On 17 April 2019, the Ministry of Finance published a bill with a new tax incentive for research and development. Accordingly, all companies, regardless of their size, are entitled to the incentive of a maximum of € 500,000 per company and year from 2020.
The tax incentive would be introduced as a separate tax law in addition to the income tax and corporation tax law to achieve a better overview of the scheme, a clear distinction from other tax regulations, and easier handling for eligible companies. According to the draft law, all unlimited and limited taxpayers within the meaning of the Income Tax Act and the Corporation Tax Act are entitled to the incentive.
According to the finance ministry, small and medium-sized enterprises would benefit disproportionately from this because a larger share of their research expenditure would be covered by the allowance. The credits could also benefit companies that pay little or no taxes, such as start-ups.
The tax allowance would be paid out for the first time in 2021 because the credit cannot be claimed until after the end of the business year. The costs are estimated in the draft for the years 2021 to 2024 with between 1.145 billion euros and 1.34 billion euros annually. The measure is subject to a state aid approval by the EU Commission and will be reevaluated after four years.
The legislative process is expected to be complete sometime in 2019.
