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Global investment and innovation incentives updates: May 2017

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

Support for specialized employee education II

The Labor Office has renewed the acceptance of applications for the second call of the “Support for Specialized Employee Education II” project. The project is designed to help employers provide specialized education to current and new employees to enable them to respond to changing market conditions and situations. The support is provided in the form of contributions to employers for employee education and a refund of salaries paid during the training period, up to a maximum amount of financial aid per month of EUR 18,660.

Scheme budget EUR 37.3 million
Type of incentive Cash grant
Deadline From 20 March 2017, with the program closing when the allocation reaches the total scheme budget

Contact your Czech Republic 
representative

Luděk Hanáček,
partner, Tax and Legal in Central Europe
+420 606 654 304

Germany

Funding program “Agricultural crops of the future” 

The goal of this call is to drive significant improvement in, and the application of, CRISPR/Cas-systems and other genome editing methods for the breeding of crop plants. R&D projects may focus on areas such as:

  • New tools for application in the breeding of agricultural crops,
  • Innovative transfer techniques for RNA, proteins, RNA-proteins complex in plant cells, and
  • Pioneering new methods for plant regeneration.

The focus will be on methodical-explorative approaches that combine different research targets and offer exploitation potential for agronomic productivity (e.g. resource efficiency, quality, and stability).

Scheme budget Funding is granted to universities, research institutions, and companies (eligible parties)

Activities usually are carried out as individual projects by single eligible party. However, in exceptional cases, a maximum of three partners can form a consortia and apply for funding (consortium projects)

The maximum funding for individual and consortium projects is EUR 500,000, with a maximum funding period of 24 months

Funding for companies can be up to 50 percent of eligible project costs, with a 10 percent bonus for SMEs

Universities and research institutions can be subsidized up to 100 percent of the project-related expenditure. Universities can receive a lump sum amount of up to 20 percent of their expenditure, in addition to the maximum possible funding
Type of incentive Non-repayable grant to a company or research institution
Deadline Submission of a project outline (first application step): 27 June 2017

Transport research program "Mobility and transport technologies"

This funding scheme promotes product and application-oriented research activities in the area of mobility and transport technology and focuses on automated driving solutions and innovative vehicles. Project areas include:

  • Automated driving: Innovative sensors and actuation systems, high-precision localization, fast, inter-vehicle, and vehicle-to-backend communication solutions, (sensor) data fusion and processing, man-machine interaction, and
  • Innovative vehicles: Increase in energy efficiency by using light-weight construction, optimized aerodynamic characteristics, reduced frictional resistance in the complete drive trains, and innovative drive train technology.
Scheme budget Forming of an industry-led consortium is required, inclusion of SMEs is welcome but not necessary

For companies, grants of up to 50 percent of eligible costs can be awarded, provided there is an own contribution of at least 50 percent

For universities and research institutions, grants of up to 100 percent of eligible costs can be awarded

Project duration can be up to three years
Type of incentive Non-repayable cash grant to a consortium consisting of at least one company and one research institution, both with premises in Germany
Deadline Submission of project outline (first application step):
30 September and 30 March each year until December 2018

ERA-Net: Materials for additive manufacturing

This call focuses on new materials and production processes for additive manufacturing. R&D projects involving one of the following topics may receive funding:

  • Development of innovative metallic, ceramic, polymeric, and composite materials designed for use in additive manufacturing processes (e.g. tuning composition, structure, morphology, powder-processing parameters etc.), and
  • Development of advanced production systems to comply with improved or modified properties for manufactured products.

Projects should demonstrate the ability of new materials and processes to achieve finished components showing improved performance and reduced life cycle costs.

Scheme budget Companies can be subsidized up to a maximum of 50 percent of the eligible costs, SMEs may be eligible for a higher funding quota of up to 10 percent

Universities and research institutions can receive up to 100 percent of their eligible costs

Research projects at universities can receive an additional 20 percent lump sum amount
Type of incentive Non-repayable grant to a consortium comprising at least three partners from two EU member states, one of which must be Germany 
Deadline Submission of project outline (first application step): 13 June 2017

Contact your Germany representative

Isabel Antholz,
senior manager
+49 (0) 40 32080 4910

Teresa Stahl,
consultant
+49 (0) 89 29036 7109

Portugal

Incentives for internationalization of SMEs

SMEs undertaking projects to increase their capacity and presence in the global market can claim a cash grant of expenses related to the acquisition of knowledge of markets, international development and promotion, presence in international markets, and international marketing, amongst others.

Scheme budget EUR 70 million 
Type of incentive Non-repayable cash grant of up to 45 percent of eligible costs, with the exception of projects in the Lisbon region, where the maximum is 40 percent
Deadline 10 May 2017, (operational programs for the Lisbon and Alentejo regions) and 30 June 2017, (operational programs for the Norte, Centro, and Algarve regions)

Incentives for qualification of SMEs

SMEs undertaking projects to increase their productivity, flexibility, or response capacity in the global market can claim a cash grant of up to 45 percent of eligible expenses incurred on information and communication technologies, the digital economy, brands and designs, the development of new products or services, quality, knowledge transfers, eco-innovation, distribution, and logistics.

Scheme budget EUR 33 million 
Type of incentive Non-repayable cash grant of up to 45 percent of eligible costs, with the exception of projects in the Lisbon region, where the maximum is 40 percent
Deadline 10 May 2017, (operational programs for the Lisbon and Alentejo regions) and 30 June 2017, (operational programs for the Norte, Centro, and Algarve regions)

Business innovation and entrepreneurship

This program supports projects promoted by companies in all economic sectors, particularly those that aim at the production of tradable and exportable goods and services. The company must engage in activities that strengthen investments in innovative activities, and in the case of non-SMEs, also contribute to the globalization of Portugal’s economy and the creation of qualified employment (along with a spill-over effect on SMEs).

Scheme budget EUR 234.5 million (general call) and EUR 117 million (call for projects located in regions of low population density)
Type of incentive Non-interest-bearing refundable incentive with the possibility to waive the refund obligation up to 60 percent of the amount. The gross grant equivalent (i.e. the amount on which the refund obligation is waived) has a base support rate of 30 percent, but cannot exceed the maximum rates according to regional state aid maps for the period 2014–2020
Deadline 26 May 2017, (operational programs for the Lisbon and Alentejo regions) and 2 June 2017, (operational program for competitiveness and internationalization and operational programs for the Norte, Centro, and Algarve regions)

Business innovation and entrepreneurship: Contracting system of investment

This program supports special interest projects with a total eligible investment amount of at least EUR 25 million and projects of strategic interest to the members of the government responsible for regional and economic development, regardless of the total eligible investment.

Scheme budget EUR 115 million
Type of incentive Non-interest-bearing refundable incentive with the possibility of a waiver of the refund obligation, up to a percentage to be defined by Portuguese authorities

The base support rate is:

1) 35 percent for projects related to “setting up a new establishment”

2) 20 percent for projects related to “expanding an existing establishment”

3) 25 percent for projects related to “diversification of an existing establishment” and to “fundamental amendment to the production process”
Deadline 31 December 2017

Contact your Portugal 
representative

Sérgio Paulo Oliveira,
partner
+351210427527

Thailand

Targeted industry investment

An investment promotion scheme has been granted by the Thailand Board of Investment (BOI) for “targeted industries” (e.g. next-generation automotive, medical, and wellness tourism) in the Eastern Economic Corridor (EEC), comprising of three provinces (Chachengsao, Chonburi, and Rayong).

Scheme budget Minimum investment capital of THB 1 million (excluding the cost of land and working capital)
Type of incentive Projects in the EEC are eligible for an additional 50 percent corporate income tax reduction calculated on net profits for another five years once the full corporate income tax exemption period has expired
Deadline To be submitted to the BOI by 29 December 2017

Technology and innovation development

An investment promotion has been granted by the Thailand BOI for eligible activities relating to the development of technology and innovation and activities that support the development of targeted technologies.

Scheme budget Minimum investment capital of THB 1 million (excluding the cost of land and working capital)
Type of incentive 10-year corporate income tax exemption
Deadline N/A

National competitiveness enhancement act for targeted industries

Targeted industries are entitled to rights and benefits under the Competitiveness Enhancement Act. To qualify, activities must be in an industry that has never existed or been serviced in Thailand, or in an industry that uses high technology or enhanced knowledge to manufacture products with a view to promoting innovation.

Scheme budget To be determined
Type of incentive Corporate income tax exemption on net profits for up to 15 years

Deduction of annual losses incurred during the exemption period and up to five years following that period

Exclusion of dividends in computing corporate income tax for the tax exemption period
Deadline N/A

Contact your Thailand
representative

Anthony Visate Loh,
country partner
Tax and Legal
+66 (0) 2034 0112

Poljun Divari,
legal director
+66 (0) 2034 0000 Ext. 11231

United Kingdom

Collaborative R&D: Connected and autonomous vehicles test bed

Businesses and research institutions can apply for a share of up to GBP 55 million to create the world's most effective Connected and Autonomous Vehicle testing ecosystem. The Centre for Connected and Autonomous Vehicles is expecting to support up to four projects, investing up to GBP 7 million to GBP 18 million per project, depending on the competition stream. The competition will support projects in three streams as follows:

  • Stream One: One to two public test environments in an urban and/or highly dense city location.
  • Stream Two: A controlled test facility representative of an urban and/or city environment.
  • Stream Three: A realistic, controlled high-speed, limit-handling environment that will enable the creation of a diverse range of test scenarios (e.g. vehicle-to-everything interactions, collision avoidance, and limit handling). Projects submitted in this stream may include (but are not required to) a virtual environment that includes physical elements (e.g. simulators).

The competition scope requests that any test facility site be located within a defined area—existing proving grounds and public road test sites across the United Kingdom’s existing automotive and technology heartlands.

Preference will be given to projects that can deliver operational facilities and be open for business within 12 to 18 months.

Projects will be supported through investment aid for research infrastructure. This is a form of state aid and is limited to 50 percent of the investment costs.

Organizations must work with others, but consortia should contain no more than five partners. A business or research organization may lead the project.

Projects that vary from these expectations may be considered.

Scheme budget GBP 55 million
Type of incentive Cash grant
Deadline Registration: 12 July 2017
Application: 19 July 2017

Contact your United Kingdom representative

Alistair Davies,
director
+44 (0) 29 20264272

Nina Barton,
manager
+44 (0) 117 984 1120

United States (New York)

New York state life sciences research and development credit

The New York budget bill signed into law on 10 April 2017, creates a new life sciences R&D tax credit with USD 10 million of funding per year for qualified life sciences companies for years beginning 1 January 2018, and before 31 December 2027.

Taxpayers must be certified as an eligible life science company and be a “new business” as defined by New York state statutes. Eligible taxpayers may apply to the Empire State Development Corporation for the tax credit, which is equal to 15 percent of qualified research expenditure incurred in the state (20 percent if the company employs less than 10 persons). The maximum credit is USD 500,000 per taxpayer and is refundable in the event the taxpayer does not have tax to offset.

Scheme budget USD 10 million annually
Type of incentive Income tax credit
Deadline Credits allocated to taxpayers in order of application

New York youth jobs program tax credit and empire state apprenticeship tax credit programs

The budget amends NY Labor Law Sec. 25-a and allocates USD 40 million to the New York youth jobs program tax credit for each year from 2018 until 2022, with USD 20 million reserved for qualified employees and USD 20 million reserved for qualified individuals. The value of the credit depends on the duration of employment, with USD 2,500 and USD 5,000 being the maximum credit amount for part-time and full-time employees, respectively. The credit is refundable to the extent the taxpayer has a tax liability to offset.

The bill also adds NY Labor Law Sec. 25-c, which creates a new program called the Empire State Apprenticeship program to incentivize companies that employ disadvantaged youth in part-time and full-time positions. The credit amount ranges from USD 2,000–USD 7,000 per apprentice, per year, with higher credits allocated to apprentices with additional years of mentorship in the program. The credit is refundable to the extent the taxpayer has no tax liability to offset.

Scheme budget USD 40 million annually for the New York Youth Credit and up to USD 10 million annually for the apprenticeship credit
Type of incentive Income tax credit
Deadline Credits allocated to taxpayers in order of application

New York excelsior jobs program

The budget made the following amendments to the Excelsior Jobs Program (EJP):

  • Increases the value of the R&D credit from 3 percent of qualified research expenditure attributable to activities in New York to 6 percent,
  • Reduces certain minimum net job thresholds required to participate in the program (manufacturing: five jobs; financial service data center/financial service back office: 25 jobs; back office operations: 25 jobs; distribution centers: 50 jobs)
  • Amends regionally significant project provisions by lowering the jobs threshold and capital investment threshold, creates a new category of life sciences companies that create a minimum of five jobs to be eligible for the EJP,
  • The definition of a regionally significant project is also amended to include a life sciences company that creates 20 net new jobs in the state while making a significant capital investment in the state, and
  • Taxpayers under the program may take credits until the end of 2029.

In addition to the R&D component of the EJP program, the state can offer a jobs-based credit, an investment credit or a property tax-based credit. Credits are refundable to the extent a taxpayer does not have a tax liability to offset.

Scheme budget USD 183 million per year state FY 2018–2021, then declining
Type of incentive Credits and incentives program
Deadline Credits allocated to taxpayers in order of application

Contact your United States representative

Douglas Tyler,
managing director
+1 212 492 3696

John Kupcha,
senior Tax consultant
+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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