Global Tax and Legal | January 2016

Grants & Incentives program updatesThe latest legislative developments from around the world

This update provides a summary of the latest developments affecting Grants & Incentives and Research & Development programs. For more information, please contact the local partner of the respective program directly.

Brazil

Germany

Israel

Poland

United Kingdom

United States

For more information

Countries included

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R&D incentives provide a direct corporate income tax benefit for taxpayers that are engaged in technologically innovative activities. The base level of the benefit is an additional deduction of 60% of qualifying R&D expenditure, which can be increased up to 80% if the company increases the number of researchers dedicated exclusively to R&D projects.

Provisional Measure 694/2015, published on 30 September 2015, originally proposed the suspension of R&D incentives (which were established by Law 11,196/2005) for calendar year 2016. However, the new measure was not converted into law during calendar year 2015, so the suspension now will not come into effect until 1 January 2017, and then only if PM 694/2015 is converted into law by 8 March 2016.

Scheme budget Tax incentive

Type of incentive R&D

Deadline N/A

Contact name Flavia Crosara: Partner

Email flaviacrosara@deloitte.com

Tel no. +55 19 3707 3124

BrazilR&D expenses super deduction

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This R&D scheme targets the development of robust photonics system solutions for medical applications and biotechnology: • Photonic procedures for application in biotechnology and for medical prediction, prevention, diagnosis and

therapy (e.g. functional imaging processes, intelligent bio-photonics for data mining on a real-time basis)• Photonic procedures for medical boundary surfaces (e.g. sterilization and decontamination of

boundary surfaces)The program aims, in particular, at photonics system solutions allowing for a rapid application in practice (e.g. patient-oriented diagnostics/“in-vitro diagnostics”)

Scheme budget

• No overall budget published• For companies, grants of up to 50% of eligible costs can be awarded,

provided there is an own contribution of at least 50%; the funding ratio forSMEs may be higher

• For universities and research institutions, grants of up to 100% of eligiblecosts can be awarded

• Funding period of up to three years

Type of incentive Non-repayable cash grant to a consortium

Deadline Submission of project outline: 31 March 2016

Contact name Isabel Antholz: Senior Manager or Teresa Stahl: Consultant

Email iantholz@deloitte.de or tstahl@deloitte.de

Tel no. +49 (0) 40 32080 4910 or +49 (0) 15 15800 3303

Germany–medicine, biotechnology, measurement technology, sensorsPhotonics system solutions for medicine and biotechnology

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Scheme budget

• No overall budget published• For companies, grants of up to 50% of eligible costs can be awarded,

provided there is an own contribution of at least 50%; the funding ratio forSMEs may be higher

• For universities and research institutions, grants of up to 100% of eligiblecosts can be awarded

• Funding period of up to three years

Type of incentive Non-repayable cash grant to a consortium

Deadline Submission of project outline: 31 March 2016

Contact name Isabel Antholz: Senior Manager or Teresa Stahl: Consultant

Email iantholz@deloitte.de or tstahl@deloitte.de

Tel no. +49 (0) 40 32080 4910 or +49 (0) 15 15800 3303

Germany–manufacturing, e-Mobility, automotiveFlexible production technologies for electric propulsion

The scheme focuses on new or further development of production processes for electric propulsion systems: • New winding technology ready for high-volume production• Improvement of the production process for integrated power electronics, including automotive specific

bonding methods ready for high-volume production• New automated assembly concepts for mechatronic all-in-one systems• New automated measuring and testing technologies

Germany–medical technology, ICT, sensor technology

Funding will be available for research projects in the following areas:• Innovative, smart and connected “wearable” medical technology that can read vital data and be connected

with other technologies via sensors;• New concepts improving the application security and practical use of such medical technology to increase

the usability for patients and caretakers;• Innovative new concepts focusing on mining vital data and the visualization of such data, including

innovative user interfaces for patients and caretakers

Interactive “wearable” medical technology

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Scheme budget

• No overall budget published• For companies, grants of up to 50% of eligible costs can be awarded• For universities and research institutions, grants of up to 100% of eligible

costs can be awarded• Funding period of up to three years

Type of incentive Non-repayable cash grant to a consortium

Deadline Submission of project outline: 6 April 2016

Contact name Isabel Antholz: Senior Manager or Teresa Stahl: Consultant

Email iantholz@deloitte.de or tstahl@deloitte.de

Tel no. +49 (0) 40 32080 4910 or +49 (0) 15 15800 3303

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Scheme budget

Type of incentive

Deadline

No overall budget

Grants of up to 50% of the approved R&D project expenses are available to the partner companies, in addition to other regional incentives. Whether or not the grant is “conditional,” which would require that it be repaid, in whole or in part if the project results in actual commercial sales, is determined in accordance with the rules of the two countries. For Israeli companies, royalty payments ranging from 3% to 5% of sales are required until the funding granted has been repaid.

Bilateral form (first stage): 15 March 2016

Contact name Nadav Gil: Partner or Tamar Weinberg: Senior

Email ngil@deloitte.co.il or tweinberg@deloitte.co.il

Tel no. +97 25 25258840

Israel—bilateral innovation projects with ChinaFourth call for proposals

A collaborative project involving at least one science and technology company from Israel and one from China may be able to secure funding for R&D activities aimed at developing a new product or new process. The joint industrial R&D project should aim at the development of cutting-edge innovation products and processes leading to commercialization in the global market.

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Scheme budget

Type of incentive

Deadline

No overall budget

Grants of up to 50% of the approved R&D project expenses are available to the partner companies in addition to other regional incentives. Whether or not the grant is “conditional,” which would require that it be repaid in whole or in part if the project results in actual commercial sales, will be determined in accordance with the rules of each jurisdiction. For Israeli companies, royalty payments ranging from 3% to 5% of sales are required until the funding granted has been repaid.

Applications can be submitted year-round

Contact name Nadav Gil: Partner or Tamar Weinberg: Senior

Email ngil@deloitte.co.il or tweinberg@delitte.co.il

Tel no. +97 23 6085378 or +97 23 6085529

Israel–Bilateral innovation projects with Hong KongR&D cooperation program

A collaborative project involving at least one science and technology company from Israel and one from Hong Kong may be able to secure funding for R&D activities aimed at developing a new product or new process. The joint industrial R&D project should aim at the development of cutting-edge innovation products and processes leading to commercialization in the global market.

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Poland/Chemical sectorINNOCHEM (Measure 1.2 of the Smart Growth Operational Program)

Administered by the National Center for Research and Development (NCR&D), this program supports industrial research or experimental development carried out by enterprises or consortiums of enterprises, consisting of at least two entrepreneurs, aimed at the production of basic products in the chemical industry (e.g. refined petroleum products, additives for fuels and mineral oils, fertilizers, plastics). To benefit, a project must fall within the scope of one of the R&D&I funding priorities in the “National Smart Specialization” and must include R&D activities related to one of the following: sourcing raw materials, production of basic products or production of specialized products or new technologies.

Costs that are eligible for a grant include remuneration and outsourcing costs (up to 50% in the latter case), depreciation and leasing costs for R&D infrastructure and equipment, costs incurred on intangible assets, land and buildings, other operational costs and up to 17% of indirect costs. The enterprise must incur at least EUR 250,000 and a maximum of EUR 5 million in qualifying costs. The project implementation period cannot exceed three years.

Scheme budget EUR 30 million for current call for proposals

Contact name Dominika Orzolek: Manager

Email dorzolek@deloittece.com

Tel no. +48 88 1950969 or + 48 22 3483572

Deadline 1 March 2016

Type of incentive

The grant available as a percentage of eligible costs is as follows:• Industrial research: Up to 70% for micro and small enterprises, 60% for

medium-sized enterprises and 50% for large enterprises• Experimental development: Up to 45% for micro and small enterprises,

35% for medium-sized enterprises and 25% for large enterprisesIf the results of the R&D results or effective collaboration are broadly disseminated, the percentages can be increased by 15%, up to an overall maximum of 80% of the costs.

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Grant funding is available for activities relating to the development phase of narrative storytelling video games, regardless of platform or expected distribution method. In all cases, the video game must be intended for commercial exploitation. This call for proposals is aimed at European video game production companies that have been legally constituted for at least 12 months before the submission date and that can demonstrate a recent success. The maximum duration of individual projects is 30 months from the date of submission.

United Kingdom/EUSupport for the development of European video games

Scheme budget

EUR 2.6 million. Grants of EUR 10,000 to EUR 150,000 are available to fund up to 50% of total project costs for the concept and project development of a European video game (activities to the point that the concept leads to a playable prototype or trial version).

Type of incentive Cash grant

Contact name

Deadline

Steve Conibear: Senior Manager

3 March 2016

Email stconibear@deloitte.co.uk

Tel no. +44 29 20264325

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On 18 December 2015, US President Obama signed into law legislation that affects the research tax credits. The legislation makes the research tax credit a permanent part of the Internal Revenue Code, ending the temporary status of this provision that has endured for 34 years. The law also enhances the availability of research credits for small businesses by allowing the tax credit, for the first time, to be applied against alternative minimum taxes and payroll taxes.

United StatesResearch tax credit

Scheme budget

Incremental federal research tax credits, with an effective rate ranging from 6.5% to 9.1% (depending on the elected credit). Special research credits also are available for clinical studies of orphan drugs (17.5% credit – effective rate) and for energy research through consortia (13%).

Type of incentive R&D

Contact name

Deadline

Michael Goldbas: Principal

N/A

Email mgoldbas@deloitte.com

Tel no. 860 725 3028

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© 2016. For information, contact Deloitte Touche Tohmatsu Limited.

For more information

For more information on any of the programs listed above, please contact the in-country representative or your usual contact.

For further information on how Deloitte can assist with available grants and incentives please contact:

Natan Aronshtam Global Managing Director—R&D and GI, DTTLnaronshtam@deloitte.ca+1 416 643 8701

David Cobb Partner, R&D and Government Incentives, Deloitte UKdcobb@deloitte.co.uk | Twitter@davidfcobb+44 20 7007 2996

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