ASSISTANCE FOR RESEARCH AND DEVELOPMENT AND INNOVATION REGULATIONS

SUBSIDIARY LEGISLATION 463.05

ASSISTANCE FOR RESEARCH AND

DEVELOPMENT AND INNOVATION

REGULATIONS

1st January, 2009 *

LEGAL NOTICE 168 of 2009, as amended by Legal Notices 80 of 2014

and 38 of 2015.

The title of these regulations is the Assistance for Research

and Development and Innovation Regulations.

(Regulation 5)

Maximum Aid Intensity in respect of eligible costs

Small

Medium

Large

Undertaking

Undertaking

Undertaking

70%

60%

50%

Industrial Research

Industrial Research subject to

80%

75%

65%

-

collaboration between undertakings; for

large undertakings: cross border or with

at least one SME or

-

collaboration of an undertaking with a

research organisation

45%

35%

25%

Experimental Development

Experimental Development subject to

60%

50%

40%

-

collaboration between undertakings; for

large undertakings: cross border or with

at least one SME or

-

collaboration of an undertaking with a

research organisation

Technical Feasibility Studies

75%

75%

65%

Industrial Research

Technical Feasibility Studies

50%

50%

40%

Experimental Development

Innovative Clusters and Collaborations

50%

40%

30%

Investment Aid

Innovative Clusters and Collaborations

50%

50%

50%

Operation Aid (non-digressive)

Schedule A

Added by

L.N. 38 of 2015.

(Regulation 5)

Maximum aid intensities for industrial research and experimental development

projects as well as feasibility studies in preparation for industrial research

or experimental development projects having the start of works happening

on or after the 1st November, 2014

Small

Medium

Large

Undertaking Undertaking Undertaking

Research and Development Tax Credits

Industrial Research Projects

70%

60%

50%

Experimental Development Projects

45%

35%

25%

Collaborative Industrial Research

80%

75%

65%

Projects

ASSISTANCE FOR RESEARCH

AND DEVELOPMENT AND INNOVATION

Collaborative

Experimental

60%

50%

40%

Development Projects

Feasibility Studies

Feasibility studies in preparation for

70%

60%

50%

industrial research and experimental

development projects

In these regulations, unless the context otherwise requires

"the Act" means the Malta Enterprise Act;

"aid intensity" means the gross aid amount expressed as a

percentage of the eligible costs, before any deduction of tax or

other charge;

"the Corporation" means the Malta Enterprise Corporation

established under the Act;

"eligible costs" means expenses incurred by an undertaking

(a) to carry out industrial research or experimental

development

Provided that the eligible costs considered by this

paragraph shall only be applicable to undertakings

which qualify for assistance under these regulations

until the 30th June, 2014;

(b) to carry out technical feasibility studies preparatory to

industrial research or experimental development

Provided that the eligible costs considered by this

paragraph shall only be applicable to undertakings

which qualify for assistance under these regulations

until the 30th June 2014;

(c)

to carry out feasibility studies in preparation for an

industrial research or an experimental development

project having the start of works happening on or after

the 1st November, 2014;

(d) to obtain and validate patents and other industrial

property rights;

(e) to carry out industrial research and experimental

development projects as well as to carry out feasibility

studies in preparation for industrial research or

experimental development projects, having the start of

works happening on or after the 1st November 2014, in

accordance with the terms and conditions set out in the

*see regulation 1(2) of these Regulations, as originally promulgated.

Guidelines;

"effective collaboration” means collaboration between at least

two independent parties to exchange knowledge or technology, or

to achieve a common objective based on the division of labour

where the parties jointly define the scope of the collaborative

project, contribute to its implementation and share its risks, as well

as its results. One or several parties may bear the full costs of the

project and thus relieve other parties of its financial risks. Contract

research and provision of research services are not considered

forms of collaborations

Provided that this definition shall be applicable to

industrial research and experimental development projects having

the start of works happening on or after the 1st November, 2014;

"experimental development" means the acquiring, combining,

shaping and using of existing scientific, technological, business

and other relevant knowledge and skills for the purpose of

producing plans and arrangements or designs for new, altered or

improved products, processes or services but shall not include the

routine or periodic changes made to products, production lines,

manufacturing processes, existing services and other operations in

progress, even if such changes may represent improvements. The

experimental production and testing of products, processes and

services are also eligible, provided that these cannot be used or

transformed to be used in industrial applications or commercially

Provided that the following definition for "experimental

development" shall be applicable to research and development

projects having the start of works happening on or after the 1st

November, 2014

"experimental development" means acquiring, combining,

shaping and using existing scientific, technological, business and

other relevant knowledge and skills with the aim of developing new

or improved products, processes or services. This may also include,

for example, activities aiming at the conceptual definition,

planning and docum entati on of new products, p rocesses or

services

Provided that experimental development may comprise

prototyping, demonstrating, piloting, testing and validation of new

or improved products, processes or services in environments

representative of real life operating conditions where the primary

objective is to make further technical improvements on products,

processes or services that are not substantially set. This may

include the development of a commercially usable prototype or

pilot which is necessarily the final commercial product and which

is too expensive to produce for it to be used only for demonstration

and validation purposes

Provided further that experimental development does not

include routine or periodic changes made to existing products,

production lines, manufacturing processes, services and other

operations in progress, even if those changes may represent

improvements;

"feasibility study" means the evaluation and analysis of the

potential of a project, which aims at supporting the process of

decision-making by objectively and rationally uncovering its

strengths and weaknesses, opportunities and threats, as well as

identifying the resources required to carry it through and ultimately

its prospects for success

Provided that "feasibility studies" in the above definition

refers to feasibility studies in preparation for industrial research

and experimental projects as contemplated by these regulations

Provided also that the above definition for "feasibility

study" in preparation for industrial research and experimental

development projects shall be applicable to feasibility studies in

preparation for industrial research and experimental projects

having the start of works happening on or after the 1st November

2014, in accordance with the terms and conditions set out in the

Guidelines

Provided further that the applicable definition for technical

feasibility studies preparatory to industrial research and

experimental development for research, development and

innovation projects approved by the Corporation till the 30th June

2014, is provided in the Guidelines applicable at the time;

"the Guidelines" means such guidelines as may be published by

the Corporation from time to time in terms of the Act;

"industrial research" means the planned research or critical

investigation aimed at the acquisition of new knowledge and skills

for developing new products, processes or services or for bringing

about a significant improvement in existing products, processes and

services

Provided that industrial research comprises the creation of

components parts of complex systems, and may include the

construction of prototypes in a laboratory environment or in an

environment with simulated interfaces to existing systems as well

as of pilot lines, when necessary for the industrial research and

notably for generic technology validation;

"large undertaking", "medium-sized undertaking", "small

undertaking" and "micro undertaking" shall have the meaning

attributed to them by Annex I of Commission Regulation (EC) No

800/2008 of the 6th August, 2008 declaring certain categories of

aid compatible with the common market in application of Articles

87 and 88 of the Treaty (General Block Exemption Regulation)

Provided that for industrial research and experimental

development projects as well as for feasibility studies in

preparation for industrial research or experimental development

projects having the start of works happening on or after the 1st

November 2014, " "large undertaking", "medium-sized

undertaking", "small undertaking" and "micro undertaking" " shall

have the meaning attributed to them by Annex I of Commission

Regulation (EU) No 651/2014 of 17 June 2014 declaring certain

categories of aid compatible with the internal market in application

of Articles 107 and 108 of the Treaty;

"research organisation" means an entity, such as university or

research institute, irrespective of its legal status (organised under

public or private law) or way of financing, whose primary goal is to

conduct fundamental research, industrial research or experimental

development and to disseminate their results by way of teaching,

publication or technology transfer; all profits are reinvested in

these activities, the dissemination of their results or teaching;

undertakings that can exert influence upon such an entity, in the

quality of, for example, shareholders or members, shall enjoy no

preferential access to the research capacities of such an entity or to

the research results generated by it;

"research and knowledge-dissemination organisation" means an

entity (such as universities or research institutes, technology

transfer agencies, innovation intermediaries, research-oriented

physical or virtual collaborative entities), irrespective of its legal

status (organised under public or private law) or way of financing,

whose primary goal is to independently conduct industrial research

or experimental development or to widely disseminate the results

of such activities by way of teaching, publication or knowledge

transfer

Provided that where such entity also pursues economic

activities the financing, the costs and the revenues of those

economic activities must be accounted for separately

Provided further that undertakings that can exert a decisive

i n f l u e n c e u p o n s u c h a n e n t i t y, i n t h e q u a l i t y f o r e x a m p l e ,

shareholders or members may not enjoy preferential access to the

results generated by it

Provided finally, that the above definition for "research and

knowledge-dissemination organisation" shall be applicable to

industrial research and experimental development projects having

the start of works happening on or after the 1st November 2014 in

accordance with the terms and conditions set out in the Guidelines;

"start of works" means the earlier of either the start of

construction works relating to the investment, or the first legally

binding commitment to order equipment or any other commitment

that makes the investment irreversible

Provided that buying land and preparatory works such as

obtaining permits and conducting feasibility studies are not

considered start of works

Provided further that for take-overs, "start of works" means

that moment of acquiring the assets directly linked to the acquired

establishment;

"undertaking" means an undertaking as defined in the Act except

for the purposes of tax credits granted under regulation 3 where

undertaking shall mean

(a) a partnership constituted under the Companies Act,

being a partnership en nom collectif, en commandite or

a limited liability company; or

(b) a body of persons constituted, incorporated or

registered outside Malta, and of a nature similar to the

aforesaid partnerships and registered as an oversea

company in accordance with the Companies Act; or

(c) a co-operative society duly registered as such under

the Co-operative Societies Act

Provided that for industrial research and experimental

development projects having the start of works happening on or

after the 1st November 2014, "undertaking" shall have the same

meaning as assigned to it in paragraphs (a) to (c) under the

definition "undertaking" above

Provided also that, for feasibility studies in preparation for

industrial research and experimental development projects having

the start of works happening on or after the 1st November 2014,

"undertaking" shall have the same meaning as defined in the Act.

Miżjuda

A.L. 38 tal-2015.

(Regolament 5)

Limiti massimi tal-għajnuna għall-proġetti ta’ riċerka industrijali jew żvilupp

sperimentali kif ukoll biex jitwettqu studji ta’ vijabilità fit-tħejjija għall-proġetti

ta’ riċerka industrijali jew żvilupp sperimentali li għandhom il-bidu ta’ xogħlijiet

li ġraw nhar jew wara l-1 ta’ Novembru, 2014

Impriża ta’

Impriża ta’

Impriża ta’

Daqs Żgħir

Daqs Medju

Daqs Kbir

Krediti ta’ Taxxa għal Riċerka u Żvilupp

Proġetti ta’ Riċerka Industrijali

70%

60%

50%

Proġetti ta’ Żvilupp Sperimentali

45%

35%

25%

Proġetti ta’ Riċerka Industrijali permezz

80%

75%

65%

ta’ kollaborazzjoni

GĦAJNUNA GĦAR-RIĊERKA U ŻVILUPP

U INNOVAZZJONI

Proġetti ta’ Żvilupp Sperimentali

60%

50%

40%

permezz ta’ kollaborazzjoni

Studji ta’ Vijabilità

Studji ta’ vijabilità fit-tħejjija għall-

70%

60%

50%

proġetti ta’ riċerka industrijali jew

żvilupp sperimentali

(1) Where the Corporation is satisfied that an undertaking

requires assistance to carry out research and development and

innovation activities for developing new products, processes or

services or for bringing about a significant improvement in existing

products, processes and services, the Corporation may assist such

an undertaking by means of a tax credit or a cash grant as a

percentage of the eligible costs incurred by such undertaking in the

devel opm ent of th e said produ cts, servi ces or processes in

accordance with the terms and conditions set out in the Guidelines

Provided that as from the 1st November 2014 where the

Corporation is satisfied that an undertaking requires assistance to

carry out industrial research and experimental development

projects, the Corporation may assist such an undertaking by means

of a tax credit or a cash grant as a percentage of the eligible costs

incurred by such an undertaking in accordance with the terms and

conditions set out in the Guidelines

Provided also that as from the 1st November 2014 where

the Corporation is satisfied that an undertaking requires assistance

to carry out feasibility studies in preparation for an industrial

research or an experimental development project, the Corporation

may assist such an undertaking by means of a cash grant as a

percentage of the eligible costs incurred by such an undertaking in

accordance with the terms and conditions set out in the Guidelines.

(2) The tax credit that may be claimed under this regulation

shall be due for each year of assessment that immediately follows a

year in which the eligible expenditure giving rise to the right to the

tax credit is incurred.

(3) The assistance referred to in sub-regulation (1) may be

provided only if the research, development and innovation project

together with the relative services and costs involved have been

approved a priori in writing by the Corporation

Provided that such assistance may be approved by the

Corporation only if the undertaking shall increase its level of

research, development and innovation activities and shall carry out

research, development and innovation projects or activities which

would otherwise not have been carried out or would have been

carried out in a more restricted manner.

(1) Where the Corporation is satisfied that a research

project based on industrial research or experimental development

m ay contribute to the econ omic develo pment of Malta, the

Corporation may provide such an undertaking with the forms of

assistance referred to in regulation 3 in accordance with the terms

and conditions set out in the Guidelines.

(2) Where the Corporation, on or after the 1st November 2014,

is satisfied that an undertaking requires assistance to carry out

feasibility studies in preparation for an industrial research or an

experimental development project, the Corporation may provide

such an undertaking with the form of assistance referred to in

regulation 3 in accordance with the terms and conditions set out in

the Guidelines.

Where the Corporation is satisfied that a research project

referred to in regulation 4 involves collaboration between two

undertakings independent from each other or between an

undertaking and a research organisation, the Corporation may

provide such an undertaking with the forms of assistance referred

to in regulation 3 with the aid intensities for collaboration as

indicated in the Schedule, in accordance with the terms and

conditions set out in the Guidelines

Provided that, as from the 1st November 2014, where the

Corporation is satisfied that an industrial research or an

experimental development project referred to in regulation 4(1)

i nvol ves effect ive co llabo ratio n bet ween tw o un dert aking s

independent from each other or between an undertaking and a

research and knowledge-dissemination organisation, the

Corporation may provide such an undertaking with the forms of

assistance referred to in regulation 3 with the aid intensities for

collaboration as indicated in Schedule A, in accordance with the

terms and conditions set out in the Guidelines.

Where the Corporation is satisfied that an undertaking that

may contribute to the economic development of Malta requires

assistance to carry out technical feasibility studies preparatory to

industrial research or experimental development, the Corporation

may provide such an undertaking with the forms of assistance

referred to in regulation 3 in accordance with the terms and

conditions set out in the Guidelines

Provided that, as from the 1st November 2014, where the

Corporation is satisfied that an undertaking as defined in the Act

may contribute to the economic development of Malta requires

assistance to carry out feasibility studies in preparation for an

industrial research or an experimental development project, the

Corporation may provide such an undertaking with a cash grant in

accordance with the terms and conditions set out in the Guidelines.

(1) An undertaking benefiting from tax credits in terms of

these regulations and the respective Guidelines in respect of a year

of assessment shall be entitled to deduct from the amount of

income tax which is due on its chargeable income derived from its

trade or business for that year of assessment the amount of the tax

credit and, where the tax credit, for any year of assessment, exceeds

the income tax payable by such an undertaking for that year, the

excess shall be added to the tax credit for the following year and

deemed to be part of that tax credit, or if there is no such tax credit

for that year, be deemed to be the tax credit for that year and so on

for subsequent years

Provided that such tax credit which is not so utilised at the

end of any year and which is therefore carried forward to be added

to the tax credit of the following year of assessment and deemed to

be the tax credit for that year, shall be increased by such rate as

may be prescribed in the Guidelines; and where any part of the tax

credit as so increased is again not utilised, so much of it as is not

utilised shall be further increased by the said percentage and

carried forward to the following year and so on for subsequent

years

Provided further that a tax credit shall not give rise to a

right to a refund of tax.

(2) When an undertaking has benefited from the provisions of

these regulations, the tax credit shall be deemed to have relieved

from tax so much of that undertaking’s chargeable income which,

when multiplied by the rates of tax at which it was chargeable in

that year, is equal to the tax credit, and where the undertaking or

any subsequent undertaking distributes the income which is so

deemed to have been relieved from tax, such undertaking or

undertakings shall state in the dividend warrant pertaining to any

such distribution that such income has been relieved from tax by a

tax credit in accordance with these regulations; and the tax which

has so been relieved shall not be available for refund for any

purpose of the Income Tax Act.

(3)

(a) The chargeable income which is deemed to have been

relieved from tax in accordance with these regulations

shall, for the purposes of the Income Tax Act, be

allocated to the Final Taxed Account of the company in

question and any dividends, or part thereof, distributed

from such income shall be exempted from income tax

in the hands of the members of the company on receipt

of such distribution.

(b) Where the dividend referred to in sub-regulation (2) is

distributed to a member which is also a company

(hereinafter referred to as "the second company"), the

said dividend shall likewise be distributed by the

second company to its members in the form of

dividends exempt from income tax in the hands of the

recipients, and where a member of the second

company is again a company, the preceding provisions

shall apply mutatis mutandis as though references to

the first company were references to the second

company, and as though references therein to the

second company were references to that member, and

the principle set out in this sub-regulation shall

continue to be applied for as long as such income or

part thereof to which this regulation applies are

distributed by way of dividends.

(4) Where for a year of assessment, an undertaking qualifies

for a tax credit under regulation 5 of the Business Promotion

Regulations, and also under the provisions of these regulations, it

shall avail itself of the tax credit due under the Business Promotion

Regulations before any set-off is made in respect of the tax credit

due under these regulations.

(5) No tax credit shall be due to an undertaking under these

regulations for a year of assessment unless it is claimed in the

appropriate section of a tax return submitted by electronic means

by not later than the relative tax return date.

The Corporation shall not approve any new research

projects after the 30th June, 2014 or after such date as the

Corporation may specify by means of a notice in the Gazette

Provided that the Corporation may approve until the 31st

December 2020 new industrial research and experimental

development projects as well as feasibility studies in preparation

for industrial research or experimental development projects

having the start of works happening on or after the 1st November

2014, and the provisions of these regulations shall mutatis

mutandis apply to such industrial research and experimental

development projects and feasibility studies in accordance with the

terms and conditions set out in the Guidelines.

The levels of assistance that may be granted in terms of

these regulations shall be established by the respective Guidelines

published by the Corporation pursuant to the Act. The maximum

intensity levels of assistance shall be as indicated in the Schedule

Provided that the maximum aid intensity levels of

assistance for industrial research and experimental development

projects as well as feasibility studies in preparation for industrial

research or experimental development projects having the start of

works happening on or after the 1st November 2014, shall be those

as indicated in Schedule A.

These regulations shall not apply to firms in difficulty in

terms of Community Guidelines on State aid for rescuing and

restructuring firms in difficulty as described in the Official Journal

C244, 01.10.2004

Provided that the Community Guidelines considered by this

regulation shall only be applicable to undertakings which qualify

for assistance under these regulations until the 30th June, 2014

Provided also that for industrial research and experimental

development projects as well as feasibility studies in preparation

for industrial research or experimental development projects

having the start of works happening on or after the 1st November

2014, these regulations shall not apply to firms in difficulty in

terms of Commission Regulation (EU) No 651/2014 of 17 June

2014 declaring certain categories of aid compatible with the

internal market in application of Articles 107 and 108 of the Treaty.

ASSISTANCE FOR RESEARCH

AND DEVELOPMENT AND INNOVATION