Tax incentives for companies that will be merged or transformed are provided for in the draft law presented yesterday to the Cabinet by the Minister of Economy and Finance, Kostis Hatzidakis.

The aim of the proposed interventions is to strengthen the country's innovation ecosystem and to bridge the gap between Greece and the European average in terms of Research and Development (R&D). 

It is indicative of the fact that, despite the progress made in recent years, in Greece, according to the latest Eurostat data, business expenditure on R&D as a percentage of GDP is half the European average (0.73% compared to 1.48%). 

At the same time, according to the European Innovation Scoreboard 2024, Greece's performance in "Direct and indirect government support of business R&D" is 62% compared to the EU average, which contributes to the country's ranking in 20th place in terms of overall Innovation Performance.

R&D

In particular, the incentives to support R&D relate to four pillars:

1. The tax incentives for R&D included in the Ministry of Research and Development bill build on the existing incentive of a 200% across-the-board deduction for scientific and technological research expenditure. 

With the interventions introduced, the deductions can go from 250% to 315% in the following cases:

• Collaboration projects with start-ups
• Collaboration projects with research centres
• Knowledge-intensive SMEs, i.e. with R&D expenditure > 20% of total expenditure

Among other things, the aim is to strengthen the link between the market and academia, but also to foster partnerships between larger companies and the country's startup ecosystem.

2. At the same time, the framework of incentives for patent commercialisation (patenting) is being extended to make it more attractive to take the risk of investing in research and development. In particular, until now there has been a three-year tax exemption for the profits involved, starting from the financial year in which the profits were first made.

The measures introduced provide for a reduction of the corresponding rate by 10% for the next seven years.

3. The tax incentives for angel investors are expanded, with an increase in the maximum limit of investment in startups on which the deduction from taxable income is calculated.

In addition, the possibility of using this incentive for investments in venture capital funds is extended.

4. The tax regime for venture capital funds is rationalised and harmonised with European practices—as well as the way other mutual fund schemes operate—in order to provide an incentive for the creation of investment schemes based entirely in Greece.

BUSINESS TRANSFORMATION

As regards the incentives for business transformations promoted by the Ministry of National Economy, these are also along four axes, namely: 

1. Introduction of the possibility of carrying forward tax losses of transformed companies.

2. Reduction of the minimum threshold of the new company's share capital resulting from cooperation/transformation (to 100,000 euros from 125,000 euros) required to obtain a 30% tax exemption on the profits of cooperating (up to 125,000 euros in 9 years) and transforming (up to 500,000 euros in 9 years) companies, with the aim of promoting smaller-scale synergies.

3. Escalation of the income tax rate in line with job retention for the period during which the benefits of the law are provided.

4. Extend the exemption of tax on capital gains from the corporate level to the shareholder level after the transfer or dissolution of the business.