EC Proposes Massive Tax Deductions for R&D

October 28, 2016 Taxation in EU

R&D Tax BreaksBRUSSELS – Newly proposed rules in the EU will see companies get tax breaks worth twice their R&D spending.

The European Commission has recently put forward a new proposal which would see significant tax deductions being granted to businesses involved in research and development activities in the EU.

Under the proposed new rules, any business with turnovers of over EUR 750 million, which is also a tax resident in the EU, would be eligible for a tax deduction on the full cost of their R&D spending.

Further, an extra 50 percent deduction will be made available for R&D expenses of up to EUR 20 million, with a further 25 percent on spending if spending exceeds EUR 20 million.

If a business which is a tax resident in the EU does not meet the size requirements, but opts to be part of the R&D deduction system, they will be eligible to enjoy a deduction of up to 200 percent in total.

Additional tax changes have also been proposed to equalise the tax deductions available between funding raised through debt and equity, in an effort to encourage businesses to raise capital through markets instead of debts.