[IP finance] Can the Donald Keep Up with the EU: EU Tax Reform and Venture Capital Fund

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Mike Mireles

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Nov 17, 2016, 1:25:02 AM11/17/16

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After the hangover of the U.S. presidential election subsides, some serious issues will be addressed, including our current tax and innovation system. Will the U.S. adopt a patent box? Will the U.S. lower the corporate tax rate? What will the Donald do? I am hopeful that he will push more resources to research, and development (which has been in decline in real dollars), and education. Perhaps a gaze across the pond will not only give him some inspiration, but may also solve some of our problems.

On October 26, the EU Commission announced a new way to tax corporations operating in the EU. The EU Commission website states:

EU Commission have announced the Common Consolidated Corporate Tax Base (CCCTB), a new EU-wide tax system to improve the Single Market, combat tax avoidance and support growth and investment in the EU. The CCCTB will also support Research and Development (R&D) through tax incentives for companies that invest in real research activities.

In particular, the proposal includes super-deductions for R&D costs: big companies may deduct 100% of their costs, in addition to 50% deduction for R&D expenses up to €20 million and further 25% deduction for R&D costs that will exceed this amount.
The draft also grants super-deductions for small starting companies without associated enterprises (i.e. start-ups) which may deduct up to 200% of their R&D expenses.

For more information, including videos, please see the CCTB website here. The EU Commission also recently announced the “European Investments Fund (EIF) . . . , a Venture Capital fund of funds programme of €400 million to boost start-ups' growth and increase investments opportunities of institutional private investors.”