Worldwide R&D Incentives Reference Guide
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Worldwide R&D Incentives Reference Guide 2020 Preface R&D incentives boom in 2020 and beyond Tax competition — driven by governments vying to attract and sustain economic activity in their jurisdiction — drove much global tax change in 2019 and is expected to generate even more in 2020. As countries formulate plans to reinvigorate their economies in the wake of COVID-19, we expect many to implement new, expanded or specially focused research and development (R&D) incentive programs. As you review particular jurisdictions, please note many of these programs will have been introduced after the data collection deadlines for this Guide. Therefore, not only do we strongly recommend you review EYs Global COVID-19 Response Tracker for the very latest program launches and changes, but we also recommend you speak to your EY Tax representatives for up-to-date information. According to EY’s annual Global outlook for tax policy, 2019 was another relative boom year for R&D incentives with over a third of responding jurisdictions making their R&D incentives more favorable. This trend could be explained by the fact that countries found themselves constrained by the Organisation for Economic Co-operation and Development’s base erosion and profit shifting (BEPS) recommendations, but at the same time, wanting to maintain or improve their competitive position. Similarly, a third of reporting jurisdictions are also incentivizing wider business investment via improved capital and other incentives and allowances, depreciation and amortization. Even better, 11 jurisdictions (Finland, Germany, Indonesia, Japan, Korea, Malaysia, New Zealand, Poland, Slovakia, Switzerland and the United Kingdom) are reducing the tax burden on companies by both creating or improving R&D incentives and other business incentives simultaneously. None of the responding jurisdictions reported new or significantly changed innovation, patent or knowledge “boxes.” Patent and innovation boxes While the deployment of new patent or innovation “boxes” was quiet in 2019 when compared to a few years ago, this could change in 2020. An OECD initiative to tax the digitalization of the economy – often referred to as BEPS 2.0 as its effects extend far past digital businesses – includes the imposition of a global minimum tax measure. Despite the global economic disruption caused by COVID-19, or perhaps even spurred by it, the OECD is continuing this work and may reach an agreement by the end of 2020. Such a measure would mean a significant narrowing of the sovereignty of countries, potentially affecting their ability to decide on their overall tax mix and incentivize behavior using tax measures. This potentially includes patent and innovation boxes that have already been deemed as acceptable after many years of BEPS debate. This is an important issue to not only monitor, but to be actively involved in throughout 2020. The facts at your fingertips The Worldwide R&D Incentives Reference Guide offers taxpayers the information necessary to identify and leverage opportunities to benefit from available incentives, especially relevant if they are contemplating new or expanded investments in R&D. 2 Worldwide R&D Incentives Reference Guide 2020 The content of our guide remains structured in a straightforward manner, consistent with prior years, and chapter by chapter we summarize the key R&D incentives in 48 jurisdictions. Each chapter begins with contact information for key EY R&D incentive professionals, before laying out a short overview of that country’s approach to incentivizing R&D activity and providing a checklist showing which types of incentives are available. Where an incentive is most commonly referred to in local language, we have provided a translation. In many cases, our professionals indicate which incentive they believe provides the highest level of value to applicants. For each incentive, we list the following information: • A description of the benefits delivered • Guidelines around incentive applications • Eligibility requirements • Intellectual property and jurisdictional requirements • Role of governmental bodies in administering the incentive • Administrative requirements • Any statutory references The Worldwide R&D Incentives Reference Guide is published alongside three companion guides on broad-based taxes: the Worldwide Corporate Tax Guide, the Worldwide Personal Tax and Immigration Guide and the Worldwide VAT, GST and Sales Tax Guide. In recent years, those three guides have been joined by additional tax guides on more specialized topics, including the Worldwide Estate and Inheritance Tax Guide, the Worldwide Transfer Pricing Reference Guide, the Global Oil and Gas Tax Guide, the Worldwide Digital Tax Guide and the Worldwide Capital and Fixed Assets Guide. Each guide represents thousands of hours of tax research. The entire suite is available without charge online, along with timely Global Tax Alerts and other insightful publications on ey.com or in our EY Global Tax Guides app for iOS devices. You can also keep up with the latest updates to all guides at ey.com/globaltaxguides while ey.com/taxalerts provides access to daily EY Global Tax Alerts from around the world. 3 Worldwide R&D Incentives Reference Guide 2020 Preface .........................................................2 Argentina ......................................................9 Australia .....................................................15 Austria ........................................................19 Belgium ......................................................25 Brazil ..........................................................39 Contents Canada .......................................................45 Chile ...........................................................51 China Mainland ............................................59 Colombia .....................................................69 Curaçao ......................................................75 Czech Republic ............................................83 Denmark .....................................................91 France .........................................................95 Germany ...................................................103 Hong Kong ................................................111 Hungary ....................................................115 India .........................................................123 Indonesia ..................................................133 Ireland ......................................................139 South Africa ..............................................303 Israel.........................................................149 South Korea ..............................................311 Italy ..........................................................167 Spain ........................................................317 Japan .......................................................179 Sweden .....................................................325 Lithuania ...................................................185 Switzerland ...............................................331 Luxembourg ..............................................191 Thailand ....................................................339 Malaysia ....................................................209 Turkey .......................................................345 Mexico ......................................................221 United Kingdom .........................................355 Netherlands ..............................................225 United States .............................................361 New Zealand .............................................233 Vietnam ....................................................367 Norway .....................................................239 EU’s Horizon 2020 and Horizon Europe program ..........................377 Philippines ................................................243 R&D incentives summary matrix — Poland ......................................................249 Americas .................................................382 Portugal ....................................................259 R&D incentives summary matrix — Romania ...................................................269 Asia-Pacific (APAC) ..................................390 Russia .......................................................275 R&D incentives summary matrix — Europe, Middle East, India and Singapore .................................................281 Africa (EMEIA) .........................................404 Slovak Republic .........................................287 Contacts ...................................................466 Slovenia ....................................................295 5 Worldwide R&D Incentives Reference Guide 2020 Summary of available R&D incentives Jurisdiction Accelerated on R&D depreciation assets grants Cash government Expedited process approval Financial support withholding tax Income incentives Infrastructure/land price preferential Loans Patent-related incentives security social Reduced contributions rates/ tax Reduced rates tax preferable allowance Tax credits Tax deduction Tax (including super deduction) exemptions Tax holiday Tax reimbursement VAT Other Argentina Australia Reduced income tax for highly qualified Austria scientists moving to Austria from abroad Belgium Brazil Canada Chile China Mainland Colombia Tax discount Curaçao Czech Republic Denmark France Germany