State Aid for Research, Development and Innovation for the Benefit of Luxembourg s Economy

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1 State Aid for Research, Development and Innovation for the Benefit of Luxembourg s Economy Law of 5 June 2009 relating to the promotion of research, development and innovation

2 CONTENTS Editorials 03 The aid schemes of the Law of 5 June Research & development projects or programmes Technical feasibility studies Protection of technical industrial property Aid for young innovative enterprises Innovation advisory services and innovation support services Temporary secondment of highly qualified personnel Process and organisational innovation in services Investment in innovation clusters Animation of innovation clusters "De minimis" measures 22 Table of aid intensities under the new schemes and measures 24 Terms and conditions for aid applications 26 Personalised assistance from Luxinnovation 27 Page 02

3 Stimulating research and innovation through new state aids Page 03 Innovation and research are key assets enabling businesses to differentiate and position themselves in an increasingly competitive market. Any enterprise, small or large, has innovation potential, and this potential must be stimulated. This is why the Luxembourg Government has created a new legal framework to support research, development and innovation in Luxembourg. While earlier legislation focused exclusively on research and development projects, the Law of 5 June 2009 creates scope for financial assistance to enterprises that engage in innovation activities. The new Law introduces a range of aid schemes notably designed to co-finance technical feasibility studies, the protection of industrial property, organisational innovation and innovation advisory services. Another measure provides co-financing of the expenses associated with the development of young innovative enterprises that are less than six years old. As some of these new schemes are reserved for SMEs, I would like large enterprises to benefit from similar opportunities, in the form of the de minimis aid. Certain of the schemes provide higher level incentives in order to encourage public-private partnerships and cross-border collaborations. This brochure, produced by Luxinnovation, explains the new RDI aid schemes established by the Law and allows project applicants to rapidly understand the incentive measures implemented by the Government. I encourage entrepreneurs and researchers to fully use the range of guidance and support services offered by Luxinnovation, an experienced partner with whom their innovation and research projects can be discussed in complete confidence. Jeannot Krecké Minister of the Economy and Foreign Trade Stimulating research and innovation through new state aids

4 Personalised assistance for your innovation activities Responsible for the promotion of the new Law relating to research, development and innovation (RDI), Luxinnovation aims, with this publication, to provide an introductory overview of the available aid schemes. For each of the aid schemes introduced by the new Law, this publication features simple answers to questions such as : What does this new state aid cover? Who can benefit? Which expenses does it finance? How much does the aid amount to? But each project is unique! Luxinnovation, therefore, also provides personalised assistance that takes account of the specificities of individual projects. You may be looking for answers to your questions about aid eligibility, for guidance on the preparation of your application, for advice on setting up your innovative enterprise, for suitable innovation experts, for opportunities to benefit from technology transfer or for a technical collaboration partner. Luxinnovation develops tailor-made solutions, and allocates a dedicated team to every project. As part of its service, Luxinnovation makes its networks and contacts available to its clients, whilst maintaining the strictest confidentiality. Drawing on 25 years of experience, our Agency is committed to supporting you as you take your ideas to the next level. Together, let s turn ideas into action! Marco Walentiny President of Luxinnovation GIE Director for Research, Development and Innovation Ministry of the Economy and Foreign Trade Page 04

5 The aid schemes The Law of 5 June 2009 relating to the promotion of research, development and innovation enables the Government to award aid for RDI to enterprises and research organisations under the following aid schemes and measures : research & development (R&D) projects or programmes ; technical feasibility studies ; protection of technical industrial property ; aid for young innovative enterprises ; innovation advisory services and innovation support services ; temporary secondment of highly qualified personnel ; process and organisational innovation in services ; investment in innovation clusters and animation of innovation clusters ; de minimis measures. Offering an appropriate framework for RDI in Luxembourg The Luxembourg Government has seized the opportunity presented by the new EU framework to adapt the RDI aid schemes while taking into account the changes that occurred at a national level since the previous scheme came into force in In particular, the broadening of the competencies of the research centres and the difficulties which many Small and Medium-sized Enterprises (SMEs) encounter in accessing innovation have been taken into account. Generally speaking, the new Law offers a range of tools specific to the needs of various RDI stakeholders and aims to simplify and accelerate the aid application procedures. Page 05 Definition of Small and Medium-sized Enterprises Small enterprises are defined as enterprises which employ fewer than 50 people and whose annual turnover or total annual balance sheet does not exceed 10 million. Medium-sized enterprises are defined as enterprises which employ fewer than 250 people and whose annual turnover does not exceed 50 million or whose total annual balance sheet does not exceed 43 million. However, in some cases, enterprises can lose their status as small or medium-sized enterprises, if they are not autonomous, i.e. if 25% or more of their capital or voting rights are owned by another enterprise or by several linked enterprises, or if they have downstream control over another enterprise. The full definition of the Grand-Ducal Regulation of 16 March 2005 amending the definition of micro, small and medium-sized enterprises is available on the Luxembourg Portal for innovation and research under the heading Publications, subheading Key legislation, bills and regulations : 1 1 Please note the full text is only available in French. The aid schemes

6 1. Research & development (R&D) projects OR programmes WHAT IS THE SCOPE OF THIS AID? Three types of R&D are eligible : Experimental development : an activity aimed at developing new, modified or improved products, processes, services, methods or organisation models (including the creation of prototypes). Industrial research : research aimed at acquiring new, not yet commercially exploitable knowledge with the aim of allowing new products, processes, services, methods or organisation models to be created (possibly during a subsequent experimental development). Fundamental research : an activity aimed at broadening scientific and technical knowledge not associated with industrial or commercial objectives. Main assessment criteria : the innovative nature of the project ; technological risks proving the R&D nature of the project ; the economic potential (except for fundamental research) ; the enterprise s financial capacity in relation to the size of the project. WHO CAN BENEFIT? All enterprises and private research organisations established in Luxembourg are eligible. Page 06

7 WHAT CAN BE FUNDED? Eligible expenses include the following costs in so far as they are directly associated with the R&D project or programme : personnel expenses ; costs for the use of instruments, equipment, machines, tools, installations, land and buildings ; materials and other consumables ; subcontracting expenses ; overhead expenses ; any other type of cost directly associated with the project. Page 07 HOW MUCH DOES THIS AID AMOUNT TO? The aid intensities, calculated on the basis of the eligible costs of the project or programme, cannot exceed the following limits : Maximum aid intensity Large enterprise or large private research organisation Medium-sized enterprise or medium-sized private research organisation (including 10% bonus) 1 Small enterprise or small private research organisation (including 20% bonus) 1 Experimental development 25% 35% 45% Experimental development + collaboration 40% 2 50% 3 60% 3 (including 15% bonus) Industrial research 50% 60% 70% Industrial research + collaboration 65% 2 75% 3 80% 3, 4 (including 15% bonus) Fundamental research 100% 100% 100% 1 Cf. Definition of Small and Medium-sized Enterprises (p.5) 2 Collaboration with at least one public research organisation in Luxembourg or one SME in Luxembourg or one enterprise located in another EU member state. Subcontracting is not considered to be effective collaboration. 3 Collaboration with at least one public research organisation in Luxembourg or one enterprise in Luxembourg or in another EU member state. Subcontracting is not considered to be effective collaboration. 4 Maximum aid intensity allowed for industrial research, including all bonuses. 1. Research & development projects or programmes

8 2. Technical feasibility studies WHAT IS THE SCOPE OF THIS AID? This relates to a study conducted prior to an R&D project or programme in order to determine the technical feasibility of the project or programme. This type of study must permit an identification of the technological risks, the advantages of a product compared to competing products, or an assessment of the potential of a technology for the development of a new application. The study s conclusions must allow a decision to be made on the launch of an R&D project or programme. WHO CAN BENEFIT? All enterprises and private research organisations established in Luxembourg are eligible. Page 08

9 WHAT CAN BE FUNDED? The eligible costs are the same as those for R&D projects or programmes, i.e. costs directly associated with the technical feasibility study : personnel expenses ; costs for the use of instruments, equipment, machines, tools, installations, land and buildings ; materials and other consumables ; subcontracting expenses ; overhead expenses ; any other type of costs directly associated with the study. HOW MUCH DOES THIS AID AMOUNT TO? The maximum allowable aid intensities vary according to the type of study. For a study prior to an industrial research activity : 75% of the eligible costs for Small and Medium-sized Enterprises (SMEs) 1 ; 65% of the eligible costs for large enterprises. Page 09 For a study prior to an experimental development activity : 50% of the eligible costs for SMEs ; 40% of the eligible costs for large enterprises. 1 Cf. Definition of Small and Medium-sized Enterprises (p.5) 2. Technical feasibility studies

10 3. Protection of technical industrial property WHAT IS THE SCOPE OF THIS AID? Technical industrial property is defined by law as a temporary monopoly on the exploitation of an intellectual work protected by a right, such as a patent or design, or by a copyright on software. WHO CAN BENEFIT? This aid is reserved for Small and Medium-sized Enterprises (SMEs) and private research organisations (meeting the SME criteria) established in Luxembourg. Page 10 Mikko Pitkänen

11 WHAT CAN BE FUNDED? The eligible costs cover : all costs preceding the grant of the right in the first legal jurisdiction ; translation and other costs incurred in order to obtain the granting or validation of the right in other legal jurisdictions ; costs incurred to defend the validity of the right during the official prosecution of the application and possible opposition proceedings. HOW MUCH DOES THIS AID AMOUNT TO? The maximum intensity is equal to the intensity that could have been allocated to the R&D activities that led to the right being obtained, i.e. : 100% for expenses following a fundamental research activity ; 50% for expenses following an industrial research activity ; 25% for expenses following an experimental development activity. Page 11 A bonus of 15% can be added for technical intellectual property expenses incurred at the end of an effective collaboration with at least one public research organisation in Luxembourg or one enterprise in Luxembourg or in another EU member state. Subcontracting is not considered to be effective collaboration. 3. Protection of technical industrial property

12 4. Aid for young innovative enterprises WHAT IS THE SCOPE OF THIS AID? This aid aims to cover the funding needs of young innovative enterprises, which have high growth potential, during their development phase. WHO CAN BENEFIT? This aid targets small enterprises 1 or small private research organisations 1 established in Luxembourg which were created less than 6 years before the aid is granted AND : which will, in the foreseeable future, develop new products, processes or services which involve a significant risk of technical or industrial failure ; OR which have used at least 15% of their operating expenses for R&D over at least 1 of the 3 years preceding the granting of the aid, or over the current year. Page 12 Luminis

13 WHAT CAN BE FUNDED? All of the enterprise s expenses are eligible. The aid is thus particularly suitable for supporting the enterprise s commercial development or for the setting up of its infrastructure. HOW MUCH DOES THIS AID AMOUNT TO? This aid can only be awarded once and it cannot exceed e 1 million. The aid can be combined with other aid allowed under the RDI promotion schemes, as long as the aids do not cover the same expenses. Page 13 1 Cf. Definition of Small and Medium-sized Enterprises (p.5) 4. Aid for young innovative enterprises

14 5. Innovation advisory services and innovation Support services WHAT IS THE SCOPE OF THIS AID? This scheme encourages Small and Medium-sized Enterprises (SMEs) to make use of external services in order to initiate and support their innovation activities. WHO CAN BENEFIT? This aid is reserved for SMEs and private research organisations (meeting the SME criteria) established in Luxembourg. Page 14 Kacper Nowicki

15 WHAT CAN BE FUNDED? The external services relating to innovation advisory services and innovation support services are eligible. The following costs are eligible for aid : For innovation advisory services : Costs associated with management consulting, technological assistance, technology monitoring and technology transfer services, consultancy for the acquisition, protection and trade of technical intellectual property rights and for licensing agreements, and consultancy on the use of technical standards. For innovation support services : The costs for the temporary use of premises, databanks, technical libraries and laboratories, the costs associated with market studies, quality studies, testing and certification. Page 15 HOW MUCH DOES THIS AID AMOUNT TO? The maximum intensity of the aid corresponds to 75% of the eligible costs (and potentially up to 100% if the expert is certified). The terms and conditions for granting this approval are specified in a Grand- Ducal Regulation. The aid is limited to 200,000 over 3 years. 5. Innovation advisory services and innovation support services

16 6. Temporary secondment of highly qualified personnel WHAT IS THE SCOPE OF THIS AID? The intention of this measure is to facilitate access to highly qualified human resources from public research organisations or large enterprises who can contribute knowledge and expertise. Secondment is understood to be the temporary posting of a person to a private research organisation or to an enterprise, including a right of return to the establishment releasing the person on secondment at the end of the posting period. Highly qualified personnel is defined as a person with a university degree marking the successful conclusion of a higher education course of at least four years and with a minimum of five years experience in the fields of research, engineering or the design or marketing of products, services or processes. WHO CAN BENEFIT? This aid is reserved for Small and Medium-sized Enterprises (SMEs) established in Luxembourg. The following conditions must be met : the person is released on secondment by a large enterprise or a research organisation and does not replace another salaried employee ; the person is assigned to a newly created post ; the person must have been working in the original establishment for at least two years ; the person must carry out RDI activities for the enterprise receiving the aid. Page 16

17 WHAT CAN BE FUNDED? Eligible costs include : the salary expenses for the seconded personnel for a maximum period of 3 years ; recruitment expenses ; any moving expenses of the seconded personnel and their families. HOW MUCH DOES THIS AID AMOUNT TO? The maximum intensity is set at 50% of the eligible costs. Page Temporary secondment of highly qualified personnel

18 7. process and organisational innovation in services WHAT IS THE SCOPE OF THIS AID? Organisational innovation involves the implementation of a new organisational method in the business practices, at the workplace or in the external relations of the enterprise. Process innovation consists of the implementation of a new or significantly improved production or distribution method. WHO CAN BENEFIT? The aid is open to all enterprises on the understanding that large enterprises must collaborate with at least one small or medium-sized enterprise. The following conditions must be met : organisational innovation must be related to the use and exploitation of Information and Communication Technologies (ICT); the project or programme must be managed by an identified and qualified project manager, and the costs of the project or programme must be budgeted ; the project or programme must lead to the development of a standard, a business model, methodology or concept that can be systematically reproduced ; the innovation must be a novelty or a significant improvement on the state-of-the-art in the relevant sector within the European Union ; the project or programme must involve a genuine risk of failure. Page 18

19 WHAT CAN BE FUNDED? The eligible costs include : personnel expenses ; costs for the use of instruments, equipment, machines, tools, installations, land and buildings ; materials and other consumables ; subcontracting costs ; overhead expenses ; any other type of costs directly associated with the project. In the case of an organisational innovation, only the costs associated with the use and exploitation of ICT are eligible. Page 19 HOW MUCH DOES THIS AID AMOUNT TO? The maximum aid intensities are as follows : 15% of the eligible costs for large enterprises ; 25% of the eligible costs for medium-sized enterprises ; 35% of the eligible costs for small enterprises. 7. Process and organisational innovation in services

20 8. & 9. Investment in innovation clusters & animation of innovation clusters WHAT IS THE SCOPE OF THIS AID? An innovation cluster is defined as a grouping of independent enterprises or research organisations. This grouping must be active in a particular sector or region or must share similar or complementary interests or skills. Its aim is to : promote innovation by encouraging interaction, the sharing of facilities and the exchange of knowledge and expertise for the purpose of research, development or innovation ; contribute to technology transfer, networking and the dissemination of scientific and technical information between the enterprises and research organisations that compose the grouping. The aid can cover two types of expenses : investments in an innovation cluster ; animation costs of an innovation cluster. WHO CAN BENEFIT? All enterprises and all public and private research organisations established in Luxembourg are eligible for these schemes. The recipient of the aid for investment in an innovation cluster must be responsible for managing the installations and activities of the innovation cluster as well as the access to the premises. Access to the premises must be open to enterprises and public or private research organisations that wish to use the cluster s installations. The fees for using the installations must reflect the investment, maintenance and management costs. Page 20

21 WHAT CAN BE FUNDED? Investment expenses : The aid can be granted to the manager of an innovation cluster for the following investments : land and buildings for research laboratories and training facilities ; research, laboratory and testing equipment ; broadband network equipment. Animation expenses : Eligible costs for the animation of an innovation cluster are the staff and administrative expenses associated with the following activities : promotional operations designed to recruit new members ; management of the installations of an innovation cluster ; organisation of training programmes, workshops and conferences to facilitate knowledge transfer and networking among the members of an innovation cluster. Page 21 HOW MUCH DOES THIS AID AMOUNT TO? Investment expenses : The maximum aid intensity is 15%. Bonuses can be granted to small enterprises (+ 20%), medium-sized enterprises (+10%) and, in some cases, to public research organisations (up to + 35%). Animation expenses : The aid can be : linear, limited to 50% of the annual eligible costs over a maximum period of 5 years ; degressive, in which case the intensity can attain 100% in the first year and must subsequently decline, in a linear fashion, to a rate of 0% in the fifth year. Bonuses (up to a total maximum intensity of 75%) and period extensions (up to a maximum of 10 years) can be granted to public research organisations under certain conditions. 8. & 9. Investment in innovation clusters & animation of innovation clusters

22 10. De minimis measures WHAT IS THE SCOPE OF THIS AID? The Ministers may apply discretionary capped aid measures, called de minimis, to enable enterprises and private research organisations to benefit from public funding if these entities are not eligible for a specific aid scheme defined by the Law due to their size or in view of other criteria. WHO CAN BENEFIT? All enterprises and private research organisations established in Luxembourg are eligible. WHAT CAN BE FUNDED? The eligible costs correspond to the expenses eligible for the relevant aid schemes defined by the Law. HOW MUCH DOES THIS AID AMOUNT TO? In accordance with the provisions of European Commission Regulation No / 2006, the total gross amount of the de minimis aid may not, per private enterprise or private research organisation, exceed the limit allowed by this Regulation or by the regulations that may subsequently replace it. This amount is currently set at 200,000 per period of 3 fiscal years. Page 22

23 10. Mesures «de minimis»

24 Table of aid intensities under the new schemes and measures The table below summarises the maximum aid intensities of all of the aid schemes established by the Law of 5 June 2009 relating to the promotion of research, development and innovation. Each line represents a specific aid scheme or measure. MAXIMUM INTENSITY / MAXIMUM AMOUNT Type of scheme R&D project or programme Technical feasibility studies Protection of technical industrial property Type of R&D project or programme Large enterprise or large private research organisation Medium-sized enterprise or medium-sized private research organisation (including 10% bonus) 1 Small enterprise or small private research organisation (including 20% bonus) 1 Public research organisation Experimental development 25% 35% 45% n/a Experimental development 40% 50% 60% n/a + collaboration (including 15% bonus) Industrial research 50% 60% 70% n/a Industrial research 65% 75% 80% n/a + collaboration (including 15% bonus) Fundamental research 100% 100% 100% n/a Prior to experimental 40% 50% 50% n/a development Prior to industrial research 65% 75% 75% n/a Following experimental n/a 2 25% 25% n/a development Following experimental n/a 2 40% 40% n/a development + collaboration (including 15% bonus) Following n/a 2 50% 50% n/a industrial research Following industrial research n/a 2 65% 65% n/a + collaboration (including 15% bonus) Page 24 Following fundamental research n/a 2 100% 100% n/a

25 MAXIMUM INTENSITY / MAXIMUM AMOUNT Type of scheme Large enterprise or large private research organisation Medium-sized enterprise or mediumsized private research organisation (including 10% bonus) 1 Small enterprise or small private research organisation (including 20% bonus) 1 Public research organisation Aid for young innovative enterprises n/a n/a 1,000,000 n/a Innovation advisory services and innovation support services n/a 2 200,000 maximum aid per 3-year period 200,000 maximum aid per 3-year period n/a Temporary secondment of highly qualified personnel n/a 2 50% 50% n/a Page 25 Process and organisational innovation in services Investment in innovation clusters Animation of innovation clusters "De minimis" measures 15% 25% 35% n/a 15% 25% 35% 50% 50% on average, over a maximum period of 5 years 200,000 maximum per period of 3 fiscal years 1 Cf. Definition of Small and Medium-sized Enterprises (p.5) 2 De minimis measures may apply (cf. p.22) 50% on average, over a maximum period of 5 years 200,000 maximum per period of 3 fiscal years 50% on average, over a maximum period of 5 years 200,000 maximum per period of 3 fiscal years 75% over a maximum period of 10 years n/a Table of aid intensities under the new schemes and measures

26 Terms and conditions for aid applications Aid applications must be submitted before the RDI investments are made or before the relevant connected activities are launched. It is the applicants responsibility to prove, in their application, the incentive effect of the aid measure applied for. This effect is presumed for SMEs provided that the aid application has been submitted before the expenses were incurred. Large enterprises, however, must also document that the aid will result in a significant increase in the size of the project, its scope, its pace or the budget allocated to it. Guidelines for submitting aid applications are available on the Luxembourg Portal for innovation and research (www.innovation.public.lu) and on the Guichet Entreprises website (www.guichet.public.lu). This brochure is provided purely for information purposes. The Law of 5 June 2009 relating to the promotion of research, development and innovation remains the only legal basis. The full text of this Law can be downloaded from the Luxembourg Portal for innovation and research under the heading Publications, subheading Key legislation, bills and regulations (www.innovation.public.lu/loi_rdi/) 1. Page 26 Cumulation rules The aid allowed by the different aid schemes instituted by the new Law cannot be cumulated for the same expense. For individual sets of eligible expenses, this aid cannot be combined with : de minimis aid, if the maximum aid permitted by the applicable scheme is exceeded as a result of the cumulation ; the aid allowed in article 4 of the modified Law of 27 July 1993 relating to economic development and diversification and to the improvement of the general structure and of the regional balance of the economy ; the aid allowed by the Law of 18 April 2008 concerning the renewal of the support for rural development ; the aid allowed in article 5 of the Law of 30 June 2004 relating to the creation of a general framework of aid schemes for the middle class sector ; the aid allowed by the Law of 15 July 2008 relating to the economic development of certain regions of the country and to the modification of the modified Law of 27 July 1993 which related to economic development and diversification, the improvement of the general structure and of the regional balance of the economy and to the law of 18 February 2010 on aid schemes for environmental protection and for the rational use of natural resources. 1 Please note the full text is only available in French.

27 PERSONALISED ASSISTANCE FROM LUXINNOVATION Luxinnovation offers tailor-made support at all stages of innovation and research projects and activities. Drawing on the expertise of its teams, Luxinnovation provides customised services for project applicants to : identify the needs of the enterprise or the research organisation ; guide them to the appropriate funding tool ; support them in putting together aid application files. Cooperating closely with companies in the field and with the institutions in charge of policies relating to innovation and research, the Agency supports the action of entrepreneurs and researchers through : Page Assistance in searching for national, European and international funding Project set-up assistance: guidance and support for the preparation of aid applications Access to the national and international decision makers 2. Support for new activities Complete assistance for start-up projects (feasibility, business plan, public and private funding, providing contacts, integration within a business incubator) Support for young innovative enterprises in the development phase 3. Transfer of technologies and searching for collaborations Innovation diagnostics Technology transfer support and technology monitoring Providing contacts and networking with partners Creation and animation of clusters Project support 4. Valorisation of research results Analysis of the socio-economic potential Information and guidance in regards to intellectual property Support for the socio-economic valorisation of the results 5. Information on research and innovation Innovation management training Information meetings and workshops Management of the Luxembourg Portal for innovation and research (www.innovation.public.lu) Publication of the FOCUS on research and innovation in Luxembourg magazine

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