This aid measure from the Ministry of Small and Medium-Sized Businesses and Tourism is directed at 3 types of research and development (R&D) and innovation activities:
- fundamental research: activities aimed at broadening scientific and technical knowledge, unrelated to industrial or commercial objectives.
- applied research: planned research or critical surveys aimed at acquiring new knowledge with a view to developing new products, processes and services or making a marked improvement to existing products, processes and services.
- pre-competitive development: consolidation of applied research results within a plan, model or design for new products, processes and services (modified or improved) destined to be sold or used, including the creation of a prototype which cannot be used for commercial purposes.
The measure is based on article 5 of the law of 30 June 2004, as amended – the "SME sector framework law".
This aid scheme is directed at small and medium-sized businesses, legally registered in Luxembourg. The activities and the investments (excluded from) not eligible for subsidy may be consulted in the "Grand-Ducal Regulation of 9 May 2010 amending Grand-Ducal Regulation of 19 February 2005 implementing article 2 of the law of 30 June 2004 (French only) establishing a general framework for aid schemes for the SME sector and setting up an aid scheme for small and medium-sized businesses".
The following costs relating to innovation and R&D are eligible:
- the cost of acquiring or paying off land, infrastructure, buildings, equipments, instruments, tools and plant, insofar as these assets are used for research or development purposes only;
- personnel expenses
- consultancy or similar services, including the purchase of patents, user licences, technical expertise and know-how
- current expenses - materials, supplies, use of existing plant and equipment, energy and transport - required to carry out the project
- additional overheads and costs borne directly by the project
Costs relating to the marketing of products, services or developed processes, as well as interest linked to the financing of the project, are not included under the aid scheme.
Forms of aid
The different forms of aid are as follows:
- subsidies (non-refundable contribution) when the investment project is financed by own funds;
- interest relief (reduction of the interest rate agreed upon with the bank) if the investment project is financed by a bank loan, up to a maximum of 4%. However, the bank interest rate may not be lower than 1% (reduced relief) (The interest rate cannot be reduced by more than 4 percent, and may not be lower than 1 percent)
The co-financing rates (indicative) can be broken down as follows:
- for fundamental research: ≤ 75% (100% maximum in case of increase)
- for applied research: ≤ 50% (75% maximum in case of increase)
- for pre-competitive development: ≤ 25% (50% maximum in case of increase)
Increases may be granted up to the maximum limits specified above in the following cases:
- 10% in the case of an activity carried out by an SME
- 10% in the case of cooperation with at least one independent partner from another Member State of the European Union, or 15% if the project complies with the objectives of the EC research and development framework programme, or 25% if the results of a project covered by this framework are widely disseminated
- 25% in the case of aid for undertaking technology watch projects or a feasibility study prior to applied research or pre-competitive development activities
All the rates indicated are upper limits. Each application is assessed and processed on a case-by-case basis according to the merits of the project.
Applications must be submitted before the research begins.
Subsidies are paid after completion of the investment programme. Alternatively, upon request, they may be paid in one or several instalments as the project advances.
Submitting an application
The application must be sent to the Ministry of Small and Medium-Sized Businesses and Tourism, enclosing all the required documentation.
Luxinnovation is available to help you prepare your application free of charge.