R&D Tax Incentives : Spain, 2017 (last figures of OECD)
The OECD has just published the R&D Tax Incentives Spain 2017. According to this report, Spain offers in 2017 one of the most generous R&D tax incentive provisions among OECD countries and partner economies, despite the decline in the generosity of the R&d tax credit regime over the 200-17 period. The drop in implied marginal tax subsidy rates noticeable in 2007 and 2008 is accounted for by the stepwise reduction of the volume-based and incremental R&D tax credit rates that apply to eligible R&D expenditure in Spain. The less marked decline in the implied subsidy rates in 2016 and sustained in 2017 is connected to a drop in the corporate income tax rate from 28% to 25%.
Spain provides R&D tax relief through a hybrid R&D tax credit and a SSC exemption for quealified research staff. Both incentives are partially muttually exclusive in their use (except for innovative SMEs): expenditures claimed for researchers under one scheme are not eligible for the other.
In case of insufficient income tax liability, unsued tax credits cand be carredi-froward for 18 years or can alternatively be refunded at a 20% discount one year after the tax credit was generated. On the other part, ceilings apply on refunded credits and the amount of R&D tax relief for firms in any profit situation.
Recent developments
Differences in the design of R&D tax incentives drive a significant variation in the expected generosity of tax relief per additional unit of R&D investment across OECD and partner economies and over time. In 2017, the marginal tax subsidy rate for a profit-making (loss-making) SME in Spain is estimated at 0,33 (0,26), well above the OECD median of 0.19 (0.15). In the case of large enterprises, the tax subsidy rate is equal to 0,33 (0,26) for profitable (loss-making enterprises) substantially over the OECD median, 0.11 (0.10). These estimates model provisions of the R&D tax credit and the accelerated depreciation of R&D capital.
Public support for business R&D: the policy mix
Spain is positioned close to the OECD median in terms of total gobernment support to business R&D as a percentage of GDP, equivalent to 0.8% of GDP in 2005.
From 2006 to 2015, total gobernment support for BERD as a percentage of GDP declined by 0.04 percentage points (this percentage increased from 2006 to 2008, declined thereafter)in Spain, while the OECD median increased by 0.02 percentage points.
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