Research, development and innovation activities: Andersen’s guide to incentives in Europe

Using a cross-border approach, the Andersen European Business Incentives and Tax Credits service line developed a detailed examination of R&D incentives in 24 Member States and in Albania, Switzerland, and the United Kingdom.

Activities related to research, development, and innovation (R&D&I) are crucial for enterprises. The EU has started a number of multiyear R&D framework programs at the European level, over the years. The current Horizon Europe program, which will run from 2021 to 2027, is the ninth consecutive program to rank as the largest global research and innovation initiative. The EU’s rules and definitions should serve as the foundation for the Member States’ legislation.

This guide is intended to provide simple access to relevant information on research and development activities.

On EU level, the definition of R&D is directly provided by European Union regulations and guidelines (e.g. by the General Block Exemption Regulation or by the State aid Framework for research, development and innovation), so the concept itself should be the same in all EU Member States.

The same definitions are applied by the additional members of the European Economic Area (Iceland, Lichtenstein and Norway), Switzerland and the United Kingdom as well.

R&D is characterized by

  • novelty
  • the resolution of scientific and technological uncertainties
  • creative activities
  • systematic activities
  • activities the results of which may be transferable and reproducible by others.

The three main types of research and development are

  1. fundamental research: experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundations of phenomena and observable facts, without any direct practical application or use in view
  2. industrial research: the acquisition of new knowledge and expertise to develop new products, processes or services, or to bring about significant improvements in existing products, processes, or services
  3. experimental development: the acquiring, combining, shaping, and using existing scientific, technological knowledge and skills for the purpose of new, altered or improved products, processes or service.

From the perspective of incentives, these activities separate from so-called innovation activity, which can be interpreted as innovation within an organization.

Most of the incentives focus on research and development. However, innovation and IP protection are supported by several measures as well.

Our partner Stefania Zanotti, head of the Business Incentives and Tax Credits service line in Italy and a member of the European service line, edited the section on Italy.