- R&D Tax Incentives in Europe: Many European countries provide R&D tax incentives, primarily through expenditure-based relief, with significant variation in implied tax subsidy rates. Portugal offers the highest subsidy rate at 39%, followed by France (36%) and Poland (36%), while Denmark has the lowest at 1%.
- Average Implied Subsidy Rates: The average implied tax subsidy rate for profitable large firms across 33 major European countries was 15.7% in 2024, compared to the United States’ 3% and China’s 32%. This indicates a stronger focus on incentivizing R&D in Europe.
- Relief for SMEs and Loss-Making Firms: Most countries provide similar R&D tax relief for large firms and SMEs. However, certain countries, including France and the UK, offer more generous provisions for SMEs, while loss-making firms generally receive lower average subsidy rates compared to profitable firms due to the structure of the incentives.
Source Tax Foundation
