Tax incentives promote innovation

In the study, success was most evident in those countries that encouraged R&D spending through the tax system, for example, by providing tax credits or special depreciation options for material or personnel costs. The authors write that tax incentives have significant advantages over direct project funding, which can be particularly beneficial for small and medium-sized enterprises (SMEs): who help them do it. Therefore, with the new German R&D tax credit, it is important to keep getting the tax credit as simple as possible from the outset and to review it regularly, ”Falck recommends.

The report also emphasizes the importance of general taxation in private sector research and development. “The finding that lower corporate taxes lead to more private sector innovation is particularly important for Germany as an internationally high-tax country and should be taken into account in future tax discussions,” Falck says.

Source: ifo institute

Source: The Nordic Page


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