R&D and Government Incentives Newsletter - January 2013

Payroll Tax Exemption: new measures 

One of the measures in the Economic Stimulus Plan, agreed upon by the Government in July 2012, concerns a percentage increase for the partial payroll tax exemption on wages of qualifying researchers from 75% to 80%. The increase would apply as of 1 January 2013 but is still not enacted.

There seems to be plans to introduce an upfront reporting obligation of research and development programmes with the Programmatorische Federale Overheidsdienst Wetenschapsbeleid / Service Public de Programmation de la Politique Scientifique fédérale. This service would have to assess whether the reported programmes qualify for the partial payroll tax exemption. The reporting obligation would be applicable as of 1 January 2014.

For more info on this measure and an update on the other stimulus measures, we refer to our dedicated Economic Stimulus Plan website.

Since 2009, the wage tax exemption in Belgium has been fixed at 75% for all the different groups (universities, companies, etc.). The table below shows the respective levels of withholding tax savings per year. The figures provided show a significant increase since 2009.

1. Amounts expressed in euros
2. Amounts for 2011 still to be confirmed

The table also shows that most of the R&D activities and wage tax linked to it are still concentrated in universities and scientific institutions and that investments in R&D by the sector are still increasing. In addition, we can also see a constant increase year on year of approximately 10% of the savings realised by private companies.

As the amounts of wage tax agreed by the fiscal authorities are significant and increasing, the Minister of Finance and Sustainable Development has confirmed that more audits will be conducted to make sure the tax benefit is implemented correctly by companies who take advantage of it.

In this context, we have noted in recent tax audits more in depth reviews and analysis by the tax authorities of the foreign diplomas eligibility.

Article based on DO 2011201209590 - Question n° 490 from Dirk Van der Maelen of July 2012, the 5th (N.) and answer from vice-premier and Minister of Finance and Sustainable Development, in charge of the public function, of October 2012, the 3d

OECD Report on R&D in Belgium  

According to the latest OECD report on R&D, the R&D landscape in Belgium has evolved significantly since 2005. In 2010, business expenditure on R&D investments were 1.32% of GDP, with the main contributors being the pharmaceutical industry (28%), chemicals (9%), and IT (8%).

As illustrated in the figure below (bottom section), Belgium in general has an approach of public support to business R&D more oriented toward indirect funding (tax incentives) than direct funding (grants) compared to the OECD median. This is due to the generous tax incentives programmes (partial professional withholding tax exemption, tax credit, patent income deduction).

The OECD report also highlights some interesting figures in terms of comparative performance of science and innovation systems in Belgium (figure below). The country compares well to the other OECD members in terms of public research, universities and scientific publications. From the business R&D and entrepreneurship perspective, Belgium is slightly above the OECD median for all markers except for trademarks and young patenting firms per GDP. The country is also clearly in the upper part of the spectrum in terms of available venture capital per GDP.

Finally, the report shows that for the infrastructure and human resources factors impacting innovation and R&D, improvements will be required in the country’s wireless and internet networks infrastructure to catch up with other OECD countries. While knowledge flows and commercialisation indicators are well above the median, important science and technology (S&T) human resources indicators (adult population having a tertiary education level and doctoral grade in S&T) with median values may show signs of a future shortage in S&T personnel (see figure below).

Source: OECD Science Technology and Industry Outlook 2012

UK Regional Growth Fund 

The UK Government has launched a new grant scheme with a £350 million (€420 million) budget. The Regional Growth Fund for England can support the investment plans of private sector companies and/or public-private partnerships.

The scheme in summary

• It is designed to provide support for projects and programmes with significant potential for creating long term, private sector led economic growth and employment. 
• Priority is given to projects that will occur in areas of high unemployment and/or locations currently dependent on the public sector for a high proportion of jobs. 
• A minimum of £1 million (€1.2 million) of assistance must be bid for, by either individual private sector companies or public-private partnerships across England.

Project eligibility

The scheme is available to support private sector companies with their investment plans and also public-private partnerships. Typical projects may be geared towards training, R&D, job creation, capital expenditure or, energy efficiency. In all cases, the project must involve either the creation of new jobs over a three year period and/or a clear threat that some existing jobs may be lost if the project does not occur.

A total of £2.4 billion (€2.9 billion) in grant assistance has been awarded in the previous three rounds and many large companies have been beneficiaries including Jaguar Land Rover, Dyson, EADS and Santander.

What type of organisation could be eligible?

The scheme is able to assist all sizes of companies, from small and medium through to multinationals.

The timetable

Applications for grant aid need to be approved before a project commences. The deadline for applications under this funding programme has been set as 20 March 2013.

For further information

To have an initial, informal discussion or to learn more about the scheme, please contact:

Alistair Davies 
aldavies@deloitte.co.uk 
Direct: +44 292 0264272 
Mobile: +44 7774 412675

EU funding opportunities 

Specific measures for SMEs

Eurostars

Eurostars aims to support research-performing SMEs*, by initiating innovative pan-European projects and co-funding their research activities, enabling them to compete internationally and become leaders in their sector. It specifically targets the development of new products, processes and services. Eurostars is bottom-up meaning that project applications are accepted from any technological or market area.

Type of projects

A Eurostars project must be led by an R&D-performing SME within a consortium involving partners from a minimum of two Eurostars participating countries. The project life cycle must be short (three years maximum) and no more than two years after project completion the result of the research should be ready for introduction onto the market. A typical Eurostars project has a total value of € 1.5 million and involves between two and three SME participants, a larger company and a research institute or a university.

Funding

The following funding rules are applicable for Belgian SME partners of Eurostars projects:

* Research-performing SMEs are SMEs that dedicate at least 10% of their turnover or FTE to research activities.

Deadline

Project proposals must be submitted by 04 April 2013.

MANUNET

The objective of the MANUNET call for proposals is to foster the competitiveness of Europe’s Manufacturing Industry by co-funding manufacturing research projects performed by enterprises (preferably SMEs) and their strategic partners.

The funding objectives of the call are transnational application oriented and high risk R&D projects related to Manufacturing.

Type of projects

The MANUNET call includes all fields in Manufacturing, structured in the following topics:

• Information and communication technologies for manufacturing including industrial robotics 
• Environmental and energy technologies 
• Knowledge-based engineering technologies (computer-aided engineering and design, automated manufacturing, product lifetime management, etc.) 
• Adaptive manufacturing technologies: processes for removing, joining, adding, forming, consolidating, assembling 
• Other technologies/products related to the manufacturing field

All MANUNET projects must consist of at least 2 independent SMEs belonging to 2 participating countries, or 2 regions in different countries.

Large companies, academic research groups, universities or other public organisations, as well as subcontractors, may also participate according to their regional/national financing regulations, as long as there are 2 independent SMEs belonging to 2 different participating countries.

Small to medium projects (4 or 5 partners) are expected.

Who can apply?

The Call is open for entities belonging to the following regions/countries:

• Asturias (Spain) 
• Basque Country (Spain) 
• Catalonia (Spain) 
• Finland 
• Germany 
• Iceland 
• Lower Austria (Austria) 
• Luxembourg 
• Northern Ireland (United Kingdom) 
• Slovakia 
• Switzerland 
• Romania (to be confirmed) 
• Turkey 
• Wallonia (Belgium) 
• Western Greece (Greece)

Funding

Wallonia: SME and Large companies, academia and research centers can be funded. Maximum funding: 60-80% grant for SMEs, 40% grant for large companies, 100% grant for academia and 75% grant for research centres.

Industrial research: minimum 40% of the Walloon project’s budget must be dedicated to the Walloon company(ies).

Experimental development: minimum 40% of the Walloon project’s budget must be dedicated to the Walloon company(ies) AND minimum 50% of the project’s budget must be dedicated to the Walloon partners OR at least 2 Walloon companies are partners in the consortium.

Maximum project duration: 36 months

Deadline

Deadline for pre-proposal submission: 13th March 2013

Deadline for full proposals submission: 10th July 2013

Environmental projects

LIFE+*

LIFE+ is the European Union’s financial instrument for supporting environmental and nature conservation projects. LIFE+ consists of three thematic components: LIFE+ Nature & Biodiversity, LIFE+ Environment Policy & Governance and LIFE+ Information & Communication.

LIFE+ Environment Policy & Governance supports innovation or demonstration projects contributing to the development of innovative technologies, methods, instruments and policy approaches focusing on 12 priority areas: climate change, water, air, soil, urban environment, noise, chemicals, environment and health, natural resources and waste, forests, innovative technologies, and strategic approaches.

Type of projects

Demonstration project: puts into practice, tests, evaluates and disseminates actions/methodologies that are to some degree new or unfamiliar in the project's specific context (geographical, environmental, socio-economical...), and that should be more widely applied elsewhere under similar circumstances.

Innovation project: applies a technique or method that has not been applied/tested before or elsewhere and that offers potential environmental advantages compared to current best practice. Innovations can refer to technological innovations and/or to innovations in processes or methods.

LIFE+ covers a limited part of the research activities related to the project's objectives but the technology/process to be used for demonstration purposes should be clearly defined and technologically proven at the application stage.

Who can apply?

LIFE+ is open to all legal entities, public or private, commercial or non-commercial that are legally established in the European Union. Project proposals can either be submitted by a single beneficiary or by a consortium.

Funding

The maximum rate of co-financing is 50% of the total eligible project costs. There is no fixed minimum size for project budgets, but the European Commission favours the co-financing of large, ambitious LIFE+ proposals with a substantial budget. Historically, the average grant awarded has been in excess of 1 million euro.

Deadline

Provisional deadline 25 June 2013.

*Information is based on the 2012 call for proposals. The 2013 call is expected to be published on the 14 February 2013.

Eco-Innovation

Eco-innovation is an EU funding programme (part of CIP) which helps bring innovative environmentally friendly technologies, products and processes to market.

The main focus of the programme is to reduce environmental impact, increase recycling and promote resource efficiency through supporting post-research activities in five main areas: Materials Recycling, Sustainable Building Products, Food and Drink Sector, Water, Greening businesses.

Type of projects

First application or market replication of eco-innovative techniques, products, processes, or practices, which have already been technically demonstrated with success but which, owing to residual risk, have not yet penetrated the market. The aim of the project should be to foster their diffusion and broader uptake e.g. through demonstration in combination with publicity measures.

Research activities (incl. development of prototype) are not eligible.

Who can apply?

Eco-innovation is open to all legal persons, public or private, commercial or non-commercial that are legally established in the European Union or associated to the programme (1). Project proposals can be submitted by a single beneficiary or by a consortium.

Funding

The maximum rate of co-financing is 50% of eligible project costs. The maximum duration of a funded project is 36 months. Historically, the average grant awarded has been around 800,000 euro.

Deadline

Expected September 2013.

(1) Norway, Iceland, Liechtenstein, Albania, Croatia, former Yugoslav Republic of Macedonia, Israel, Montenegro, Serbia and Turkey

ECO-INNOVERA

ECO-INNOVERA focuses on the support of eco-innovation in research and development. Project proposals are expected to have the potential to address substantive market opportunities preferably on a timescale of within 3-5 years of the project start.

Type of projects

The call supports research and development proposals within 3 topics:

• Topic 1 - System innovation: Proving the transformational potential of eco-innovation requires a systemic approach and differs from conventional approaches to innovation. As “System Innovation” it may lead to quite different models of production and consumption. 
• Topic 2 - Sustainable processes and products: Proposals which will mobilise the value chain (both industry partners and the knowledge base) to deliver projects which are high impact both in terms of the market opportunity they address, and the environmental/societal benefits they will enable. 
• Topic 3 - Recycling; re-use of waste and water: This topic seeks new products, processes and services which will enable significant reductions in the impact of waste and recycling processes and new products which make better use of waste and secondary materials.

Projects should be international with a minimum number of 3 partners, drawn from a minimum of 3 participating countries. Where one of the partners is an SME, the minimum number of partners is 2, drawn from 2 countries.

The project duration may be up to 36 months.

Who can apply?

The call is open to industry (including SMEs), public and private research organizations, non-profit organisations*.

The call is open for entities belonging to the following regions/countries:

• Belgium (Wallonia & Flanders) 
• Germany 
• Switzerland 
• Austria 
• Sweden 
• Israel 
• Poland 
• Spain 
• United Kingdom 
• Finland 
• Turkey

Funding

Funding of the project partners is provided by the national or regional funding organisations according to national/regional regulations.

Deadline

Deadline for pre-proposal submission: 08 April 2013

Deadline for full proposals submission: 15 July 2013

*Non-profit organisations are not eligible for support in Wallonia and Flanders.

ICT projects

ICT-Policy Support Programme (ICT-PSP)

ICT-PSP aims to accelerate the wider uptake and best use of innovative digital technologies and content by citizens, governments and businesses.

Type of projects

Pilot projects – Stimulating uptake of innovative ICT-based services and products Pilots aim at the implementation of an ICT based innovative service addressing the needs of citizens, governments and businesses. The pilots should be carried out under realistic conditions. The emphasis is on fostering innovation in services; consequently the pilot may need to take-up completed R&D work, may extend already tested prototype services or may combine / integrate several partial solutions to realise a new approach. Whichever approach is taken, the outcome of the work shall be an operational pilot service demonstrating significant impact potential. Pilot projects are expected to implement their solutions in several Member States or Associated Countries.

A consortium of at least 4 separate, independent legal entities from 4 different EU or Associated countries is required to apply.

• National authorities (Ministries, local and regional authorities; Public organisations e.g. hospitals, schools, libraries,… 
• Private companies including SMEs 
• Academia and public research

Funding

Pilot projects are funded up to 50% of eligible costs with funding typically in the range 2-3 M€ / pilot. Project duration is typically 24-36 months including the operation of a pilot service for at least 6 months.

Deadline

14 May 2013.

Energy projects

Intelligent Energy Europe

The objective of the Intelligent Energy Europe programme (IEE) is to foster energy efficiency and the rational use of energy resources; to promote new and renewable energy sources and to support energy diversification; and to promote energy efficiency and the use of new and renewable energy sources in transport.

Type of projects

Promotion & Dissemination projects

Mobilising Local Energy Investments - Project Development Assistance (MLEI-PDA)

Who can apply?

For the main call, applications must be submitted by a team of at least three independent legal entities, each established in a different eligible country (EU Member States, Norway, Iceland, Liechtenstein, Croatia, Former Yugoslav Republic of Macedonia.

Funding

Projects are funded up to 75% of eligible costs and the maximum duration of a project is 36 months.

Deadline

08 May 2013.

Fuel Cells & Hydrogen

The Fuel Cells and Hydrogen Joint Undertaking (FCH JU) is a public private partnership supporting research, technological development and demonstration (RTD) activities in fuel cell and hydrogen energy technologies in Europe. Its aim is to accelerate the market introduction of these technologies, realising their potential as an instrument in achieving a carbon-lean energy system.

Type of projects

The FCH JU supports:

• long-term and breakthrough-orientated research 
• research and technological development 
• demonstration 
• support actions, including pre-normative research

Who can apply?

Collaborative projects: at least three independent legal entities established in different EU Member States or Associated countries. Target audience: Research organisations, universities, industry (including SMEs). 

Support Actions: at least one legal entity established in an EU Member States or Associated country. Target audience: Research organisations, universities, industry (including SMEs), research programme managers and owners.

Funding

Funding schemes: CP: Collaborative project; CSA: Coordination and Support Action.

Deadline

22 May 2013

Health projects

Health Programme

The Health Programme has three overarching objectives. It seeks to:

1. Improve citizens' health security; 
2. Promote health and reduce health inequalities, increasing healthy life years and promoting healthy ageing; 
3. Generate and disseminate health information and knowledge, exchanging knowledge and best practice on health issues.

Type of projects

Projects, conferences, joint actions and operation grants. These actions intend to have a special European dimension, meaning that a minimum of various partners of different European Countries have to be involved in the project plan.

Who can apply?

Participation in the Health Programme is open to a wide range of organisations, including:

• Research institutes and universities 
• Public administrations 
• Non-governmental organisations 
• Commercial firms

Funding

The maximum reimbursement given for an action depends on the funding scheme in place, but is usually up to 50 or 60%.

Deadline

22 March 2013.

For more information, please contact:

Deloitte R&D and Government Incentives
Berkenlaan 8a
1831 Diegem
Belgium
Tel: + 32 2 600 65 74
beresearch@deloitte.com

For further information, visit the R&D and Government Incentives page on www.deloitte.be