Thursday 17 November 2016

Can the Donald Keep Up with the EU: EU Tax Reform and Venture Capital Fund

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.”  

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