Brussels, 22/11/2006 (Agence Europe) On Wednesday 22 November the European Commission adopted a communication on the more effective use of tax incentives in favour of R&D in order to boost R&D investments and enhance job creation and economic growth in Europe. The Communication clarifies the legal conditions arising from EU case law and sets out some basic principles and good practices for the design of tax incentives for R&D. It encourages Member States to improve the use and coordination of tax incentives on specific R&D issues.
The Commission explains that tax incentives which restrict their benefits to activities performed domestically are incompatible with the EC Treaty. It is also important to realise that R&D tax incentives which target a specific group or sector may constitute State aid and therefore must be made compatible with the Community State Aid rules. The Commission also offers guidance on the main design options, features and relevant factors which Member States may wish to follow when designing or updating their R&D tax incentive schemes. According to these principles, tax incentives must be easily accessible for a broad range of R&D firms; including elements of simplicity as well as low administrative and compliance costs; principles for evaluation of tax incentives and the need for delivery to be timely, efficient and predictable. (oj)