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Global investment and innovation incentives updates: September 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.

Canada

Quebec patent box regime—Incentive for domestic R&D commercialization

Quebec has introduced a tax relief initiative for qualifying innovative Québec manufacturing corporations. The Innovative Companies Deduction (ICD), commonly referred to as the patent box, provides tax relief to manufacturing firms for patent-attributable revenue from products marketed from Québec that include a feature protected by patent and developed in Québec. The measure is designed to promote Québec commercialization and aims to ensure that patented innovations developed in Québec also will be marketed from Québec.

Scheme budget Effective 1 January 2017, qualifying innovative manufacturing corporations with establishments in Quebec are eligible for a lower effective tax rate up to 50 percent of the net income derived from the sale or rental of qualified products integrating patented inventions developed in the province.

At least part of the underlying R&D of the patent must have been carried out in Quebec. In addition, the corporation must have invested at least CAD 500,000 in eligible R&D expenditure (in the five years before the patent application) that gave rise to refundable Quebec R&D tax credits.

The effective provincial tax rate for the qualifying portion of net income will be reduced from 11.8 percent to 4 percent for 2017.

The budget report estimates that the ICD is expected to provide CAD 135 million in tax breaks over the next five years to innovative companies.
Type of incentive Tax rate reduction
Deadline Aligned with corporate income tax return

Contact your Canada representative

Martin Vézina,
partner Gi3
+1 514 393 7139

Czech Republic

Application programme—Call IV

The Ministry of Industry and Trade has announced Call IV of the application programme. The programme supports business entities and organizations engaged in industrial research or experimental development, focusing on operational support for research activities (staff costs, overhead, material consumption, travel costs, etc.), resulting in a specific deliverable (e.g. a prototype, utility model, or proven technology). The support amounts to a maximum of 70 percent of eligible costs based on the type of activity and the size of the entity. The subsidy per project can range from CZK 1 million to CZK 50 million.

Scheme budget EUR 61.3 million
Type of incentive Cash grant
Deadline 30 November 2017

Innovation programme—Call IV

The innovation programme provides small, medium-sized, and large entities a subsidy for investment in the introduction of new products and technologies into production. For example, support is given to projects where the R&D for a new product, service, or production process has been finalized and all that remains to be done for it to be put into practice is to acquire the necessary technology (machinery, equipment, etc.). An eligible project may obtain a subsidy of up to 45 percent (small businesses), 35 percent (medium-sized businesses), and 25 percent (large enterprises) of eligible costs. The subsidy can range from CZK 1 to CZK 50 million.

Scheme budget EUR 115 million
Type of incentive Cash grant
Deadline 12 November 2017

Potential programme—Call IV

The potential programme provides support for the development or extension of industrial research, development, and innovation centers. Eligible costs include acquisition costs of development machinery and equipment, hardware, software, and reconstruction of premises. The maximum support per project is CZK 50 million. Only small and medium-sized entities (SMEs) may apply for the ongoing call, with support amounting to 50 percent of eligible costs

Scheme budget EUR 57.5 million
Type of incentive Cash grant
Deadline 30 November 2017

Contact your Czech Republic representative

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

Germany

Funding program “Technology initiative bio-refineries”

Bio-refineries can contribute substantially to the building of a sustainable bio-economy as they are characterized by an integrated concept, using biological resources as a source of raw materials for the sustainable production of diverse intermediates and products (e.g. chemicals, materials, bio-energy).

The goal of the current call is to support research, development, and innovation activities for different conversion steps of the bio-refinery value chain—the processing of raw materials, procedures, and processes of primary and secondary refining, and production of target molecules for further industrial use.

Scheme budget Funding is disbursed to universities, research institutions, and companies (eligible parties) incorporated or active in Germany

Funding for companies can be up to 25 percent of eligible project costs

Universities and research institutions can be subsidized up to 100 percent of the project-related expenditure
Type of incentive Non-repayable cash grant
Deadline Submission of a project outline: 23 October 2017 (first application step)

Funding program “Construction 4.0”

This funding program aims at supporting applied research in the field of construction and building sciences. Funding topics cover a broad spectrum:

  • Low-cost housing
  • Energy-efficient, resource-efficient, and climate-friendly buildings and districts
  • Innovation for existing housing/restructuring measures
  • Building quality, resource efficiency, circular economy, and sustainable construction
  • Demographic change
  • New materials and techniques
  • Improvement of construction and planning processes
  • Added value of urban space, architecture, and design qualities
  • Future perspectives for the planning and construction industry
Scheme budget Funding is disbursed to universities, research institutions, and companies (eligible parties) incorporated or active in Germany

Funding can be up to 70 percent of eligible project costs
Type of incentive Non-repayable cash grant
Deadline Submission of a project outline: 30 November 2017 (first application step)

Funding program “Utilizing power efficiency—Step up!”

This funding program supports various power efficiency investment measures, ranging from renewal investments, early replacement investments to additional investments. The current call supports investment measures in all sectors and through various technologies. Funding is disbursed separately for power efficiency investment measures in drying and cleaning processes. The key criterion for funding decisions is incurring the least possible investment cost in relation to achieved power savings.

Scheme budget Funding is disbursed to companies (private and municipal) incorporated or active in Germany (eligible parties)

Funding can be up to 30 percent of eligible project costs

Max. funding for investments in drying and cleaning processes: EUR 15,000–EUR 1.5 million for individual projects

Maximum funding for other sectors: EUR 20,000–EUR 250,000 for small projects, EUR 250,000–EUR 1.5 million for large-scale projects, and EUR 100,000–EUR 1 million for composite projects
Type of incentive Non-repayable investment cash grant
Deadline Submission of project application and calculation of power savings until 30 November 2017 (one-step application process)

Contact your Germany representative

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

Italy

Further extension of the super depreciation tax scheme

The 150 percent super depreciation tax scheme related to the Government's Industry Plan 4.0 has been further extended to include qualifying tangible assets purchased before 30 September 2018 (instead of 31 July 2018). Starting from 1 January 2018, the relevant purchase orders must be accepted by the seller, and at least 20 percent of the purchase price must be actually paid by 31 December 2017.

Scheme budget N/A
Type of incentive Super depreciation
Deadline 30 September 2018

Contact your Italy representative

Ranieri Villa,
Tax partner
+34 8 875 7224

Poland

Submeasure 1.1.1 of operational program smart growth—Call for proposals for large entrepreneurs: Fast track

Large enterprises and SMEs planning to commence R&D leading to commercialization will be able to apply for funds distributed under the “fast track” programme. The outcome of the project must be novel in Poland in relation to the current state of the art and must involve process or product innovation.

Scheme budget Budget: EUR 82.5 million for large enterprises, EUR 235.5 million for SMEs

Eligible costs range from EUR 250,000–EUR 50 million, depending on the size of the enterprise

Eligible costs: Remuneration, costs of outsourcing (up to 60 percent); R&D infrastructure and equipment (depreciation and leasing), intangible assets, land and buildings, and implementation costs (up to 20 percent); and other operating costs, indirect costs (up to 25 percent)

Support level:
Industrial research: 50 percent–70 percent (65 percent–80 percent*)

Development: 25 percent–45 percent (40 percent–60 percent*)

* Higher percentages apply if there is broad dissemination of R&D results
Type of incentive Cash grant
Deadline 2 October–29 December 2017

Submeasure 3.2.1 of the operational program smart growth—Research for the market

SMEs that implement new solutions, products, or services developed by themselves or that are purchased on the market will have an opportunity to obtain financial support. The main objective of the program is to stimulate enterprise innovation and translate it into a real product (product or service) on the market.

Scheme budget Budget: EUR 176.5 million

Eligible costs: Remuneration, intangible assets, land and buildings, tangible assets, outsourcing, other operating costs, and advisory services

Support level:
Development: 35 percent for medium-sized enterprises, 45 percent for small/micro enterprises

Regional investment aid, according to the regional aid map—15 percent–70 percent

Advisory services—up to 50 percent of eligible costs
Type of incentive Cash grant
Deadline 5 September 2017–28 February 2018

Submeasure 1.2 of the operational program smart growth—PBSE

Enterprises and consortia consisting of enterprises can apply for grants for carrying out R&D in the second phase of the sectoral PBSE programme (Measure 1.2 OP smart growth). The research results must improve the competitiveness of the Polish power sector. It also is possible to obtain financing for pre-implementation work.

Scheme budget Budget: EUR 28.2 million

Eligible costs range from EUR 470,000–EUR 9.4 million

Eligible costs: Remuneration, costs of outsourcing (up to 60 percent); and R&D infrastructure and equipment (depreciation and leasing), intangible assets, land and buildings, other operational costs, and indirect costs (up to 25 percent of direct costs, excluding costs of outsourcing)

Support level:
Industrial research: 50 percent (65 percent*) for large enterprises, 60 percent (75 percent*) for medium-sized enterprises, and 70 percent (80 percent*) for small/micro enterprises

Development: 25 percent (40 percent*) for large enterprises, 35 percent (50 percent*) for medium-sized enterprises, and 45 percent (60 percent*) for small/micro enterprises

*Higher percentages apply if there is broad dissemination of R&D results
Type of incentive Cash grant
Deadline 2 October–1 December 2017

Submeasure 1.2 of the operational program smart growth—InnoStal

Enterprises and consortia consisting of enterprises can apply for grants for carrying out R&D in the second phase of the sectoral INNOSTAL programme (Measure 1.2 OP smart growth). The research results must improve the competitiveness of the Polish steel sector. In this phase, it also is possible to obtain financing for pre-implementation work and for a higher level of indirect costs.

Scheme budget Budget: EUR 22.3 million

Eligible costs range from EUR 470,000–EUR 7 million

Eligible costs: Remuneration, costs of outsourcing (up to 70 percent); and R&D infrastructure and equipment (depreciation and lease), intangible assets, land and buildings, other operational costs and indirect costs (up to 25 percent of direct costs, excluding costs of outsourcing)

Support level:
Industrial research: 50 percent (65 percent*) for large enterprises, 60 percent (75 percent*) for medium-sized enterprises, and 70 percent (80 percent*) for small/micro enterprises

Development: 25 percent (40 percent*) for large enterprises, 35 percent (50 percent*) for medium-sized enterprises, and 45 percent (60 percent*) for small/micro enterprises

*Higher percentages apply if there is broad dissemination of R&D results
Type of incentive Cash grant
Deadline 9 October–8 December 2017

Submeasure 2.1 of the operational program smart growth—Support for investment in R&D infrastructure

Companies carrying out R&D projects will have an opportunity to apply for support for investment costs associated with the establishment or development of R&D centers (i.e. equipment purchase or construction works), as well as development works (i.e. remuneration, depreciation, and subcontracting).

Scheme budget Budget: EUR 35 million

Eligible costs range from EUR 500,000–EUR 50 million

Eligible costs: R&D equipment—tangible assets acquisition or purchase, construction works and materials, intangible assets (patents, licenses), buildings, real estate installment lease payment/purchase of real estate, costs of technical knowledge and consultancy, materials, and products used for R&D activities

Support level:
Regional investment aid, according to the regional aid map—15 percent–70 percent

Development: Up to 45 percent

De minimis aid—Up to EUR 200,000 over a rolling three-year period (25 percent–45 percent for materials and products directly related to project implementation)
Type of incentive
Cash grant
Deadline 20 November 2017–19 January 2018

Contact your Poland representative

Dominika Orzołek
senior manager
+48 881 950 969

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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