Hellenic Innovation Forum 2017

1. Global Investment & Innovation Incentives
Stylianos Sbyrakis
March 2017

2. Countries compete to attract innovation &
investments – a major factor in generating
local, high value, sustainable employment.
2
It’s a global
competition!
© 2017 Deloitte Business Solutions S.A.

3. • Projects are mobile and companies
have global options.
• Global incentives trend is a combination
of tax and direct funding.
• Most OECD countries are enhancing
their existing incentives and are
introducing new ones.
Global Investment & Innovation Incentives | Look deeper. Seize the opportunity. 3
Governments
compete for
investments
Research
incentives
Intellectual
property
incentives
Productive
investment
incentives
© 2017 Deloitte Business Solutions S.A.

4. What is on the global menu?
R&D projects
For product and process—
for all industries—from
basic research to shop
floor
Capital
investments
Whether site-related or
for equipment
purchases
Employment
Creation,
conversion, and
training
Location
New sites or
modifications to
existing sites
Environment
Direct investments or
productivity
improvement- related
Tax credits or rebates,
either as a reduction of
your corporate or
employer taxes or as a
refund in other ways
Defined grants and
accelerated tax
deductions that apply to
prescribed investments
Negotiated grants or
incentives as a function
of employment
creation or capital
investment
Investment factors that trigger more incentives
Typical financial benefits
4
R&D
IP
CAPEX
Global Investment & Innovation Incentives | Look deeper. Seize the opportunity.© 2017 Deloitte Business Solutions S.A.

5. £,0 mil
£5000,0 mil
£10000,0 mil
£15000,0 mil
£20000,0 mil
-
2000,0
4000,0
6000,0
8000,0
10000,0
12000,0
14000,0
16000,0
18000,0
20000,0
Companies applied R&D Expenditure
In the last 15 years: €140 billion in R&D declared -> €14,3 billion tax relief. Only in
2013-14 over 18.000 enterprises declared over €17,8 billion R&D expenditure .
R&D tax incentives in the UK
5
Source: HMRC Research and Development tax credits statistics, September 2015
Every 1€ in tax relief
generates an 1,53 - 2,35€
further R&D expenditure
Global Investment & Innovation Incentives | Look deeper. Seize the opportunity.© 2017 Deloitte Business Solutions S.A.

6. IP includes:
• Software
• Patents
• Brands
• Design
• Trademarks
• Know-how
• Formulas
• Processes
50% corporate
income tax
exemption
50% local
state tax
exemption
5 year
irrevocable
Available for
holders of IP &
owners of
exploitation rights
OECD compliant,
requires R&D
expenditure to
occur in Italy
Aims to encourage the development and maintenance of intellectual property in Italy,
providing a favorable tax regime for IP revenues of around 13%
Italy has a new Intellectual Property Box (IP Box)
Source: Deloitte Taxation & Investment in Italy 2016 (https://dits.deloitte.com/)
6Global Investment & Innovation Incentives | Look deeper. Seize the opportunity.© 2017 Deloitte Business Solutions S.A.

7. 5%
tax
rate
Multinationals
€ 23 million
R&D
expenditure
250 R&D
employees
Priority areas
A
Significant incentives are provided in terms of special tax regimes, for entities who
invest in R&D jobs in Israel, leading to a 5% tax rate.
Israel is attracting large multinationals
Source: Deloitte Taxation & Investment in Israel 2016 (https://dits.deloitte.com/)
7Global Investment & Innovation Incentives | Look deeper. Seize the opportunity.© 2017 Deloitte Business Solutions S.A.

8. Article 22A,
L.4172/2013
Article 71,
L.3842/2010
L.4399/2016
Although not very competitive, Greece
offers similar incentives
8
Incentives in Greece
Development
Law R&D super-
deduction
Patent Box
© 2017 Deloitte Business Solutions S.A.

9. A quick look at the basic characteristics of the incentives
Available incentives in Greece
R&D Super-
deduction
R&D Super-
deduction
Tax reduction of
8,7% of eligible
expenditure
Carried forward for 5
years, in case of
losses
Eligible R&D
expenditure include
personnel cost,
consumables,
external researchers
and fixed assets
Patent BoxPatent Box
100% tax deferral for
3 years on all profits
originating from an
international patent
Patent must be held
by the entity and
must have been
developed by the
entity
Development LawDevelopment Law
Grants, tax
exemptions and
subsidies, depending
on investment plans,
entity size and
geography
9Global Investment & Innovation Incentives | Look deeper. Seize the opportunity.© 2017 Deloitte Business Solutions S.A.

10. 0%
10%
20%
30%
40%
50%
60%
0%
50%
100%
150%
200%
250%
300%
350%
400%
450%
R&D Superdeduction Tax benefit
Greece needs to make the incentive more competitive with respect to other countries,
create a tax benefit > 20%
The R&D super-deduction in Greece is very low
Source: Deloitte 2015 Global Survey of R&D Incentives
10Global Investment & Innovation Incentives | Look deeper. Seize the opportunity.© 2017 Deloitte Business Solutions S.A.

11. Greece needs to expand the eligibility to a wider range of IP – no just patents. The tax
benefit needs to be material, not a deferral, with a tax IP rate < 15%
The IP box in Greece is non-existent
00%
05%
10%
15%
20%
25%
30%
35%
40%
Netherlands Belgium Hungary United
Kingdom
Austria Italy China Spain France Greece
Tax rate Innovation tax rate
Source: Deloitte 2015 Global Survey of R&D Incentives
11Global Investment & Innovation Incentives | Look deeper. Seize the opportunity.© 2017 Deloitte Business Solutions S.A.

12. A better R&D
superdeduction
incentive can drive
clinical trial costs
down, making Greece
competitive to e.g.
Belgium.
Of course, some
further structural
changes are also
needed…
One of the highly competitive, global R&D activities are pharmaceutical clinical
trials. Greece could claim a much larger share.
Why does Greece need to improve the incentives?
12Global Investment & Innovation Incentives | Look deeper. Seize the opportunity.© 2017 Deloitte Business Solutions S.A.

13. Global
Competition
Significant innovation
incentives are available
in most countries
Greece is
behind
Available incentives are
lacking compared to
other countries
Can we
improve?
Simple modifications in
existing legislation can
fix these incentives
Takeaway
13Global Investment & Innovation Incentives | Look deeper. Seize the opportunity.© 2017 Deloitte Business Solutions S.A.

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