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Measures to promote research and development

SUPPORT FOR RESEARCH AND DEVELOPMENT PROJECTS

State aid for research and development projects are regulated by the Act on State Aid for Research and Development Projects (NN 64/18) effective from 26 July 2018.

State aid provider: Ministry of Economy and Sustainable Development

Implementing Body: Croatian Agency for SMEs, Innovations and Investments (HAMAG-BICRO)

Beneficiaries: legal and natural persons, corporate or personal income taxpayers

Type of state aid: tax relief for research and development projects and feasibility studies (income tax base reduction)

The research and development (R&D) project can fall under one or more research categories: fundamental research, industrial research and experimental development or feasibility study for R&D project.

The total maximum intensity of state aid for a particular R&D category in an R&D project to which a user can exercise the right on any ground based on this Act, including other legal grounds, may be up to:
a) 100% of the eligible project costs for basic research
b) 50% of eligible project costs for industrial research *
c) 25% of eligible project costs for experimental development *
d) 50% of eligible costs for feasibility studies **.
* Support intensity for industrial research and experimental development may in some cases be increased to a maximum aid intensity of 80% of eligible costs for industrial research and experimental development.
** Intensity of support for feasibility studies can be increased by 10 percentage points for medium-sized entrepreneurs and 20-percentage points for small entrepreneurs

The total amount of state aid that a beneficiary can achieve under this Act is as follows:
a) for predominantly basic research: the amount in kuna equivalent of up to € 300,000 per entrepreneur per project
b) for predominantly industrial research: the amount in kuna equivalent of up to € 200,000 per entrepreneur per project
c) for predominantly experimental development: the amount in kuna equivalent to € 100.000,00 per entrepreneur per project
d) for feasibility studies in the preparation of research activities: the amount in kuna equivalent to € 50.000,00 per study.

The total amount of State Aid for an R&D project that an individual entrepreneur can achieve under this Act and other legal bases may be increased if more than 50% of the cost of research conducted on the basis of contracts, knowledge, and patents obtained or licensed by the other parties under market conditions, and the costs of consultancy and similar services provided solely for the project are contracted with organizations for research and dissemination of knowledge, as follows:
a) for predominantly basic research: the amount in kuna equivalents up to € 40 million per entrepreneur per project
b) for predominantly industrial research: the amount in kuna equivalent of up to € 20 million per entrepreneur per project
c) for predominantly experimental development: the amount in kuna equivalent to € 15 million per entrepreneur per project.
d) for feasibility studies in the preparation of research activities: the amount in kuna equivalent to € 7.5 million per study.

The Beneficiary is supported by an additional deduction of the tax base for the eligible costs of R&D projects or for the feasibility study for R&D, in accordance with the corporate income tax or personal income tax regulations, in the following total percentages:
a) 200% of eligible project costs for basic research
b) 150% of eligible project costs for industrial research
c) 125% of eligible project costs for experimental development
d) 150% of eligible costs for the feasibility study.

Application: Entrepreneurs must submit an application before starting the project activities to the Ministry of Economy and Sustainable Development

Application forms can be found at the link: https://hamagbicro.hr/bespovratne-potpore/programi-podrske-inovacijskom-procesu/drzavna-potpora-za-iri-projekte/

Project implementation period: up to three years from the beginning of the project.