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Brussels, 13th February 2008

State aid: Commission approves Spanish corporate tax credit to promote R&D

The European Commission has authorised, under EC Treaty state aid rules, a Spanish corporate tax credit for revenues from patents, designs, models, plans, secret formulas and processes. The Commission concluded that this tax credit is a general measure rather than targeted at a particular type of company or region and therefore does not constitute state aid.

Competition Commissioner Neelie Kroes commented: “I welcome this measure introduced by the Spanish Government, as it aims to create an incentive for companies to invest in R&D for the benefit of the Spanish economy as a whole”.

In August 2007, Spain notified a proposal to grant a corporate tax credit of 50% for revenues stemming from patents, designs, models, plans, secret formulas and processes. The Commission has assessed the measure, which is part of the Corporate Tax Law, on the basis of the Commission Notice on fiscal aid (see IP/98/983).

In particular, the Commission found that the tax credit would be open to all companies, irrespective of their size or sector, that there would be no restriction concerning the location of the eligible activities, and that the public administration had no discretion in applying the measure as the criteria are objective and defined ex-ante in the implementing regulation. Moreover, the overall budget to be spent by the state for the measure is not limited and the scheme constitutes a reduction of the tax base rather than a reduction of the tax rate. Therefore, the Commission concluded that the tax credit was in the logic of the Spanish tax system and that it would provide an incentive for companies to invest in R&D. The non-confidential version of the decision will be made available under the case number N 480/2007 in the State aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.

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