Public funding tools
for innovative projects

 We detail the different indirect and direct instruments from which companies carrying out research and development projects in Spain can benefit. These instruments are as follows:

• Loans and non-refundable regional, national or European subsidies for actions that develop innovation projects.
• Allowances for research personnel dedicated exclusively to innovation projects.
• R&D tax deductions that reduce between 12% and 42% of corporate income tax payments.
• Patent Box that allows a reduction of up to 15% in corporate tax thanks to the development of a patent.

Below is a brief description of the basis for each of them according to the time frame in which they must be applied for:

• Direct aids. The bodies managing funds at regional, national, European or international level have a broad portfolio of programmes to finance research and development actions (both at the level of projects and the hiring of personnel), innovation and/or industrial investment. Aid may take the form of non-repayable grants, soft loans (even at 0%) or a combination of both. With some exceptions, the vast majority of programmes require that the application for aid be made before the start of the actions, which requires a thorough knowledge of the programmes, the application and justification procedures and other aspects that affect their processing (guarantees, de minimis, percentage of expenditure by item, evaluation procedure, etc.) in order to act in advance without missing out on opportunities.

• Rebates on Social Security contributions. This incentive makes it possible to reduce the direct business costs related to personnel dedicated exclusively to R&D&I activities by means of a 40% reduction in the company’s Social Security contributions under the Common Contingencies heading. This incentive has an immediate impact on companies’ profit and loss accounts, since as soon as the rebate is applied for in the RED system of the Social Security General Treasury, the reduction in the payment of contributions is automatic.

• Deduction for R&D activities. At the end of each tax year, this deduction makes it possible to reduce corporate income tax payments by between 12% and 42% of the expenses already incurred in carrying out R&D projects (products/processes/technologies/systems that transcend the state of the art) and/or Technological Innovation projects (projects that involve a novelty only at the level of the company that executes them). In the event that companies with recurrent R&D&I activity have negative results and do not pay Corporate Income Tax, or do not have sufficient quota to apply (within the established limits) the tax deductions for R&D&I activities, the tax regulations allow 80% of the deduction generated in each tax year to be monetised through two mechanisms: the application for the refund of the amount (cash-back) or the unlimited application of the deduction. The tax deduction for R&D&I activities is compatible with the rebates on social security contributions for those companies that have the Innovative SME Seal. For the rest of the companies, a thorough analysis of their financial situation and R&D cost structure will be necessary to determine which option is most appropriate.

• Patent Box. Once the R&D project has materialised in the form of a patent, a utility model or the registration of software or a design and the right of use is assigned or even the intangible asset generated is transferred to a third party, the financing cycle is completed, thanks to the reduced taxation of the direct income from the assignment or transfer. The actual reduction in the payment of corporate income tax can be as much as 15% of the income received. The optimisation of the combined use of all these instruments requires a permanent updating of programmes, procedures, regulations or administrative doctrine to maximise the rates of return on investment, as well as a dedication of resources for the technical-administrative management of the same, which is why it is advisable to have the support of consultancy firms specialising in the field.

At Euro-Funding we provide our clients with customised financial solutions that allow the different financing instruments to materialise quickly and efficiently according to their financial context (monetisation/cash-back, participation of private financial entities, guarantees and collateral, generation of EIGs or subrogation of credits, among others).