R&D TAX RELIEF IN THE EUROPEAN UNION
R&D TAX RELIEF IN THE EUROPEAN UNION

Summary/Abstract: Tax incentives have become a popular policy instrument to boost research and experimental development (R&D) activities for businesses. They offer a reduction to a firm’s tax burden depending on the volume, or increase, of the expenditure the firm devoted to R&D. The popularity of this instrument arises from the fact that it is rather simple to implement through the existing system of corporate taxation, implying low additional administrative costs both at the side of authorities and firms. R&D tax incentives do not burden the budget of research ministries (as the costs are borne by lower revenues of the Treasury), and they can easily be altered in size and scope without much change in the administration of the measure (as compared to a grant or loan program where a doubling or halving of the measure often implies an according change in the resources to run the scheme). This article approach R&D tax incentives that apply in the EU member states and the need of these incentives as an important factor in stimulating economic activities.

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