New tax exemption package and incentives for business and corporate mergers..

The package of interventions was included in the draft law presented to the Council of Ministers today by the Minister of National Economy and Finance Mr. Konstantinos Hatzidakis, the Minister of Development Mr. Panagiotis Theodorikakos and the Deputy Minister of National Economy and Finance in charge of tax policy issues Mr. Christos Dimas.

The aim of the proposed interventions is to strengthen the country’s innovation ecosystem and bridge the gap that separates Greece from the European average in terms of research and development.

It is worth noting that despite the progress made in recent years, in our country, according to the latest data from Eurostat, corporate spending on R&D as a percentage of GDP is half the European average (0.73% versus 1.48%).

Meanwhile, according to the European Innovation Scoreboard 2024, Greece’s performance in the area of ​​“direct and indirect government support for business R&D” is 62% compared to the EU average, contributing to the country’s ranking in 20th place when it comes to innovation performance.

R&D incentives

In particular, incentives to promote R&D relate to four axes:

1. The R&D tax incentives included in the Ministry of Finance draft law build on the existing incentive of a 200% horizontal gross deduction for scientific and technological research expenses.

With the interventions provided, reductions can reach 250% to 315% in the following cases:

• Cooperation projects with start-ups

• Cooperation projects with research centers

• “Knowledge-intensive” SMEs, i.e. those with R&D expenditures of more than 20% of total expenditure

Among other things, the goal is to strengthen the relationship between the market and the academic community, but also to develop partnerships between major companies and the country’s startup ecosystem.

2. At the same time, the framework of incentives for the commercial exploitation of patents is being expanded, with the aim of making them more attractive for taking risks in R&D investment. In particular, a three-year tax exemption is now being provided for the relevant profits, starting from the fiscal year in which such profits were first made.

With the interventions provided, the corresponding rate is expected to be reduced by 10% over the next seven years.

3. Expanding tax incentives for angel investors (angel investors), with an increase in the upper limit for investment in startups for which the deduction is calculated from taxable income.

In addition, the possibility of benefiting from this incentive has been expanded to investments in mutual funds for commercial participations.

4. The tax regime for venture capital funds is rationalised and aligned with European practices – but also with the way other mutual fund schemes operate – so that there is an incentive to create investment schemes entirely domiciled in Greece.

Incentives for Business Transformation

As for the incentives for commercial transformations promoted by the Ministry of Interior, they also move along four axes, which are:

1. Proving the possibility of carrying forward tax losses for converted companies.

2. Reducing the minimum capital of new companies resulting from cooperation/transformation (to €100,000 from €125,000) and requiring a 30% tax exemption for the profits of partners (up to €125,000 in 9 years) and the transformed companies (up to €500,000 in 9 years), with the aim of promoting synergies on a smaller scale.

3. The income tax rate increases in the job preservation function while the benefits of the law are provided.

4. Extending the capital gains tax exemption from the company level to the shareholder level after a business transfer or dissolution.