Grants, support and tax savings for innovative companies that want to expand into the European market

Last Updated on Feb 20, 2022 by Jos

Home » Insights » Grants, support and tax savings for innovative companies that want to expand into the European market

Contents

    Introduction

    In this post, we’ll be discussing the Belgium Governments Innovation Grants that are available to innovative companies that want to enter the European market.

    We also share an infographic that shows how a US company can effectively slash their taxes to almost $0 so read till the end for that.

    Hey guys, I’m here today with Julia V from Innovation Park. She’s running a company that helps other companies into the European market. They need to be innovative. So pretty excited to see how it works and what kind of incentives are available for companies to enter the European market.

    What is the criteria for a company to get government assistance moving into the European market?

    So there are several criteria for companies who move to the European market, generally, they need to be innovative companies. In this case, an innovative company is that has a certain product or technology that has not been used before, and that potentially, the IP could be registered in Europe.

    That’s a very important piece for getting funding.

    But there’s also a piece that many people don’t know that there is also funding available and grants available for investors.

    So if it’s the case, that you’re not an innovative company, however, you’re looking to invest into some important large objects, there are still quite significant funds available, for example, you know, something like 100,000 in salaries or something like that.

    What if you already have your patents registered in the States, for example?

    Yes, sometimes, actually, oftentimes, that’s the case when the company is already registered.

    And even like, publicly traded in us, however, a certain piece of technology or device that they want to actually bring to Europe, it needs additional licencing.

    In EU, we just like many cases, that’s that’s it. So that still qualifies for getting the grants and partnerships and contracts.

    So if you have the parents wouldn’t exclude you, but it just means you’d need additional patents.

    Exactly. So like, you can still keep your company, like in this specific case, US company, US public company would own the company in Europe. But it needs to establish this company in Europe that would then get the licencing that’s required to market the product in Europe.

    Okay, what other criteria are there?

    The other criteria is, so specifically we are looking like oh, just to give you some examples of the industries that are very much in demand in Belgium.

    So Belgium is the centre of logistics.

    So anything that has to do with logistics or improving logistics, is very much in demand. Because you know, just being the best doesn’t mean you’re going to always say be the best, right?

    You need to constantly work on staying the best. Then Belgium is quite, quite competitive in trucking and transportation industries competing with Germany, such a small company can be such big country, like Germany, so it needs to be very technologically advanced.

    Also, also working on that. So improving trucking industry, again, always has to do with logistics, charging station for trucks, alternative fuel for trucks, and anything.

    Yeah, yep, exactly. So that’s another interesting industry, apart from that, sort of, because of COVID became sort of sort of known that Belgium is also strong in biosciences.

    Okay, you know, a lot of vaccines have been developed here. So Biosciences here strong chemical, a lot of chemical companies, also here in Belgium. Many of them actually are German companies that are set up and operating in Belgium.

    So chemical industry, biosciences, medicine, logistics and trucking, also very important agriculture.

    There is an interesting fact about Flanders at Flinders has more things than people. Flanders is one of the biggest provinces in Belgium.

    Belgium has three provinces.

    One of them is Brussels city. Like it’s a small country.

    So yes, so even though Belgium is a small country produces a lot of food and a thing that port of Antwerp has.

    These are the largest frozen vegetable storage in the world. Don’t call Got it, but I’m quite sure it’s true. Which is crazy.

    So you look at the technologies in that space as well?

    Yes, anything that’s related with alternative for food production, but agriculture, mostly

    Agriculture kind of stuff.

    So how to increase the agricultural output, etc?

    Exactly. alternative, alternative, innovative agriculture and the industries that I mentioned.

    Cool. And there’s a, that’s a full list there was there more than

    No, that’s it. So sometimes there is like a piece of technology that could be applied to multiple industries that also happen to us.

    So for example, there was like AR, fabric technology. And that could be used in, you know, like trucks that could be used in agriculture that could be used in biosciences and medical education, and there are multiple industries.

    So it’s not necessarily needed, it does not necessarily need to fit into one of those.

    Why should we enter the European market and what benefit what assistance is available to companies looking to do so?

    Well, first of all, because Europe and innovation appear a lot more. And the same sentence, like an innovation is growing innovative, there are lots of resources, lots of government grants, in our case, we are able to get a grant up to 3 million euros for company.

    And that grant has 95% approval rate at post pre approval stage.

    So usually, we pre approved the company, if you’re pre approved, that gets you 95% chance, you’re actually going to get the grant, which is pretty huge.

    Okay, for this amount of grant. Now, also, we are actively working with other European countries to get similar agreements with them.

    So you know, you’re able to get a grant of that size, most of the time, it needs to be matched by either your own funds or additional investment, like investments from your investors,

    at least some of the investors listening to this, who would be interested in that as well. So if you invest in a company, you can have that matched by the Belgian government or who’s matching the funds.

    Yes, as Belgium government mentioned. So it’s really, you know, thinking, using my industry hat, like, that’s a really no brainer investment, like if I either want to, or maybe already invested in a certain innovative company, or I’m looking to invest into one and I have a choice, you know, to match my funds or not.

    Can that apply to existing investors capital?

    So if you’ve invested, say, 3 million into a US company, and they want to move to Belgium, will that capital that’s already been invested be considered for matching grant funds?

    Yes, exactly. That’s necessarily you do not necessarily, you actually do not necessarily need to invest, you just need to show that you have that, you know, you have those funds already invested in the company, or it exists in company assets, even.

    So, what is the purpose of their investment? Is it for the Belgian government to see what people are interested in the company or what’s their, what they need their matching funds?

    The matching funds are just to make sure, you know, like, they’re not the only company that’s investing. Like, it’s just risk, you know, like, risking exactly the risk in the strategy. Because if nobody else wants to invest in a company, even knowing that it’s going to get $3 million dollars. Maybe it’s a wrong decision.

    What other support can the government offer beyond the matchmaking? And yes, what is it?

    So there’s a lot that can be done. So I’ll start from like a government side and then I’ll move to like the non-government side.

    Sometimes, it’s different. So first of all, from the government, there are various subsidies for salaries. Like there is like the first employee, for example, can get certain taxes completely removed from the salary which is like Belgium is known for taxes, like the salaries they are pretty high.

    So you can have that removed and there is also quite significant 30% reduction on all Texas for innovative companies, that is something that only innovative companies in research and development stage, you know, which is this grant is for companies, we’re in research and development stage, which basically, if you expand to a different country that’s considered development stage, you would usually qualify for that as well.

    There are also a lot of smaller grants, for example, for something like website updates, you can qualify for up to 50% up to 10,000.

    Coaching, you know, salary training, sometimes it’s, most of the time is like 50%, or 45%.

    On those. So honestly speaking, like, if you, like we, for example, our team always keep an eye on which grants are coming, which grants are going and which grants have been updated, and there’s like, a lot of money.

    And where can people see those updates?

    That’s a great question.

    Usually, we only provide this privately to our clients.

    Because we need to pull information from different languages.

    So like in Flemish Region, information is in Dutch, and Brussels and Bologna, eights and French, we need to keep not just, you know, keep the updates up, but also translate all the information and put it in a human language. That actually makes sense.

    what’s the next step in the process to apply?

    What is the next step? Yeah, the next step is usually we get on a call, ask a lot of questions.

    See if the client is qualifying and like, you know, matching now interests.

    And then we usually bring the pitch deck and whatever information we can disclose to the table to discuss with our team in Belgium economic development. And usually, within a week after that, we can get people pre-qualified if they’re willing to move forward.

    Belgium Tax Optimisation

    And let’s talk a bit about the tax optimization strategies that this would allow for.

    Absolutely. So some of you may know, and some of you might not belt you have interesting taxation laws that sometimes can be serving new companies.

    For example, Belgium has zero capital tax rate, meaning if you are selling your company, shares, everything that you make on those shares is not taxed, zero tax. So, therefore, even though generally speaking, Belgium has quite high taxes on salaries and personal taxation, there are multiple ways you can implement this specific tax piece to minimise your taxes and sometimes completely remove them.

    What kind of companies are the best fit for this, like in terms of revenue size?

    In terms of the revenue size, it’s ideal for companies that are making 50 million plus, as they would probably see, almost like instant results from that.

    Because when you’re at that size, especially if you’re like in, you know, something, something like innovation in the beginning, you don’t make money in the soil, you make a lot.

    So it’s extremely important to be prepared with those structures for something like this in advance because it gets much more complicated if you do it at later stages.

    Because like, let’s say we see two different clients, one of them is just setting up the company, the other one, started making money.

    Realising like this year is gonna be very painful. And you know, like we see them at the same time, it’s going to be extremely more difficult. And much more work for the company, who didn’t

    Conclusion

    Great. So I’ll drop a link to the website below.

    And for anyone who responds in the ACA family office community, if you want to send me an email, I’m happy to make an introduction to Julia.