Research and Development (R&D) tax credits are incentives offered by governments across the world, designed to stimulate innovation among businesses large and small. These credits provide crucial financial support to businesses which undertake R&D activities, thereby promoting economic growth and technological progress.
However, not all countries offer the same level of R&D tax credits. The rates can vary significantly depending on the country, industry, and the type of research being carried out.
Here’s a brief overview of the rates of R&D tax credits available in different geographies.
United Kingdom
The UK has one of the most attractive R&D tax credit schemes in Europe. The credit rate is calculated as a percentage of the eligible R&D expenses and can be up to 27% for loss-making SMEs. The government has also introduced a research and development expenditure credit (RDEC), which allows larger companies to claim a credit of up to 20% of their qualifying R&D expenses.
France
France offers a 30% tax credit on eligible R&D expenses for SMEs and a 20% credit for larger companies. The credit is capped at €100 million per company and can be carried forward for up to three years.
Germany
Germany offers several R&D tax credit programs to promote innovation and technology development, including the “Forschungszulage”. This credit is available to all companies regardless of size and provides a tax credit of up to 25% of eligible R&D expenses. The maximum amount of credit payable is €500,000 per year.
United States
In the US, the credit is calculated as a percentage of the eligible R&D expenses incurred by the business, and the rate can be as high as 20%. However, the actual rate of the credit depends on various factors such as the size of the business, the type of research being conducted, and the tax laws of the state in which the business is located.
Canada
Canada offers a federal tax credit of up to 20% on eligible R&D expenses. Additionally, several provinces also offer their own R&D tax credit programs. The combined federal and provincial tax credit rate can be as high as 50% for small businesses.
Australia
Australia offers the R&D Tax Incentive, which provides a 43.5% refundable tax credit on eligible R&D expenses for SMEs and a 38.5% non-refundable tax credit for larger companies. The credit can be carried forward for up to 10 years.
China
China offers various incentives to companies carrying out R&D activities, including a tax credit of up to 75% of eligible R&D expenses. The actual rate of the credit depends on the location of the business and the type of research being conducted.
Japan
Japan offers a tax credit of up to 30% on eligible R&D expenses. However, the credit is only available to businesses that meet certain criteria, such as having a certain percentage of their workforce engaged in R&D activities.
Leonid is the leading specialist recruiter for the R&D incentives market in the UK and France – but in fact, we recruit for R&D tax roles internationally, at a range of levels. We understand the specific needs of each market and our multi-lingual team have extensive experience in working across different geographies.
To find out more about our R&D tax recruitment services, please don’t hesitate to get in touch for a friendly chat!