Incentives and tax breaks to boost investments –

The government is expected to bring tax exemptions that are considerably higher compared to the current ones to a vote in the Parliament in the next period, which will be applied from the new year and concern those who make large private investments, those who include investment projects in the manufacturing support regime and those who proceed to finance start-ups.

According to exclusive information of “Sunday Step”, the Minister of Development Takis Theodorikakos has recommended that the levels of tax exemptions be much higher in the new schemes that will be announced in the first quarter of 2025 and especially in the Large Investments scheme, but always within the limits of the regional aid rules and the General Exemption Regulation (EU 651/2014 ).

Innovation

He himself during a recent event of the Ministry of Development on “Productive transformation, strengthening investments and industry for growth and new jobs throughout Greece”, in the presence of the Prime Minister Kyriakou Mitsotakis and numerous actors of the political and economic life of the country, pointed out, among other things, on the issue of tax exemptions that “through the General Secretariat of Private Investments, we give absolute priority to the regime of large investments, which will be innovative, use modern technology and be implemented with a low energy footprint. Specifically: 150 million Euros in tax exemptions for the regime of large investments over 10 million. euro”.

Processing

He also mentioned another 150 million. euro for the declaration of a processing regime: “75 million euro aid and 75 million euro tax exemption”. Also, Mr. Theodorikakos stated that “there is the very important package of measures to support start-ups, which the Prime Minister recently announced at the TIF, expanding the tax incentives for the participation of investors in them”. According to sources from the Ministry of Development, tax exemptions are the most important aid provided by all EU countries to support investment projects.

In fact, the tax exemption is a deduction from the payment of income tax on the realized pre-tax profits, which result from all the activities of the company, while the tax exemption is calculated as a percentage of the value of the supported costs of the investment project or the value of equipment acquired through leasing.

In the regimes that have been announced in the development law n. 4887/2022, the amount of tax exemptions per investment reaches 5,000,000 euros, while the amount of grants is 3,000,000 euros. Also, the aid on an annual basis must not exceed 1/3 of the total tax exemption.

For example, if an investment receives a tax exemption amount of 1,500,000 euros, it can use it during 15 years at will. However, per year the maximum amount of the tax exemption can rise to 1/3*1,500,000 = 500,000 euros. However, if from the previous year he has an aid balance that he did not use, this can be added to the above amount. According to the Ministry of Development, the companies that request the strengthening of the tax exemption are those that have the greatest added value to the country’s GDP, as the investor, having assessed the risks involved in his investment, believes in the sustainability and profitability of the investment in order to apply for the incentive of the tax exemption, which begins to be provided to him after realizing 50% or 65% of his investment. So these investments are realized and are profitable.

The startups

On the other hand, the ultimate goal of interventions on the innovation front is to strengthen business startups and bridge the gap that separates Greece from the European average in terms of research and development (R&D). It is worth emphasizing that until 2020, companies investing in research and innovation had a 130% tax deduction for research and development expenses certified by the General Secretariat of Research and Innovation of the Ministry of Development. In 2020, the rate of the tax deduction rose to 200% and now with the bill that will be submitted immediately to the Parliament, it will provide for a maximum rate of deduction of 315%, as announced by Mr. Mitsotakis from the podium of the International Exhibition of Thessaloniki.

“Investment angels”

At the same time, the tax incentives for “angel investors” are significantly expanded, with an increase in the upper limit of investment in startups on which the deduction from taxable income is calculated to 900,000 euros from 300,000 euros today. In this way, an investor can earn up to 450,000 tax-deductible instead of 150,000 euros today. It is noted that the percentage of the 50% discount remains the same. What changes is the maximum tax-deductible investment amount. Also, “investment angels” are entitled to make up to 3 investments per year.

As they report competently, given the limited utilization of this incentive to date, it is considered appropriate to make it more attractive, through the above increase, as these are high-risk investments.