Tax Equity thru Economic Interest Groupings: an attractive tool to finance R&D projects

Tax Equity thru Economic Interest Groupings: an attractive tool to finance R&D projects

Abstract:

This article addresses a rare and attractive way to cofinance R&D/IT projects via transfer to third parties of the tax credits that generates each and every start up carrying out an R&D/ IT project in its beginning: a net operating loss plus the tax
credit for investing in R&D or IT.

Said transfer is structured thru an Economic Interest Grouping and it is not deemed aggressive tax planning as it counts with the blessing of the Spanish General Directorate of Taxes, representing thus a solid legal alternative to lower taxes on the one hand, investor’s end, and an attractive and suitable option to cofinance the costs of R&D/IT projects for the start up as it represents a low or nil cost for the latter

Keywords: Tax Equity, transfer of tax credits, R&D costs monetization, Economic Interest Grouping, R&D financing