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Global investment and innovation incentives updates: September 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.

Belgium

Tax audits relating to a partial exemption of wage withholding tax (WHT) for researchers

The Belgian tax authorities have stepped up audits that aim to ensure the correct application of the partial withholding tax exemption for R&D researchers. Under this scheme, 80 percent of the withholding tax of eligible research employees is exempt from tax provided certain requirements are met. The authorities’ focus in such audits is mainly on the following:

  • The notification issued by the Science Policy Office (Belspo), including the notification date and the start/end dates of the projects and programs,
  • A clear technical description of the R&D activities that are carried out, and
  • The link between projects and the qualifying employees, more specifically the time spent by each employee on each project.

Audits of cases where the wage withholding exemption is applied are likely to continue to increase in both frequency and scope. Potentially affected employers should have detailed documentation of their R&D activities (and retain such documentation for at least two years) so they can provide contextual clarifications to the tax authorities and justify the application of the wage withholding exemption.

Scheme budget n/a
Type of incentive Belgian partial exemption of the WHT for R&D 
Deadline n/a


2019 government budgets for economy, science, and innovation

Belgium’s department of economy, science, and innovation publishes an annual report on the Flemish government budgets for the implementation of economic policy, as well as science and innovation policy. The overall budget for 2019 is EUR 3.904 billion.

Part of the overall budget is assigned to VLAIO (the Flemish agency for innovation and entrepreneurship). VLAIO is responsible for allocating resources to companies carrying out innovative R&D projects or investing in environmentally friendly technologies. A budget of EUR 213.8 million (EUR 35 million higher than the budget for 2018) is available to support R&D projects within companies, while a budget of EUR 20 million is allocated to stimulate ecological investments. VLAIO also supports business investments and training programs via the Strategic Transformation Support (STS). In 2018, 54 projects were approved for a total budget of EUR 38.8 million. In 2019, a budget of EUR 28 million is available to support companies via STS.

Scheme budget n/a
Type of incentive Belgian/Flemish funding and grants
Deadline n/a

Contact your Belgian representative

Renaud Hendricé,
partner
+32 2 600 67 21

Czech Republic

New call under environment operational program

The Czech Republic Ministry of the Environment has announced a call for waste processing under the Environment Operational Program that will support projects for the construction and modernization of facilities for the collection, sorting and treatment of waste, facilities for the energy-efficient use of waste, and related infrastructure and facilities for handling hazardous waste, including medical waste.

Eligible applicants include public and business entities. The maximum subsidy for a single project will be 85 percent of total qualifying costs.

Scheme budget CZK 500 million (EUR 19 million)
Type of incentive Cash grant
Deadline 3 February 2020


New calls under Business and Innovation for Operational Competitiveness Program

The Czech Republic Ministry of Industry and Trade intends to announce a series of calls focusing on R&D activities under the Business and Innovation for Operational Competitiveness Program.

The calls will be targeted at the following:

  • Application—Support for projects focusing on industrial research and experimental development,
  • Innovation—Support for projects used to purchase manufacturing technology to bring new or innovative products into production and subsequent launch on the market, and
  • Potential—Support for projects to establish or develop centers for industrial research, development, and innovation.

Contact your Czech Republic representative

Luděk Hanáček
partner
+420 606 654 304

European Union

The final round of EU funding calls under Horizon 2020 Work Programs

The final round of funding calls for the Horizon 2020 Work Programs were announced in July 2019, intending to provide further investments of around EUR 30 billion for research and innovation. The European Commission decided to focus on four main areas (about 25 percent of the budget):

  1. Building a low-carbon, climate resilient future (around EUR 3.7 billion),
  2. Connecting economic and environmental gains—the circular economy (around EUR 1,020 million),
  3. Digitizing and transforming European industry and services (around EUR 1.8 billion), and
  4. Boosting the effectiveness of the Security Union (around EUR 1.040 billion).
Scheme budget n/a
Type of incentive European funding and grants
Deadline n/a


Potential consequences of a hard Brexit on EU-funded projects

If the UK leaves the EU without a negotiation agreement (i.e. a hard Brexit), there likely will be consequences for EU-funded project(s) with UK partners (UK beneficiaries) for the following reasons:

  • UK beneficiaries no longer will be entitled to EU funding after the Brexit date, which may impede their ability to execute their tasks,
  • UK beneficiaries (and/or UK coordinators) no longer will be taken into account in determining whether a project meets the requirement to have at least three independent project partners in three different EU member states. If the number of project partners (or EU member states) falls below three, the entire project may become ineligible for funding, and
  • Even if an EU-funded project with UK partners proceeds following the Brexit date, difficulties may arise exchanging people, knowledge, and goods between the EU and the UK.

Affected parties should identify potential issues and come up with alternative solutions (e.g. additional funding, new partners) if needed.

Scheme budget n/a
Type of incentive European funding and grants
Energy incentives
R&D process management
Deadline n/a

Contact your European Union representative

Renaud Hendricé,
partner,
+32 2 600 67 21

Portugal

Incentives for agricultural product processing

Incentives are available in Portugal for projects promoted by domestic companies that carry out agricultural product processing activities, particularly those aimed at the production of tradable and exportable goods and the internationalization of the agricultural sector.

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

  • The project must contribute to the development of the production or added value of agricultural production,
  • The project must focus the conservation, preparation, processing, and marketing of agricultural products,
  • The total eligible costs must exceed EUR 200,000, but be less than EUR 4 million,
  • The project must not focus on the wine and olive oil sectors,
  • Investments in the fruit sector are limited to edible fruit and nut peeling and processing, and
  • Investments in the milk sector may not be limited to milk heating treatment.
Scheme budget EUR 5 million
Type of incentive Cash grant of up to 45 percent of qualifying costs (up to EUR 1 million), depending on the project location and scope, and if qualifying costs exceed EUR 1 million, the excess will be treated as an interest-free loan.
Deadline 15 October 2019


Incentives for energy-efficient projects

Incentives are available in Portugal for projects promoted by domestic companies engaged in activities aimed at increasing energy efficiency and/or at the use of renewable energy for self-consumption.

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

  • The project must not be related to obligations under concession agreements with the state,
  • An energy efficiency project must generate positive net benefits for the company,
  • The company’s economic activities must be eligible in the region where the investment is to be carried out (North, Central, Lisbon or Algarve regions), and
  • The company must be a small or medium-sized company if the project is carried out in the North region.
Scheme budget – EUR 10 million (for projects in the North region)

– EUR 5 million (for projects in the Central region)

– EUR 3.5 million (for projects in the Lisbon region)

– EUR 3 million (for projects in the Algarve region)
Type of incentive Interest-free loan for 70 percent of eligible costs, except for investments in the Lisbon region, where the maximum rate is 50 percent.

Up to 30 percent of the interest-free loan amount can be converted to a cash grant where the investment leads to a more than 10 percent reduction of the company’s energy consumption.

The cash grant is subject to the de minimis aid regulation (the cash grant conceded to each company is limited to an overall amount of EUR 200,000 over three years).
Deadline – 15 October 2019 (call for projects in the North region)

– 27 December 2019 (call for projects in the Central region)

– 6 November 2019 (final call for projects in the Lisbon region)

– 12 December 2019 (final call for projects in the Algarve region)

Contact your Portugal representative

Sérgio Oliveira,
partner,
+351 210 427 527

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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