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Global investment and innovation incentives updates: October 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 tax incentive scheme

On 6 October 2020, the Australian government finally backtracked on controversial proposed amendments to the flagship R&D tax incentive (RDTI) scheme that had been announced in 2018.

Revised amendments have been introduced into parliament that will commence as from 1 July 2021. The existing law will continue until the amendments take effect.

The revised RDTI scheme will provide a fixed 18.5 percent net tax benefit to refundable entities with aggregate turnover of less than AUD 20 million. Nonrefundable entities will be entitled to a basic premium of 8.5 percent, with a premium of 16.5 percent available for expenditure beyond a 2 percent intensity threshold. In addition, the expenditure cap of AUD 100 million, which was due to expire in 2024, has been increased to AUD 150 million on a permanent basis.

For further information, see the Deloitte tax@hand article: Government backtracks on R&D amendments

Eligible participants Companies
Scheme budget N/A
Type of incentive R&D tax credit, repayable and nonrepayable
Amount of incentive 18.5 percent of expenditure for refundable entities; 8.5percent and16.5 percent for nonrefundable entities  
Application deadline N/A
Funding agency AusIndustry
Sources https://www.ato.gov.au/General/New-legislation/In-detail/Direct-taxes/Income-tax-for-businesses/Better-targeting-the-Research-and-Development-Tax-Incentive

Contact your Australian representative

Greg Pratt,
partner
+61 7 3308 7215

Belgium

R&D tax credit and temporary increased investment deduction for small enterprises

On 15 July 2020, as part of a package of measures introduced in response to the COVID-19 pandemic, the Belgian government announced a temporary increase in the standard investment deduction to 25 percent (from 8 percent) for fixed assets acquired between 12 March 2020 and 31 December 2020 by sole entrepreneurs and small enterprises (resulting in a 6.25 percent net savings with the current Belgian corporate tax rate of 25 percent).

However, the Belgian tax credit for investments in R&D provides financial support for all companies that invest in new tangible and intangible R&D assets that are capitalized under Belgian GAAP and depreciated over at least three years. Applying the credit to the invested amount results in a net savings of between 3.4 percent and 5.1 percent of the investment made for tax year 2021 (taxable periods starting on or after 1 January 2020 and ending no earlier than 31 December 2020), reduced by 4 percent to 6 percent for tax year 2020, following the reduction in the corporate tax rate to 25 percent from 29 percent, depending on the preferred choice of application. The R&D tax credit is refundable if not utilized within five years, which may be valuable where, for example, the company is not profitable. It is important to evaluate which assets are eligible for capitalization and identify expenditure that may qualify as R&D, e.g., payroll expenses of employees that are directly charged to a R&D cost center and subcontracted R&D studies. When closing a financial year, companies may wish to review potential R&D assets to ensure the maximum available tax incentives are claimed.

Eligible participants Belgian companies, particularly small enterprises
Scheme budget N/A
Type of incentive Tax incentive
Amount of incentive Net saving of 3.4 percent to 5.1 percent for tax year 2020–21; 4 percent to 6 percent for tax year 2020)
Application deadline N/A
Funding agency Belgian government
Sources https://finances.belgium.be/fr/Actualites/declaration-isoc-inr-soc-modification-formulaire-275u

Contact your Belgian representative

Renaud Hendricé,
partner
+32 2 600 6721

Jan Pattyn,
partner
+32 2 600 68 55

Czech Republic

New call for proposals relating to grants for industrial research and experimental development

A new call for proposals for the “Application” program was announced on 1 September 2020. The program supports projects that aim to implement industrial research and experimental development activities leading to specific outputs in the form of, e.g., prototypes, industrial or utility models, proven technologies, or software.

Eligible participants Domestic entities of all sizes
Scheme budget CZK 3.7 billion (about EUR 137 million)
Type of incentive Cash grant
Amount of incentive From CZK 2 million to CZK 100 million (about EUR 74,000 to EUR 3.7 million) per project, covering up to 70 percent of eligible expenditure
Application deadline 15 December 2020
Funding agency Ministry of Industry and Trade of the Czech Republic
Source https://www.agentura-api.org/en/programy-podpory/aplikace/aplikace-vyzva-viii


New call for proposals relating to grants for innovative products, technologies, or services

A new call for proposals for the “Innovation” program was announced on 1 September 2020. The program aims to support projects introducing new or innovative products, technologies, or services into production and on the market. Supported activities include, e.g., product innovation activities, such as strengthening the technical and utility values of products, technologies, and services; and process innovation activities, such as increasing the efficiency of the production process or the provision of services.

Eligible participants Domestic entities of any size
Scheme budget CZK 1.5 billion (about EUR 55.5 million)
Type of incentive Cash grant
Amount of incentive From CZK 1 million to CZK 75 million per project (about EUR 37,000 to EUR 2.7 million), covering up to 45 percent of eligible expenditure for small entities, up to 35 percent of eligible expenditure for medium entities, and up to 25 percent of eligible expenditure for large entities
Application deadline 29 January 2021
Funding agency Ministry of Industry and Trade of the Czech Republic
Source https://www.agentura-api.org/en/programy-podpory/inovace/inovace-vyzva-viii-inovacni-projekt

 
New call for proposals relating to grants for building research and development centers

A new call for proposals for the “Potential” program was announced on 28 August 2020. The program supports projects that aim to build or expand industrial research, development, and innovation centers. The aid is provided for the purchase of land, buildings, machinery and equipment, and other facilities of a research and development center.

Eligible participants Domestic entities of any size
Scheme budget CZK 1.1 billion (about EUR 40.7 million)
Type of incentive Cash grant
Amount of incentive From CZK 2 million to CZK 50 million (about EUR 74,000 to EUR 1.8 million) per project, covering up to 50 percent of eligible expenditure
Application deadline 23 November 2020
Funding agency Ministry of Industry and Trade of the Czech Republic
Source https://www.agentura-api.org/en/programy-podpory/potencial/potencial-vyzva-vii

Contact your Czech Republic representative

Luděk Hanáček,
partner
+420 606 65 4304

Antonín Weber,
director
+420 73 316 1519

Lucie Tížková,
senior consultant
+420 73 184 7774

Europe

EU COVID-19 recovery plan: funding for member states

To address the economic consequences of the COVID-19 pandemic, the European Commission on 27 May 2020 proposed an ambitious EU recovery plan, with the “Recovery and Resilience Facility” at its core. The plan is supported by a new temporary financing instrument, “Next Generation EU,” which is embedded in the EU budget.

On 21 July 2020, EU leaders reached agreement on the long-term budget for 2021–27, including a budget of EUR 672.5 billion (EUR 312.5 billion for grants and EUR 360 billion for loans) for the EU Recovery and Resilience Facility. The key objectives of the plan are to mitigate the immediate economic and social effects of the crisis, boost the single market, and foster economic recovery that invests in the priorities set by the EU toward a green and digital transition and economic resilience.

Belgium can benefit from toward EUR 5 billion in grants and may supplement this with loans. The Recovery and Resilience Facility offers the opportunity to accelerate the implementation of recommendations made by the European Semester, with which Belgium has to date made limited progress.

To determine how grants will be allocated in Belgium, an analysis of the National Recovery and Resilience Plan is required. The September Declaration of the Flemish Government forms the basis for the plan at Flemish level. The relaunch plan (Vlaamse Veerkracht) is based on seven pillars, including the digital transformation of Flanders and the transition to a more sustainable economy. In Wallonia, a similar initiative (Get Up Wallonia) was launched, and a task force was created to enable stronger economic, social, environmental, and territorial development. These initiatives, together with the federal Government Agreement, will provide the foundation for the National Recovery and Resilience Plan that Belgium must be submitted to the European Commission by 30 April 2021.

For more detailed commentary, see the Deloitte Belgium Gi3 alert: EU Recovery Plan: funds to help member state post-pandemic economic recovery

Eligible participants EU member states
Scheme budget EUR 672.5 billion
Type of incentive Nonrepayable grants and repayable loans
Amount of incentive Not yet defined
Application deadline N/A
Funding agency European Commission
Sources https://www.consilium.europa.eu/en/infographics/recovery-plan-mff-2021-2027

https://www.vlaamsparlement.be/plenaire-vergaderingen/1423095/verslag/1424411

https://spw.wallonie.be/get-wallonia

 
European Green Deal call published

The European Green Deal, published by the European Commission on 11 December 2019, has as its main priority fighting climate change and making Europe climate-neutral by 2050. The Commission is therefore supporting Green Deal–related research and innovation with a dedicated funding call of EUR 1 billion under the Horizon 2020 Framework Program. The European Green Deal call for funding proposals was published on 18 September 2020. Project proposals may be submitted until 26 January 2021 for projects expected to begin during autumn 2021.

The European Commission has published 10 call areas:

  1. Increasing climate ambition: cross-sectoral challenges;
  2. Clean, affordable, and secure energy;
  3. Industry for a clean and circular economy;
  4. Energy and resource-efficient buildings;
  5. Sustainable and smart mobility;
  6. Farm-to-fork;
  7. Restoring biodiversity and ecosystem services;
  8. Zero-pollution, toxic-free environment;
  9. Strengthening our knowledge in support of the European Green Deal; and
  10. Empowering citizens for transition toward a climate-neutral, sustainable Europe.

Underlying topics include, among others:

  • Demonstration of critical technologies to enable large-scale offshore renewable energy production;
  • Development and demonstration of a 100 MW electrolyzer;
  • Closing the industrial carbon cycle, e.g., by using CO2 to produce synthetic fuels;
  • Building and renovating in an energy and resource-efficient manner;
  • Green airports and ports as hubs for sustainable and smart mobility; and
  • Testing and demonstration of systemic innovations for sustainable food from farm to fork.

For each topic, a more detailed description is available in the EU funding and tenders portal.

Since the Green Deal will significantly affect many other EU funding instruments, including the existing LIFE instrument and the new European Innovation Fund, companies may wish to review their sustainability strategy to align with the Green Deal call.

Eligible participants Commercial and not-for-profit EU organizations
Scheme budget N/A
Type of incentive Nonrepayable cash grant
Amount of incentive Up to 100 percent of project cost
Application deadline 26 January 2021
Funding agency European Commission
Sources https://ec.europa.eu/info/sites/info/files/european-green-deal-communication_en.pdf

https://ec.europa.eu/info/funding-tenders/opportunities/portal/screen/home

Contact your European representative

Renaud Hendricé,
partner
+32 2 600 6721

Jan Pattyn,
partner
+32 2 600 68 55

Germany

Call for proposals published relating to grants for “German Games Fund”

A call for proposals published on 28 September 2020 aims to boost the international competitiveness of Germany as a development site for computer games. Funding is provided for the development of prototypes and the production of digital interactive games. The program also covers distinctive extensions of existing games, as well as the porting of existing games to a new platform with substantial enhancements or major technical adjustments.

Key conditions to be met include achieving the minimum criteria under the “culture test,” obtaining an age rating in accordance with the German Youth Protection Act no later than three months after the end of the project, and publishing the game in the German language (the game also may be published in additional languages).

Content that violates any applicable law is excluded from funding.

Eligible participants Commercial enterprises established in Germany
Scheme budget N/A
Type of incentive Nonrepayable cash grant
Amount of incentive ● Costs for prototyping may be reimbursed at a rate of up to 50 percent of eligible costs (capped at EUR 200,000)

● Costs for production may be reimbursed at a rate ranging between 50 percent and 25 percent of eligible costs
Application deadline 31 December 2021
Funding agency Federal Ministry of Transport and Digital Infrastructure (BMVI) 
Sources www.bmvi.de


Second call for proposals published relating to grants for the “6th Civil Aviation Research Program”

The second call for proposals, published on 28 September 2020, aims to expand environmentally friendly aviation, new mobility for the future, diversification of the supplier industry, and intensified European integration. Funding is provided for individual and collaborative aviation-related R&D projects in six fields of activity:

  1. Disruptive technologies and systems (eco-efficient flying);
  2. Strengthening small and medium-sized enterprises (SMEs);
  3. Basic technologies;
  4. Digitization, “factory of the future”, and artificial intelligence;
  5. Hydrogen technologies and (hybrid) electric flying (zero-emission aircraft); and
  6. Technological demonstration.
Eligible participants ● Field 1: Research institutions and universities

● Field 2: Small and medium-sized commercial enterprises, research institutions, and universities

Fields 3–6: Commercial enterprises of all sizes, research institutions, and universities

All companies and institutions must be established in the European Economic Area (EEA) or Switzerland
Scheme budget N/A
Type of incentive Nonrepayable cash grant
Amount of incentive ● Up to 50 percent of eligible costs for commercial enterprises (SMEs may qualify for an additional bonus)

● Up to 100 percent of eligible costs for universities and research institutions

Research field 2, “SMEs,” is capped at EUR 750,000 per participating SME and EUR 1.2 million per participating research institution
Application deadline 8 January 2021
Funding agency Federal Ministry of Economics and Energy (BMWi)
Sources https://www.dlr.de/pt-lf/PortalData/50/Resources/dokumente/lufo-vi/lufo_vi-2_skizzenphase/LuFo_VI-2_Bekanntmachung.pdf

Contact your German representative

Dr. Sebastian Lange,
service line leader
+49 151 182 93720

Lukas Lechner,
manager
+ 49 151 580 75882

Portugal

Incentives for productive innovation projects in interior territories

Incentives are available for individual productive innovation projects developed by companies in interior territories that target one or more of the following objectives:

  • The setting up of a new productive establishment;
  • An increase in the capacity of an existing productive establishment;
  • Production diversification (aiming specifically at new products); or
  • The transformation or conversion of the entire productive process of an existing productive establishment.

The application deadline has been extended to 31 December 2020.

Eligible participants SMEs and large companies with establishments in low-density territories 
Scheme budget EUR 109.7 million
Type of incentive Nonrepayable cash grant and repayable interest-free loan
Amount of incentive Funding rates range from 15 percent to 75 percent, split 50 percent into a cash grant and 50 percent into an interest-free loan. Investments in the Algarve region are limited to a maximum funding rate of 60 percent
Application deadline 31 December 2020
Funding agency Portugal 2020
Sources www.portugal2020.pt

 
Measure Internships ATIVAR.PT

Portugal 2020 has launched a call under the measure Internships ATIVAR.PT, which supports professional internships lasting a maximum of nine months and is aimed at the integration of young people into the labor market and the professional conversion of the unemployed.

Eligible participants Individuals and companies (for-profit or nonprofit entities)
Scheme budget EUR 75 million
Type of incentive Nonrepayable cash grant
Amount of incentive Funding rates range from 65 percent to 95 percent of eligible costs incurred by interns and companies
Application deadline 18 December 2020
Funding agency Portugal 2020 - IEFP
Sources (in Portuguese) https://www.iefp.pt/estagios

Contact your Portuguese representative

Sérgio Oliveira,
partner
+351 210 427 527

Susana Enes,
partner
+351 225 439 227

United Kingdom

New Kickstart Scheme to create new jobs for 16-to-24-year-olds

The Kickstart Scheme was announced by the UK Chancellor of the Exchequer, Rishi Sunak, in July 2020 and opened for registration on 2 September 2020. It is designed to offer financial support to employers to take on 16-to-24-year-olds to fill new jobs and is available to young people who are currently receiving Universal Credit and are at risk of long-term unemployment. The scheme offers six-month job placements intended to help participants develop the skills and experience they need to find work after completing the scheme.

Eligible participants Any organization, regardless of size, can apply for funding
Scheme budget GBP 2 billion
Type of incentive Cash grant
Amount of incentive Funding is available for 100 percent of the relevant national minimum wage for 25 hours per week, plus associated employer national insurance contributions and employer minimum automatic enrolment contributions. A further GBP 1,500 per job placement is available for setup costs, support, and training
Application deadline N/A
Funding agency Department for Work and Pensions
Sources https://www.gov.uk/guidance/apply-for-a-grant-through-the-kickstart-scheme?utm_source=314dc6b8-bce9-4ae6-9637-47915bcd5b1b&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate

 
Faraday Battery Challenge: Innovation R&D

The launch of the Faraday Battery Challenge was announced on 28 September 2020. The aim of the competition is to provide funding to support the research and development of the most promising innovative battery technologies for the propulsion of electric vehicles, building on the outputs of previous activity to accelerate towards commercialization. The competition encourages two types of project:

  • New projects building on the outputs and outcomes of previously funded Innovate UK projects or activities; and
  • New projects building on internal activity within the organization.

A project must clearly demonstrate a significant value-add and exploitation from a preceding feasibility study, collaborative research and development project, or previous non-grant-funded activity.

Eligible participants To lead a project, an organization must:

● Be a UK registered business of any size;

● Collaborate with other United Kingdom registered businesses, research and technology organizations, public sector organizations, or charities;

● Carry out its project work in the United Kingdom; and

● Intend to exploit the results from or in the United Kingdom.
Scheme budget GBP 10 million
Type of incentive Cash grant
Amount of incentive The project’s total eligible costs must be between GBP 300,000 and GBP 1.5 million
Application deadline 9 December 2020, 11:00 a.m. GMT
Funding agency Innovate UK
Sources https://apply-for-innovation-funding.service.gov.uk/competition/725/overview

Contact your United Kingdom representative

Alistair Davies,
director
+44 (0)2920 264272

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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