Business mergers encouraged
Faced with a sharp decline in mergers and acquisitions, the government is providing more generous tax incentives to encourage them. It also wants to reward companies that invest heavily in research and development.
The new draft bill, to be tabled in Parliament this month, raises tax exemptions for research and development expenditure and triples the tax-exempt amount invested by angel investors in startups.
According to the Ministry of Finance, there are more than 800,000 small and medium enterprises in Greece, 95% of which employ fewer than 10. Only 672 businesses employ over 250.
The draft bill lowers the limit for merging businesses eligible for tax breaks to €100,000 from €125,000. And, to encourage research and development, spending can lead to a deduction in taxable income up to 315% – that is, over four times – the actual amount spent. The provision will especially target startups and collaboration with research centers and universities. In the latter case, R&D spending must exceed 20% of total expenditure.
The government wants to strengthen the involvement of Greece’s academic community with entrepreneurial activities. It also wants to raise the amount spent on R&D, which is less than half the European Union average: According to the latest Eurostat data, Greek corporations’ spending on R&D amounts to 0.73% of the country’s GDP, against 1.48% in the 27 EU member-states.
Angel investors can spent up to €900,000 on startups, and have that amount deducted from their income. They can also spent through venture capital funds, instead of solely through their own assets.
Companies that merge, or expand as a result of a takeover, will get higher tax breaks if they do not shed jobs.
Mergers and acquisitions slowed down significantly, especially in terms of value, in the first quarter of 2024. Compared to the first quarter of 2023, mergers and acquisitions were down 50%, and 19% less than in the fourth quarter of 2023. In terms of value, at €171.5 million, first-quarter mergers and acquisitions were down 96% year-on-year and 37% quarter-on-quarter.
