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EU introduces new rules on aid to boost research, development and innovation

The European Commission has announced new rules on aid paid out by Member States to companies for research, development and innovation projects.

The new guidelines will allow Member States to 'tailor make' their funds to kick start private sector investment in research and d...

Policy making and guidelines

The European Commission has announced new rules on aid paid out by Member States to companies for research, development and innovation projects.

The new guidelines will allow Member States to 'tailor make' their funds to kick start private sector investment in research and development (R&D) as long as they address a 'defined market failure', have an 'incentive effect' and do not 'excessively distort competition and trade'.

If the measures have been drawn according to these guidelines, the Commission should authorise the aid faster than under previous state aid rules.

As state aid is prohibited unless specifically authorised by the Commission under EU law, widening the scope of state aid to promote R&D and innovation is an effort to stimulate Europe's economy and meet the target of increasing spending on R&D to 3% of GDP by 2010.

EU Competition Commissioner Neelie Kroes said: 'Thanks to the Commission's new R&D&I Framework, Member States should find it easier to use state aid to boost private sector R&D and innovation projects. The Framework is an important contribution to the Strategy for Growth and Jobs.'

UEAPME, the European small and medium sized enterprise (SME) employers' organisation, welcomed the proposals as they will allow aid to cover the cost of patents, support services and the employment of qualified personnel.

Separately, the Commission also called for a more effective use of tax incentives in favour of R&D to boost trans-European cooperation and job creation.

The Commission's proposals offer a 'template' for national tax incentive schemes, and draw on a variety of best practices already in operation throughout the 25 Member States.

These new guidelines should enter into force from the 1 January 2007.