
senior manager
+48 8 8195 0969

South Africa

Global Business Services Incentive

A new temporary incentive (the Global Business Services (GBS) incentive) for engaging in offshoring services was introduced in South Africa on January 1, 2019. The incentive is designed to attract investment and create youth employment and is in the form of a grant over a five-year period based on the number of jobs created and maintained. There are two components to the GBS incentive: a base and a bonus incentive. The base incentive offers a three-tier differential incentive for non-complex, complex, and highly complex jobs based on the cost per job. The maximum benefit under the base incentive is ZAR 290,000 per job for highly skilled jobs over five years, limited to 100 jobs. The bonus incentive is between 20 percent and 30 percent of the base incentive and is available for greater job creation. The approved project must create at least 30 new jobs within three years from the start of operation and employ at least 60 percent youth.

Scheme budget Not applicable
Type of incentive Cash incentive
Deadline January 1, 2019, to March 31, 2028

Contact your South Africa representative

Newton Cockcroft,
business unit leader
+27 (0)82 371 8498

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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