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Global investment and innovation incentives updates: March 2020

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.

Australia

R&D bill submissions to Senate committee

Legislation that will negatively affect the R&D tax incentive in Australia is before the Senate, with the provisions referred to a Senate Committee inquiry due to report by 30 April 2020. Deloitte has filed a formal submission (see this tax@hand article).

Scheme budget N/A
Type of incentive R&D tax incentive
Deadline 30 April, 2020

Contact your Australian representative

Roisin Arkwright,
Principal
+61 2 9322 7412

Czech Republic

New technology agency call for support for applied research and innovation

The international call of the Czech technology agency, “M-ERA.NET 2 Call 2020,” focuses on promoting material research and innovation.

Projects must be focused on one of the following:

  • Modeling for materials engineering and processing
  • Innovative surfaces, coatings, and interfaces
  • High-performance composites
  • Functional materials
  • New strategies for advanced material-based technologies for health applications
  • Materials for additive manufacturing

Eligible applicants include public and business entities, but an international research consortium must be created for the joint project.

Scheme budget EUR 1 million
Type of incentive Cash grant
Deadline 16 June, 2020

 
New call under Operational Program Environment 2014–2020

The new call under the Operational Program Environment 2014–2020 focuses on providing support for projects aimed at the construction and modernization of waste collection, sorting and treatment facilities, energy recovery facilities and related infrastructure, and hazardous waste management facilities (including medical waste).

Eligible applicants include public and business entities, and the maximum aid per project is 85 percent of the total eligible costs.

Scheme budget EUR 20 million
Type of incentive Cash grant
Deadline 1 June, 2020

Contact your Czech Republic representative

Luděk Hanáček,
partner
+420 60 665 4304

European Union

Final round of funding under the LIFE 2014–2020 program

The EU LIFE program was launched more than 20 years ago to support projects focused on sustainability, such as projects designed to improve nature and biodiversity, reduce the environmental impact of industrial activities (environmental projects), or mitigate climate change (climate action project). To qualify for funding under the LIFE program, the project must consist of demonstration and upscaling actions to limit the magnitude or rate of long-term global warming and its related effects.

LIFE projects are flexible—any legal entity in the European Union can apply for funding, a consortium is not required, and any sustainable idea can be used to build up a project.

The final round of funding under the LIFE program 2014–2020 will be distributed in 2020, with the last call for environmental and climate action projects opening on 2 April. Companies seeking support can submit their proposals until mid-June 2020 (environmental project) and September 2020 (climate action project).

Scheme budget N/A
Type of incentive European funding
Deadline Mid-June or September 2020

 
IP booster program available

The IP booster program is an EU intellectual property (IP) service funded by the European Commission to provide universities and public research institutions with support in strategic IP matters for which they do not have the time or resources in-house.

The program offers fully subsidized professional IP advice provided by specialized IP, technology, and business strategy experts through a simple online application procedure. Depending on the needs of the university or research institution, the advice can relate to patent, design, and trademark protection, initial IP auditing, patent landscaping, IP evaluation and due diligence, and negotiating technology transfers.

Applications can be submitted any time, and assessments of applications takes place at regular intervals.

Scheme budget EUR 25,000
Type of incentive Financial support for IP services
Deadline All year

Contact your European Union representative

Renaud Hendricé,
partner
+ 32(0)2 600 6721

Germany

Bio-hybrid technologies

Under the bio-hybrid technologies funding scheme, Germany’s Federal Ministry of Education and Research supports explorative R&D projects that aim to develop cutting-edge technologies for the industrial bio-economy.

Funding will be provided for interdisciplinary approaches that combine unique functionalities of biological components (DNA, RNA, peptides, proteins) with the advantages of technical elements (carriers and containers) to create future-oriented products and technologies.

Projects can address innovations in one of the following areas: bio-analytics; material separation; artificial bio-hybrid compartments; and novel immobilization concepts for bio-catalysis, sensor concepts, electro-biotechnology, artificial photosynthesis, or photo-biotechnology.

Eligible participants Commercial enterprises, universities, and research institutions established in Germany
Scheme budget • Up to 100 percent for basic research

• Up to 50 percent for industrial research

• Up to 25 percent for experimental development
Type of incentive Nonrefundable cash grant
Deadlines 3 August, 2020

 
Artificial intelligence (AI) in agriculture

The aim of the AI in agriculture funding opportunity is to make use of procedures and techniques from basic research by using AI tools for practical application. By strengthening consumer health protection, enhancing transparency in the food industry, and enhancing efficiency and sustainability in agriculture, AI potentials are expected to support the achievement of the 17 sustainable development goals (SDG) set by the United Nations.

Funding is provided for AI projects in industrial research and experimental development in areas such as the following: pattern recognition, analysis and prediction, machine learning, deep learning, intelligent machines and robotics, machine planning, and action.

Eligible participants Commercial enterprises and research institutions established in Germany
Scheme budget • Up to 50 percent of eligible costs for industrial research

• Up to 25 percent of eligible costs for experimental development

• SMEs are eligible for an additional bonus
Type of incentive Nonrefundable cash grant
Deadlines 24 April, 2020

Contact your German representative

Dr. Sebastian Lange,
service line leader
+49 151 1829 3720

Poland

Fast Track (Sub-measure 1.1.1 of the Smart Growth Operational Program)

Administered by the National Centre for Research and Development (NCRD), this program supports experimental development work and industrial research or at least experimental development, which can be supplemented by pre-implementation work, carried out by enterprises or consortia consisting of at least two entrepreneurs or at least one entrepreneur and one scientific unit.

  Thematic path: Fast track for Mazowieckie Voivodeship
Scheme budget EUR 116 million
Type of incentive Cash grant: Ranges from 25 percent to 90 percent in the case of de minimis aid on pre-implementation work (up to EUR 200,000) of eligible costs, depending on the type of activities, company size, cooperation with third parties, and dissemination of project results.

Qualifying expenditure:

– Remuneration of employees involved in R&D

– Subcontracting (up to 70 percent of R&D costs and pre-implementation work costs)

– Research equipment and intangible assets (depreciation or payable use)

– Buildings and land (maximum 10 percent),

– Other costs (such as materials, space rental, promotion (maximum 1 percent), transport, and audit)

–  Indirect costs (lump sum amount up to 25 percent of direct costs, excluding subcontracting)

Value of eligible costs: From EUR 232,000 up to EUR 50 million
Deadline 14 May, 2020

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

Administered by the National Centre for Research and Development (NCRD), this program supports experimental development work and industrial research or at least experimental development, which can be supplemented by pre-implementation work, carried out by enterprises or consortia consisting of at least two entrepreneurs or at least one entrepreneur and one scientific unit.

Projects provided through this call can be implemented in any voivodeship, except Mazowsze.

  Thematic path: Renewable energy sources (RES) in transport
Scheme budget EUR 46.5 million
Type of incentive Cash grant: Ranges from 25 percent to 90 percent in the case of de minimis aid on pre-implementation work (up to EUR 200,000) of eligible costs, depending on the type of activities, company size, cooperation with third parties, and dissemination of project results.

Qualifying expenditure: 

– Remuneration of employees involved in R&D

– Subcontracting (up to 70 percent of R&D costs and pre-implementation work costs)

– Research equipment and intangible assets (depreciation or payable use)

– Buildings and land (maximum 10 percent)

– Other costs (such as materials, space rental, promotion (maximum 1 percent), transport, and audit)

– Indirect costs (lump sum amount up to 25 percent of direct costs, except subcontracting)

Value of eligible costs: From EUR 232,000 up to EUR 50 million
Deadline 10 July, 2020

Contact your Poland representative

Dominika Alicka,
senior manager
+48 881 95 0969

Portugal

Incentives for business innovation and entrepreneurship: Productive innovation 

Incentives are available in Portugal for projects in all economic activities, particularly those aimed at the production of tradable and exportable goods and services.

Various conditions must be fulfilled to benefit from the incentives, including the following:

  • The project must strengthen investment in innovative activities
  • It must contribute to the globalization of the Portuguese economy, the creation of qualified employment, and have a spillover effect on small and medium-sized enterprises (SMEs)
  • It must promote qualified and creative entrepreneurship
  • In the case of non-SMEs, the project must ensure a relevant impact on highly qualified employment, it must fall within the scope of one of the priority areas of the regional R&I strategy for smart specialization, and the degree of novelty of the project must be at least at the national market level.
Scheme budget EUR 311,555 million
Type of incentive Non-SMEs: Cash grant ranging from 15 percent to 25 percent of eligible costs, depending on the location of the project. The cash grant can be forfeited if the enterprise fails to comply with specific targets in the grant agreement.

SMEs: Incentive base rate ranging from 15 percent to 75 percent (depending mainly on the size of the enterprise, the size of the project, location, and creation of qualified employment) of eligible costs. The incentive is split as follows: 50 percent as a cash grant (unless the enterprise fails to comply with specific targets in the grant agreement) and 50 percent as an interest-free loan.

The maximum rate for projects located in the Lisbon region is 40 percent of eligible costs and 60 percent for projects located in the Algarve.
Deadline • Projects in low-density territories: 7 September, 2020

• Projects in other territories: 20 April, 2020

 
Incentives for business innovation and entrepreneurship: Qualified and creative entrepreneurship

Incentives are available for projects in all economic activities of recently created SMEs, particularly those aimed at the production of tradable and exportable goods and services obtained through R&D activities or that fall within strong growth dynamic sectors (high technology and knowledge intensity sectors or creative and cultural industries).

Various conditions must be fulfilled to benefit from the incentives, including the following:

  • The project must promote the creation of a new establishment
  • The SME must have been engaged in activities for less than two years
  • The project must promote qualified and creative entrepreneurship
Scheme budget EUR 14.5 million
Type of incentive Incentive base rate ranging from 35 percent to 75 percent (depending mainly on the size of the enterprise, the location of the project, and the creation of qualified employment) of eligible costs. The incentive is split as follows: 50 percent as a cash grant (unless the enterprise fails to comply with specific targets in the grant agreement) and 50 percent as an interest-free loan.

The incentive maximum rate for projects in the Lisbon region is 40 percent of eligible costs and 60 percent for projects in the Algarve.
Deadline 20 April, 2020

 
Incentives for technology R&D (Collaborative projects–International partnerships)

Incentives are available for technology R&D projects promoted by a consortium led by domestic companies in cooperation with other domestic and foreign companies and R&D entities (namely, polytechnic institutions).

Various conditions must be fulfilled to qualify for the incentives, including the following:

  • The project must fall within the scope of one of the priority areas of the national R&I strategy for smart specialization (or regional R&I strategy if the project is located in the Lisbon region)
  • The consortium must be led by a domestic company and include at least two domestic polytechnic institutions and a European polytechnic institution
  • The project must include industrial research and/or experimental development activities, leading to the creation of new products, processes, or systems or to the introduction of significant improvements in existing products, processes, or systems
Scheme budget EUR 13 million
Type of incentive Domestic polytechnic institutions: Cash grant equal to 75 percent of eligible costs, except for investments in the Lisbon region, where the maximum is 50 percent.

Domestic companies: Cash grants ranging from 25 percent to 85 percent, except for investments in the Lisbon region, where the maximum rate is 50 percent.

Projects total investment levels:

– Lower–technology readiness level (TRL) projects must fall between EUR 200,000 and EUR 300,000

– Higher–TRL projects must be between EUR 800,000 and EUR 1 million
Deadline 30 April, 2020

Contact your Portuguese representative

Sérgio Oliveira,
partner
+351 21 042 7527

United States

Virginia—Property tax exemption for conservation area or rehabilitation district extended

On 3 March, 2020, Virginia governor Ralph Northam signed VA S.B. 272 into law, which extends the maximum duration for local property tax exemptions for new construction or improvements to structures located in a redevelopment or conservation area or a rehabilitation district. This legislation increases the maximum exemption duration from 15 years to 30 years.

The exemption may equal the lesser of:

  • The amount of the increase in assessed value, or a percentage of such increase, resulting from the construction of a new structure or other improvement to qualified real estate, or
  • Up to 50 percent of the costs of the construction or improvement.
Scheme budget N/A
Type of incentive Property tax exemption
Deadline N/A

 

New Jersey—Film and digital media tax credit extended

New Jersey has modified and expanded the Film and Digital Media Income Tax Credit Program by extending the program for an additional five years, until 1 July, 2028, and adding USD 25 million to the annual cap on qualified film production expenses, bringing it to USD 100 million per year (press release, Governor Phil Murphy, 21 January, 2020, Ch. 506 (A.B. 5580), Laws 2019, effective 21 January, 2020).

The New Jersey Film and Digital Media Tax Credit Program provides a transferable income tax credit against the corporation business tax and the gross income tax for certain expenses incurred for the production of certain films and digital media content in New Jersey. Upon approval of an application to the authority and the director, a taxpayer will be allowed a credit against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) in an amount equal to 30 percent of the qualified film production expenses of the taxpayer.

Scheme budget USD 100 million per year
Type of incentive Transferable income tax credit
Deadline 1 July, 2028

 

Wisconsin—Opportunity Zone tax benefits available

On 4 March, 2020, Wisconsin governor Tony Evers signed A.B. 532, which builds on the Opportunity Zone tax benefits established under the 2017 federal tax overhaul as a vehicle for spurring economic development in distressed communities. An Opportunity Zone is an economically distressed community where certain private investments may be eligible for capital gains tax incentives.

Under the new law, taxpayers that invest capital gains in a qualified opportunity fund for at least five years can exclude up to 20 percent of the total gains for Wisconsin income and franchise tax purposes (previously 10 percent). Investors participating for at least seven years may exclude 30 percent of the gains (previously 15 percent). The benefits are available beginning with the 2020 tax year.

Wisconsin is home to 120 qualified federal Opportunity Zones, located in 44 counties and 60 municipalities, according to the Wisconsin Economic Development Association.

Scheme budget N/A
Type of incentive 31 December, 2026
Deadline Income tax exemption

Contact your United States representative

Douglas Tyler,
managing director
+1 212 436 3703

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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