Matching firms with startups

The Ministry of National Economy and Finance is preparing significant tax relief measures aimed at spurring cooperation between larger companies and startups in research and technology products.

Contained in the draft bill on mergers and acquisitions, the measures also provide enhanced tax exemptions for patents and incentives for investments made by venture capitals and angel investors in startups, as well as new tools to finance merging small and medium-sized enterprises.

The focus is on research and technology products, which are mainly developed by startups. The aim is to strengthen them with the involvement of larger companies and investors, so they can achieve a better performance in the market as well. The ministry’s ultimate goal is the development of a dynamic ecosystem of such companies on Greek soil, with obvious benefits for the economy.

The existing law already provides for tax relief of 30%-50% for business mergers over nine years. Since the response has been lackluster, the government had considered extending it to the absorption of small to large enterprises, as it is today to the absorption of SMEs. However, the European Commission raised objections on competition grounds. Therefore, the interest in the new bill is now focused on collaboration for research and technology projects. Moreover, as Minister Kostis Hatzidakis told a recent conference on acquisitions and mergers, “innovation and growth are largely interrelated concepts.”

Sources say the basic provisions of the bill will provide for tax incentives for collaboration projects of companies with startups and with research centers, while tax incentives for patents will be strengthened. The limit for the 50% discount from taxable income will apply for investments made by angel investors and anyone who invests in a Greek startup, will also go up from 300,000 to 900,000 euros. A new tax regime is established for venture capital firms that invest in Greek companies, giving them more security, and a new NSRF action is established from September which will subsidize SMEs’ investments at a rate of 50%.