Tax Relief

Goals

To provide insights into the current research and development (R&D) tax relief schemes in the UK, Australia, New Zealand, Germany, France, U.S., Canada, Ireland, Sweden, and Denmark with a specific focus on determining (1) the relief, in %, obtainable in each country, (2) if companies in each of these countries are eligible to apply for R&D tax rebates for work outsourced to the UK, and (3) the official web page for each countries' scheme.

Early Findings

UK

  • In the UK, SMEs and large companies can claim up to 33% and 11% respectively for every £1 spent on qualifying R&D activities.
  • This allows SMEs R&D to "deduct an extra 130% of their qualifying costs from their yearly profit, as well as the normal 100% deduction, to make a total 230% deduction, and claim a tax credit if the company is loss-making, worth up to 14.5% of the surrenderable loss."
  • A link for more guidance on this scheme can be found here.

Canada

  • Through the Scientific Research and Experimental Development (SR&ED) Program, the Canadian government offers Canadian-controlled private corporations either a refundable investment tax credit (ITC) at the enhanced rate of 35% or a non-refundable ITC at the basic rate of 15% on qualified SR&ED expenditures of $3 million.
  • However, Canadian-controlled private companies that qualify as a corporation can earn a "refundable ITC at the basic rate of 15% on any amount over $3 million, and 40% of the ITC can be refunded."
  • "Individuals (proprietorships) and trusts can earn a refundable ITC at the basic rate of 15% on qualified SR&ED expenditures. They first must apply the ITC against tax payable before the CRA can refund 40% of the unclaimed balance of ITCs earned in the year."
  • According to the Canadian government, foreign companies (including the UK) can be eligible for the R&D tax relief scheme on the following basis:
    • "Through a Canadian subsidiary of a foreign parent — a Canadian subsidiary, performing eligible R&D work in Canada for itself or on a contractual basis for the foreign-owned parent."
    • "Through a Canadian-controlled private corporation (CCPC) — a foreign corporation can establish a corporation in Canada that may qualify as a CCPC."
  • A link to the official web page of this scheme can be found here.

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