The European Commission has presented a new tax simplification package which, among other measures, proposes the creation of a common minimum framework for the tax treatment of R&D investments across the European Union.
The main objective is to reduce differences between Member States and encourage greater investment in innovation. For companies developing R&D&I projects, the proposal introduces a new reference point for planning future investment in assets such as machinery, laboratories and pilot plants.
It also highlights the growing connection between tax incentives and European innovation funding policy.
The proposal will now be submitted to the European Parliament for consultation and to the Council of the European Union for adoption before it can enter into force.
Until now, the tax treatment of R&D investment has depended on the rules of each Member State. This has created differences between countries and, in some cases, influenced decisions about where companies choose to develop innovation activities.
The Commission’s proposal introduces a common minimum standard with three main objectives:
Under this approach, taxation becomes an additional policy instrument to encourage R&D investment, alongside existing funding programmes and public support measures.
The European Commission expects the new framework to help strengthen and attract greater investment in R&D activities, as well as support the development of industrial and technological capabilities. Among the expected effects is an estimated annual increase of approximately 0.2% in European GDP.
The Commission also estimates a reduction of almost EUR8 billion in tax compliance costs for businesses.
FI Group by EPSA has actively contributed to this European debate by presenting proposals to reinforce the role of taxation as a lever for R&D&I investment.
“In 2023, we presented a position paper on BEFIT, in which FI Group by EPSA defended the need to include specific tax incentives for innovation within the future common European framework, recovering elements already considered in the CCCTB proposal, such as deductions for R&D investment and specific measures for start-ups,” explains Victor Cruz, Regulatory Public Affairs & Strategy Director.
He adds: “FI Group by EPSA put forward recommendations aimed at improving legal certainty, supporting stable and predictable budgets, promoting eco-innovation and moving towards a common definition of innovation in the European Union.”
In addition to the direct tax treatment of R&D investments, the European proposal includes measures that may influence how companies structure innovation projects at European level.
The proposal includes the removal of withholding taxes on dividends, interest and royalties between companies in different Member States.
This change would make it easier to organise corporate structures with activity in several countries, particularly in areas such as:
The Commission also proposes adjustments to European tax rules that may affect the financing of innovative projects.
These include:
The creation of a common framework may influence how companies plan innovation investment, particularly where the acquisition of equipment, machinery or infrastructure represents a significant part of the R&D budget.
The proposal may be especially relevant for organisations developing new products, processes or technologies that require specific equipment to carry out these activities, including:
Another important point is that the proposal would allow Member States to maintain more favourable national regimes, provided they are aligned with the framework ultimately approved by the European Union. This creates the possibility that future European standards will coexist with existing incentives in each country.
The proposal focuses on tangible investments required to develop R&D activities, including:
The proposal provides for a 100% deduction of the investment, with two possible approaches:
To access the incentive, the assets must also be used continuously for R&D activities for a minimum period of three years. If this requirement is no longer met, the proposal includes a mechanism to regularise the tax benefit obtained.
The content of the proposal makes it possible to anticipate certain trends that can be incorporated into R&D project planning.
In this context, companies should consider reviewing:
The European framework is moving towards greater integration between taxation, funding and innovation. In this context, planning an R&D project goes beyond identifying a specific incentive. It requires companies to analyse how different instruments can be combined and to adapt their funding strategy as the regulatory environment evolves.
Specialist advice from the early stages of a project can help companies identify funding opportunities, define an appropriate strategy and receive support throughout the project lifecycle. This enables businesses to incorporate regulatory developments into their planning and take advantage of available opportunities at both national and European level.
AI innovation hubs are becoming critical to global R&D strategy. Locations such as King’s Cross, the San Francisco Bay Area, Paris, Toronto, Montreal and Singapore offer more than access to talent. They bring together research institutions, public funding, tax incentives, investors, infrastructure and regulatory environments that can directly influence the cost, speed and commercial success of AI development.
For businesses investing in AI, location is no longer a purely operational decision. It is a strategic R&D choice that can shape access to funding, partnerships, specialist expertise and long-term innovation capacity.
AI innovation is often discussed as though it happens entirely in the cloud. In practice, much of it still depends on place.
The strongest AI ecosystems tend to emerge where talent, research, capital, infrastructure and public policy are concentrated. This is why locations such as King’s Cross, the San Francisco Bay Area, Paris, Toronto, Montreal and Singapore matter to businesses planning AI-led R&D. They are not simply office locations. They are operating environments.
For companies investing in AI, the decision on where to build, test and scale can influence access to people, funding, partners, tax relief and regulatory certainty. The technology matters, but so does the ecosystem surrounding it.
AI R&D is resource-intensive. It requires specialist engineers, data scientists, domain experts, compute infrastructure, research links, commercial partners and patient capital. These inputs are rarely distributed evenly across a country. They concentrate.
Clusters form because proximity reduces friction. Universities train talent and generate research. Start-ups turn ideas into products. Larger companies provide scale, procurement routes and career pathways. Investors bring capital and market discipline. Public bodies provide grants, infrastructure and incentives. When these groups are close enough to interact regularly, collaboration becomes easier.
This is particularly important in AI because many projects sit between disciplines. A healthcare AI company may need machine learning researchers, clinicians, regulatory specialists, data governance support and commercial partners. A robotics company may need AI engineers, hardware expertise, manufacturing partners and testing environments. A financial services AI business may need technical talent, compliance expertise and access to enterprise clients.
Clusters help companies assemble these capabilities faster.
There is also a talent effect. Skilled workers are more likely to move to places where there are multiple employers, strong research institutions and credible career options. Companies benefit from deeper labour markets. Employees benefit from choice. This creates a reinforcing cycle: talent attracts companies, companies attract capital, and capital attracts more talent.
Venture capital adds another layer. According to OECD analysis, AI firms accounted for 61% of global venture capital investment in 2025, worth USD 258.7 billion. That capital is highly concentrated. Businesses outside the main AI hubs can still raise funding, but clusters improve access to investors who understand the technology, the commercial risks and the route to scale.
Knowledge spillovers are harder to measure, but equally important. They occur through conferences, shared labs, alumni networks, founder communities, investor meetings, university partnerships and informal contact. In a fast-moving field, proximity to the right conversations can be strategically valuable.
King’s Cross has become one of Europe’s most visible examples of an urban AI and science cluster.
Its strength comes from the wider Knowledge Quarter, which covers King’s Cross, St Pancras, Euston and Bloomsbury. Within a small area sit the British Library, the Alan Turing Institute, the Francis Crick Institute, UCL, Google DeepMind and a growing group of technology and life sciences companies.
This mix is important. King’s Cross is not only a technology district. It connects AI with biomedical research, data science, public institutions, transport infrastructure, cultural organisations and commercial space. That gives it a broader innovation base than a pure software cluster.
Google’s Platform 37 development adds further weight. The building is expected to bring Google and Google DeepMind teams together in King’s Cross, alongside the AI Exchange, a public-facing space designed to improve understanding of AI. This matters because anchor organisations shape ecosystems. They attract talent, suppliers, investors and adjacent firms.
The UK Government’s 2024 AI Sector Study estimated that the UK had 5,862 AI companies, £23.9 billion in AI-related revenue and more than 86,000 AI-related jobs. London, the South East and the East of England accounted for around three quarters of registered office locations for UK AI firms. King’s Cross sits inside that concentration.
The district also benefits from its life sciences base. UCL analysis has suggested that the Euston and King’s Cross innovation district already generates more than £8 billion in annual GVA and could add up to £3.5 billion more by 2035 with the right planning, transport and investment conditions. The Francis Crick Institute’s partnerships to expand commercial lab space in the area show how physical infrastructure is being built around scientific demand.
This is the point businesses should recognise. King’s Cross has grown because several conditions overlap: research density, corporate commitment, transport links, public institutions, commercial space and access to finance. It is not a single-factor success story.
King’s Cross is part of a wider global pattern. AI hubs are developing in different ways, shaped by their talent base, policy environment and funding model.
The Bay Area remains the commercial benchmark for AI. It combines world-class universities, large technology companies, venture capital, experienced founders and a deep technical workforce. Its advantage is scale. Companies can access capital, talent, infrastructure providers and customers in one market.
The cost base is high, and competition for talent is intense, but for frontier AI companies the Bay Area remains difficult to ignore.
Toronto and the wider Ontario ecosystem offer a different model. The Vector Institute, the University of Toronto and the Toronto-Waterloo corridor have helped build one of North America’s strongest AI talent bases. Ontario also benefits from Canada’s SR&ED tax incentive programme and provincial support such as the Ontario Innovation Tax Credit.
For companies looking for North American AI capability outside the Bay Area, Ontario offers strong research depth and a structured incentive environment.
Montreal’s AI position is closely linked to Mila, the Quebec AI Institute, and its academic network across Université de Montréal, McGill, Polytechnique Montréal and HEC Montréal. The city is especially strong in deep learning research and talent development.
Quebec has also strengthened its innovation support through the CRIC tax credit for R&D, innovation and pre-commercialisation activity. That gives Montreal a clear proposition: research strength, public support and a lower-cost environment than many US hubs.
Paris has become a stronger European AI contender through a mix of state strategy, academic depth and start-up infrastructure. Station F has increased its AI activity, while France 2030 has backed nine AI clusters with €360 million to strengthen research, training and innovation.
France also has one of Europe’s most established R&D tax incentive systems through the Crédit d’Impôt Recherche. For companies assessing European AI locations, Paris combines market access, talent and public support.
Singapore’s strength lies in coordination. Its government has treated AI as part of a broader national innovation strategy, linking talent, regulation, digital infrastructure and regional market access. The National AI Strategy and Enterprise Innovation Scheme give businesses a clear policy framework.
Singapore is especially relevant for companies looking at Asia-Pacific expansion. It offers connectivity, a pro-business environment and a growing base of AI partnerships across professional services, finance, healthcare and advanced industries.
AI hubs do not grow through market forces alone. Public policy often shapes whether a cluster becomes durable.
Governments use incentives for a practical reason: R&D creates benefits that extend beyond the company funding it. New knowledge, skilled workers and technical capability can spread through supply chains and wider industries. Without support, businesses may underinvest.
R&D tax incentives help reduce the cost of eligible activity. In the UK, the merged RDEC scheme applies from 1 April 2024 at a 20% credit rate, while Enhanced R&D Intensive Support provides additional support for qualifying loss-making R&D-intensive SMEs. In France, the Research Tax Credit supports qualifying R&D expenditure. Canada’s SR&ED programme remains a major federal incentive, often layered with provincial schemes. Singapore’s Enterprise Innovation Scheme offers enhanced deductions or allowances for qualifying innovation activity.
These incentives affect the real cost of experimentation. For AI businesses, this can include work on model development, data processing methods, software architecture, automation, testing, technical uncertainty and integration challenges, provided the activity meets the relevant scheme rules.
Grants play a different role. They can help companies start projects that would otherwise be delayed or reduced in scope. UK programmes such as BridgeAI support AI adoption and development in priority sectors. EU AI Factories are designed to improve access to compute, data and expertise. France 2030 is using public investment to strengthen national AI capability. Quebec’s support for Mila shows how direct funding can reinforce research institutions and talent pipelines.
Public-private partnerships are also central. Innovation hubs need convenors: institutions that bring companies, researchers, funders, standards bodies and public agencies together. The Alan Turing Institute, Digital Catapult, Innovate UK, the Francis Crick Institute, Station F and Singapore’s EDB all play different versions of this role.
For businesses, the lesson is clear. Incentives should not be treated as an afterthought once a location has been chosen. They are part of the location decision.
AI location strategy should start with the work being undertaken. A company developing frontier models has different needs from a manufacturer applying AI to production processes, or a healthcare company building regulated decision-support tools.
Five factors deserve close attention.
AI hubs are becoming strategic engines of R&D because they bring together the conditions that help companies move from technical possibility to commercial use. Talent, capital, infrastructure, research institutions and incentives all matter. Their value increases when they work together.
King’s Cross shows how this can happen in a dense urban district. Its advantage is not only the presence of major AI companies. It is the combination of AI, life sciences, public research, transport, universities and commercial investment in a small geography.
Other hubs offer different strengths. The Bay Area has unmatched capital depth. Ontario and Montreal offer research strength and structured public support. Paris benefits from national AI investment and a strong R&D tax regime. Singapore offers regional access and coordinated policy.
For businesses investing in AI, the location decision should be treated as part of the R&D strategy. The right hub can improve access to talent, shorten collaboration cycles, reduce project costs and open routes to funding. The wrong location can make the same project slower, more expensive and harder to scale.
AI may be digital, but innovation still has an address.
On 8-9 June 2026, FI Group by EPSA participated in the European Association of Innovation Consultants (EAIC) Annual General Meeting in Zagreb, Croatia.
EAIC is a European association representing innovation consultancy firms and supporting dialogue between consultants, institutions and industry on research, development and innovation funding policy.
The event brought together key stakeholders from EU institutions, industry and consultancy to discuss the future of innovation funding in Europe, with a particular focus on the next European long-term budget for research and innovation, the Multiannual Financial Framework (MFF) 2028-2034.
These discussions are highly relevant for organisations seeking to anticipate how European innovation funding will evolve in the coming years.
FI Group by EPSA’s participation in the EAIC AGM reinforces its position as an active contributor to the development of European innovation policy and funding frameworks.
By being present where key decisions are discussed and shaped, FI Group by EPSA gains early visibility of policy and programme developments while contributing to the design of future funding mechanisms. This enables the company to create tangible value for clients by:
This involvement supports FI Group by EPSA’s ability to provide clients with forward-looking insight, stronger strategic guidance and a clearer understanding of future EU funding programme opportunities.
During the EAIC AGM, Luca Pira, Public Affairs and International Grant Manager and Coordinator of the National Funding Schemes Working Group, played a central role in both implementation and strategic discussions as part of the Working Group Coordinators panel.
In this context, he presented FI Group by EPSA’s contributions to key topics, including the future design of EU innovation funding at national and regional level under the MFF 2028-2034, as well as regulatory and State aid frameworks.
This included input into the recent public consultation on the General Block Exemption Regulation, where FI Group by EPSA contributed as part of a coordinated effort at both national and European level alongside key industry associations: the European Association of Innovation Consultants (EAIC), the Asociación Española para el Fomento de la Financiación de la I+D+i (AFIDI), the Associazione Italiana per la Ricerca Industriale (AIRI), and BusinessEurope.
Luca also highlighted upcoming work on a European comparative report on R&D and technological innovation incentives, coordinated by Víctor Cruz, Regulatory, Public Affairs & Strategy Director. This further demonstrates FI Group by EPSA’s expertise in tax incentives and regulatory intelligence.
FI Group by EPSA’s active participation in the EAIC AGM also strengthens its international partner network, particularly in countries and regions where the company does not yet have a direct presence, such as Croatia and the broader Balkan region.
These markets are becoming increasingly strategic within the European innovation landscape. Through EAIC, FI Group by EPSA is also able to leverage collective advocacy capacity at European level, enhancing its influence on policy and funding frameworks beyond what a single organisation could achieve independently.
This approach creates stronger opportunities for FI Group by EPSA and its clients in international and cross-border innovation initiatives.
Active engagement across EAIC Working Groups
FI Group by EPSA is actively engaged in several EAIC Working Groups, covering:
This involvement strengthens the company’s expertise, expands its network and enhances its ability to anticipate and shape market trends.
As Europe defines its next innovation funding cycle, FI Group by EPSA will continue to contribute actively within EAIC, remaining at the forefront of policy and programme developments. This includes participation in the EAIC Summit on the Future of Funding in Europe, taking place on 3 November 2026 in Brussels. The event is expected to feature speakers such as MEP Christian Ehler, a key figure in EU research and innovation policy, who plays a leading role in shaping the MFF 2028–2034 and the upcoming FP10.
This engagement is aligned with a broader shift in the sector: from a primarily operational role focused on identifying opportunities and preparing applications, towards a more strategic advisory role. This requires the ability to combine technical, financial and regulatory expertise to position projects, structure partnerships and support clients across the full innovation lifecycle.
By leveraging EAIC’s collective advocacy capacity at European level, FI Group by EPSA strengthens its ability to influence frameworks, anticipate change and create tangible value for clients, while reinforcing its competitive position in the European innovation funding landscape. FI Group by EPSA can support organisations in identifying upcoming opportunities, interpreting regulatory changes and positioning projects for future funding success.
Research and Development (R&D) tax incentives are among the most widely used policy tools to stimulate corporate investment in research, technological development, and innovation. Alongside grants and public financing programmes, these incentives play a decisive role in helping companies remain competitive in an increasingly globalised economy.
Over the past decades, R&D incentives have evolved from supplementary support mechanisms into essential drivers of technological progress. They enable companies to develop new products, services, and processes while fostering a more continuous and predictable pace of innovation than in previous eras.
According to the Global Innovation Index (GII), global R&D expenditure approached US$3 trillion in 2025, reflecting nearly 3% growth over the previous year and almost triple the real value recorded 25 years ago. The global average R&D-to-GDP ratio has reached 2.0%, compared with 1.48% in 2000, underscoring the growing economic dependence on research.
As innovation ecosystems mature, governments around the world continue to review and update their R&D incentive frameworks. These updates aim to align policies with current technological realities and shift expectations around the type of evidence companies must provide when claiming incentives.
This raises an essential question for businesses:
Many recent reforms reflect a clear intent: to ensure that companies can demonstrate, substantiate, and document the activities and expenditures they report. While some organisations view these expectations as additional administrative burdens, others recognise them as opportunities to improve traceability, data accuracy, compliance, and risk management. More importantly, enhanced documentation can help companies better understand the true impact and value of their R&D efforts.
Although each country’s incentive programme has its own rules, many eligibility criteria share similarities. Common requirements include:
While these obligations may appear administrative, they help build a reliable and consistent innovation ecosystem. They also reduce subjective interpretations and prevent unequal access to incentives.
Between 2024 and 2025, the IRS introduced significant updates to Form 6765 (Credit for Increasing Research Activities), including requirements to:
Describe project objectives and associated technological uncertainties.
In November 2025, Brazil introduced MCTI Ordinance No. 9,563/2025, establishing:
These examples reflect a wider global trend: governments are introducing more robust evaluation standards, especially those aligned with the OECD’s Frascati Manual. Companies unable to adapt risk losing competitiveness and access to key incentives.
Recent court decisions across jurisdictions underscore a consistent message:
Proactive documentation and traceability significantly improve the likelihood of successful R&D claims.
Cases such as:
Demonstrate that structured documentation and evidence of technological uncertainty enable companies to defend claims effectively. Tribunals reiterated that a contract alone does not constitute “subsidised expenditure” or “contracted-out R&D”; a clear link between payment and R&D activity must be demonstrated.
In George v Commissioner, the court denied most R&D claims due to the lack of contemporaneous records. Only projects supported by real-time documentation of experimentation were deemed eligible.
In 2026, the Corte di Giustizia Tributaria del Lazio affirmed eligibility (Sentence No. 435/2026) where the company demonstrated:
The court emphasised that eligibility depends on the solidity of technical evidence—not generic business descriptions.
Across all jurisdictions, the conclusion is clear: stronger documentation leads to stronger eligibility.
Regulatory changes are not merely compliance hurdles. Companies that adopt strong governance and documentation practices gain:
Enhanced documentation provides companies with unprecedented visibility over their innovation activities. The benefits include:
A Canadian manufacturer investing $22M per year in R&D implemented real-time, compliance-aligned project tracking. Within one year:
Outcome: Compliance improvements became catalysts for better decision-making, increased productivity, and stronger innovation performance.
New eligibility and evaluation criteria for R&D tax incentives do not represent additional bureaucracy but a shift towards more reliable, transparent, and evidence-based innovation practices. Companies that embrace these changes position themselves to:
Speak with our specialists at FI Group by EPSA to safely and strategically leverage R&D tax incentives and maximise the value of your innovation activities.
Funding innovation in 2026 is no longer a “local” exercise. For global businesses, the fastest route to better cashflow, reduced risk and accelerated scale is a joined-up strategy that blends grants, tax incentives and country-by-country delivery, without losing control of compliance.
At FI Group by EPSA, we see the same pattern across sectors: where R&D is genuinely global, the funding approach must be global too.
Innovation funding is expanding in both complexity and scrutiny. Tax authorities want better evidence, funders want clearer impact, and many schemes now include location rules, collaboration requirements and stricter reporting.
In the UK alone, the latest published HMRC statistics show £7.6bn of support claimed under R&D tax credits in 2023 to 2024. That scale explains why governance, documentation and “right first time” submission have become non-negotiable.
Meanwhile, businesses are increasingly expected to “stack” support intelligently, not just chase the biggest headline scheme.
“The finance edge comes from stacking non-dilutive funding from local and international schemes, making innovation risk manageable and more profitable.”
Fawzi Abou-Chahine, Funding Director, FI Group by EPSA UK
That is the mindset behind a global innovation funding operating model.
A global innovation funding strategy is a coordinated plan that matches your R&D roadmap to the best available support in each territory, then governs delivery so claims and applications work together rather than collide.
Two core building blocks:
The strategic aim is to combine both, where permitted, while managing interactions such as state aid, “double funding” restrictions and differing definitions of eligible costs.
FI Group’s approach is deliberately practical: align the funding plan to how the business actually runs, then execute locally with global coordination. Our teams support companies to identify and secure optimal financing conditions for R&D and innovation, from local tax incentives to national and international grants and loans.
1) Map the R&D footprint and funding “right to claim”
We start with a clear view of:
This matters because many regimes apply overseas restrictions or location tests. For example, the UK’s merged scheme notes restrictions on some overseas expenditure.
2) Define the “global project narrative”, then localise it
Your technical story must be consistent globally, but written to local tests.
A strong model is:
This becomes vital where administrations require extra disclosure. In the UK, HMRC introduced an Additional Information Form requirement for claims from 8 August 2023.
3) Build the funding stack by work package
We split the R&D plan into work packages, then assign the right funding pathway:
This is where funding innovation in 2026 becomes a portfolio discipline, not a one-off application.
4) Execute locally, govern globally
Local execution protects eligibility. Global governance protects consistency.
In practice this means:
This “local delivery, global control” model is central to successful cross-border R&D funding.
Snapshot: grants and R&D tax incentives across key jurisdictions
Below is a practical snapshot of major grant pools and headline R&D tax incentive rates, using the latest publicly available figures as at January 2026. Funding volumes and effective benefit vary by company profile, sector and project design.
Grant landscape, recent indicators
R&D tax incentive headline (2026 rules)
Grant landscape, latest published programme data
R&D tax incentive headline (2026 update)
Grant landscape
Grant landscape
R&D tax incentive headline
Grant and public R&D investment landscape
R&D tax incentive headline
Grant landscape
R&D tax incentive headline
Brazil offers both grant-style support (varying by call and agency) and tax incentives. One widely used incentive is Lei do Bem, which provides an additional deduction of 60% to 100% on eligible R&D spend, equating to a tax reduction of 20.4% to 34%. Activities must be carried out in Brazil.
Scenario (illustrative): A global industrial software company has:
A structured funding plan could look like this:
Define work packages that match each jurisdiction’s strengths
Align each work package to the right support
Create one evidence pack, three compliant outputs
Add a “global bet”
Where the innovation is truly collaborative and scalable, consider an EU route (EIC Accelerator or Horizon Europe consortia), especially where the Spanish entity can lead EU engagement.
The strategy improves cash runway, reduces reliance on a single funding source and increases certainty of delivery, because funding is attached to defined work packages rather than vague “innovation spending”.
Common CFO challenges in 2026 and how to mitigate them
FI Group by EPSA operates internationally with a dedicated incentives and grants capability, supporting businesses to access funding across geographies and industries. Our international team includes over 1,400 experts across 13 countries, supporting 15,000 clients worldwide and securing over €1.7bn in funding annually, which is why many multinational groups use FI Group to coordinate multi-country innovation funding strategies with consistent governance and local compliance.
Actionable steps for funding innovation in 2026
1) Can we combine grants and R&D tax relief on the same project?
Often yes, but you must manage interaction rules, particularly whether the grant is considered state aid or restricts claiming on the same cost base.
2) Which countries are best for innovation hubs in 2026?
It depends on your footprint and sector. The UK, Ireland, Spain, Singapore and the US each offer distinct mixes of grants and tax incentives.
3) What is the biggest failure mode in cross-border funding?
Treating each application or claim as a standalone activity, rather than as part of one governed portfolio.
4) How do we avoid double funding issues?
Separate work packages, track funding sources per cost line, and maintain auditable links between technical deliverables and financial records.
5) What should we do first if we have never built a global funding strategy?
Start with a footprint map and a shortlist of projects, then design a two-track plan: quick wins (tax incentives) and strategic bids (grants).
Innovation stands as one of the most valuable assets an organization can possess. In the contemporary business landscape, intangible assets such as ideas, inventions, designs, and brands have gained paramount importance. This marks a significant shift from the 1970s when tangible goods like real estate, machinery, and automobiles dominated market value. Today, intangible assets, including innovation, are indispensable for generating competitive advantages.
Intangible or immaterial assets, despite lacking a physical form, hold substantial economic value. Innovation, as one of these intangible assets, plays a pivotal role in an organization’s success. Estimates suggest that in the 1970s, tangible goods constituted eighty percent of a company’s market value, with intangible assets making up the remaining twenty percent. Currently, this ratio has reversed, underscoring the growing significance of intangible assets.
While these figures are generalizations, they highlight the critical role of intangible assets in driving competitive advantages for businesses. Among these, innovation is particularly valuable due to its high risk of being copied. Innovation can be broadly defined as a novel change that adds value to a product, process, service, or the operations of a company.
Various forms of innovation include:
Innovations serve as significant differentiators, providing companies with considerable competitive advantages.
Beyond the previously discussed points, there is a deeper understanding of the significance of innovation for humanity. Innovation in technological development is not merely an accessory mechanism in human life; it is absolutely essential. Without technique or technology, the human species would have already faced extinction.
The history of humanity is replete with examples of how humans, through their intelligence, imagination, and creativity, have generated innovations to face environmental adversities, achieve greater well-being, and ultimately not only adapt to their surroundings but create a «human world.» This involves adjusting the environment to meet the needs and desires of the human species.
In the pursuit of technological development, increasingly sophisticated objectives have been set:
In general terms, the process by which humans generate the technology to meet these needs consists of three stages:
Humans are innovators by nature, and these innovations drive their development. Although it is not the primary focus of this discussion, it is worth mentioning that such development must be sustainable and integral, satisfying the needs of the present without compromising the capabilities of future generations, while being respectful of the environment.
Having explained the great importance of innovation for humanity and provided a notion of it, it is time to delve into its definition to understand what truly constitutes an innovation and what ways exist to protect it.
A global reference for innovation is the Organisation for Economic Co-operation and Development (OECD), which has been working in this field since the mid-20th century.
The OECD has developed various instruments dedicated not only to innovation but also to Research and Development, encompassing the famous acronym R&D. Among the most important documents from the OECD are the Frascati and Oslo Manuals.
The Frascati Manual states that R&D (research and experimental development) «comprises creative and systematic work undertaken with the aim of increasing the stock of knowledge (including knowledge of mankind, culture, and society) and devising new applications based on the existing knowledge.”
To be considered R&D, the activity must meet five basic criteria:
The term R&D includes three types of activities:
The concept of innovation is provided by the Oslo Manual, which defines it as the introduction of a new or significantly improved product (good or service), process, marketing method, or organizational method in internal practices of the enterprise, workplace organization, or external relations.
Information, much like innovation, represents one of the most valuable resources within any organisation. It forms the foundation upon which decisions, strategies, and development processes are built. Without reliable, timely, and properly safeguarded information, innovation loses momentum and investment in research and development is undermined. In the context of information security, recognising information as a critical organisational asset means treating it with the same level of care and protection as other strategic resources, ensuring its integrity, availability, and confidentiality. In this way, information not only sustains competitiveness but also enables knowledge to be transformed into innovation and sustainable progress.
Everything that has been discussed highlights the importance of recognizing, encouraging, and rewarding the efforts made by private enterprises in research, development, and innovation (R&D), without which sustainable human progress is unthinkable. This is to ensure that society can benefit from the creativity, ingenuity, and effort of those enterprises.
Consequently, the vast majority of countries and a good number of supranational organizations offer support for the financing of R&D.
At FI Group, we specialize in consulting for the application and management of such incentives. However, it is not only necessary to encourage investment in R&D but also to protect it. The way to protect it is by recognizing Intellectual Property to its creator. The legal protection of Intellectual Property allows companies, universities, public bodies, researchers, inventors, designers, artists, etc., to safeguard their innovative and creative developments and obtain a deserved economic benefit.
As previously mentioned, innovations can be classified as follows:
A preliminary approach regarding the protection of such innovations is the following: Industrial Property titles or registrations generally protect the first three types of innovations, both in Spain and across Europe and LATAM, while the fourth type can only be protected by patent in the US, provided that the new model is considered an invention, i.e., a non-obvious solution. In the rest of the world, new “business models” can only be protected by trade secrets.
However, Intellectual Property encompasses a much broader field.
There is no unambiguous definition of Intellectual Property, but the States that developed the Convention creating the World Intellectual Property Organization (WIPO) decided to establish a list of rights related to «literary, artistic and scientific works; performances of performing artists and broadcast; inventions in all fields of human activity; scientific discoveries; industrial designs; trademarks, trade names and designations; protection against unfair competition; and all other rights related to intellectual activity in the industrial, scientific, literary, and artistic fields» (Convention establishing the World Intellectual Property Organization, signed in Stockholm on July 14, 1967; art. 2, point VIII).
In summary, the objects that can be protected by Intellectual Property, which correspond to a category of Intellectual Property rights, can be grouped into the following tables, according to their configuration in Anglo-American law and European continental law:
|
Works |
Copyright |
| Performances of performing artists; and broadcast | Related rights |
| Inventions in all fields of human endeavours | Industrial property |
| Scientific discoveries | |
| Industrial designs | |
| Marks and commercial names and designations | |
| Protection against unfair competition | |
| All other rights resulting from intellectual activity in the industrial, scientific, literary, and artistic fields |
|
Works |
Copyright and related rights (continental law) |
| Inventions | Patents |
| Distinctive signs | Trademarks |
| Designs applied to objects | Industrial models and designs |
| Plant varieties | Breeder’s rights |
| Proprietary information — Know-how | Trade secrets |
At FI Group, we specialize in consulting for the management of funding incentives for R&D. With 25 years of experience, we operate globally, assisting over 15,000 clients in financing innovation. FI Group is part of EPSA, a leading player in global innovation financing, dedicated to supporting R&D activities.
Space-based technology has become one of the most powerful tools in tackling the global challenge of climate change and decarbonisation. From Earth observation satellites that monitor greenhouse gas emissions to advanced propulsion systems that reduce launch footprints, innovation in space technology is critical to achieving net-zero targets.
For SMEs and scale-ups in Europe and the UK, this sector offers a dual opportunity: driving technological breakthroughs while accessing substantial public and private funding. Yet navigating this landscape requires strategic insight. Each scheme has unique compliance demands, funding structures, and cross-border implications, and CFOs face increasing pressure to align innovation spend with decarbonisation goals while ensuring strong ROI.
This article provides a comprehensive roadmap of the funding available across Europe and the UK, from the European Space Agency (ESA) to Horizon Europe and national schemes. It also highlights the CFO pain points in financing innovation, and explains how FI Group’s “Global Reach. Local Expertise.” approach enables clients to maximise returns while reducing compliance risks.
| Programme | Budget (2021–2027) | Focus Areas | Typical Funding Size | Relevance to Space Decarbonisation |
| Horizon Europe | €95.5bn | Climate, Energy, Digital, Space | €500k–€15m | Collaborative R&D, space-enabled sustainability |
| EIC Accelerator | €10bn (subset of Horizon) | Deep-tech, disruptive innovation | Up to €2.5m grant + €15m equity | Hardware/software scale-ups in climate & space |
| ESA Clean Space | €180m+ since 2010 | Green design, debris mitigation | €50k–multi-million | Clean propulsion, eco-satellites, reusability |
| LIFE Programme | €5.43bn | Environment & climate action | €1m–€10m | Climate services, space-enabled adaptation |
| UK Space Agency | £100m+ annual calls | Space science, sustainability | £50k–£15m | National missions (e.g. CO₂ monitoring) |
| Innovate UK Net Zero | £1bn+ portfolio | Clean energy, mobility, data | £50k–£2m | Satellite data for net-zero mobility, energy |
Space technology for decarbonisation refers to the application of space-based tools and services to reduce carbon emissions, improve resource efficiency, and accelerate the transition to net-zero economies. Examples include:
This convergence of space, sustainability, and digital technology creates new commercial opportunities but requires significant upfront investment, hence the growing importance of grant funding and R&D tax incentives.
CFOs in innovation-driven SMEs face three recurring challenges:
In a climate where venture capital funding has declined year on year since 2021, grants and tax incentives are becoming the most reliable growth levers for high-tech firms.
The ESA runs multiple programmes aligned with sustainability and space innovation:
ESA grants often require international collaboration, making FI Group’s network across 13 countries a decisive advantage in forming and managing consortia.
With a €95.5 billion budget (2021–2027), Horizon Europe is the EU’s largest funding programme for research and innovation. For space decarbonisation, key clusters include:
The European Innovation Council (EIC) Accelerator within Horizon Europe also offers up to €2.5 million in grants plus blended finance, particularly relevant for scale-ups in green and space technologies.
The UK’s national innovation agency Innovate UK regularly opens competitions relevant to space and decarbonisation, such as:
Through targeted calls, the UK Space Agency co-funds ESA projects and runs initiatives on space debris mitigation and low-carbon satellite technologies.
For UK SMEs, R&D tax relief remains a crucial complementary mechanism. Costs not covered by grants can often be claimed under the merged R&D Expenditure Credit (RDEC) scheme, offering a ~20% taxable credit on qualifying costs. CFOs must carefully structure projects to avoid “double-dipping”, where the same cost is claimed twice under different schemes, a compliance risk that FI Group’s integrated advisory model helps mitigate.
While venture capital remains the largest pool of growth finance, the market has cooled significantly since 2021. UK deal volumes have fallen, though average deal sizes remain larger than a decade ago, with deep-tech and life sciences attracting outsized interest.
For space decarbonisation, this means CFOs should see public funding as a hedge against VC volatility. Grants de-risk early-stage projects, making companies more attractive to private investors down the line.
For SMEs considering entry into the space decarbonisation ecosystem, a structured roadmap is critical:
At FI Group, we turn complexity into clarity for innovation leaders. With over 1,400 experts across 20 countries, we support more than 15,000 clients annually, securing over €1.7bn in funding.
Our advisory goes beyond funding applications. We help CFOs and executives:
As Dr. Fawzi Abou-Chahine, Funding Director at FI Group UK, explains:
“We support clients to navigate the most competitive EU and UK schemes. Our role is not just to write applications, but to align funding with strategic goals, whether that’s scaling internationally, strengthening IP portfolios, or accelerating net-zero innovation.”
Innovation does not stop at borders. Space and decarbonisation projects often require cross-continental collaboration, from launch facilities in South America to data analytics hubs in Europe and Singapore.
FI Group’s model ensures that:
This capability is critical during M&A, supply chain shifts, and expansions where funding incentives vary widely across jurisdictions.
The European Space Agency and Horizon Europe are the leading sources, with additional opportunities under LIFE, Clean Hydrogen JU, and Digital Europe.
Yes, but careful structuring is needed to avoid claiming the same cost twice (“double-dipping”). FI Group helps ensure compliance with HMRC and EU rules.
Horizon Europe success rates average 10–15%, but consortium-based applications led by SMEs with strong partners see higher success.
CFOs struggle with fragmented regulations, audit risk, and inconsistent reporting across jurisdictions. Integrated advisory support mitigates these challenges.
Because we combine global scale with local expertise, securing over €1.7bn in funding annually and offering tailored support for space and decarbonisation innovators.
IT innovation isn’t limited to the digital sphere. Increasingly, industrial applications of technology are pushing the boundaries of what’s considered R&D.
When businesses use technology to solve operational, logistical, or energy challenges in new ways, they’re often venturing into innovative territory.
Some examples might include:
In these cases, the technology isn’t just supporting the business, it’s reshaping how the business operates, opening the door to R&D qualification.
At its core, R&D is about creating value through new knowledge or novel applications of existing knowledge.
Projects generally fall into one of three key categories:
While these categories may sound academic, the reality is that many IT and digital transformation projects can fall within their scope.
Digital innovation is a fast-moving field, and many solutions that tackle complex challenges could meet the criteria for R&D recognition.
For instance:
These aren’t just examples of digital progress, they’re potential R&D projects with real business impact and tangible fiscal benefits.
In a world where innovation drives competitive advantage, research and development (R&D) is no longer a luxury, it’s a strategic position.
Around the globe, companies are investing in knowledge-based growth to stay ahead of the curve. In Peru, this global trend is taking on a particularly promising form: tax incentives designed to encourage and reward innovation.
But how do you know if your project qualifies?
Could your next technology initiative not only advance your operations but also reduce your tax burden?
The power of innovation to shape sustainable economic development must be recognised, and in the case of Peru, for example, a specific tax incentive has been introduced:
This innovative regulation offers additional income tax deductions to companies that invest in scientific research, technological development or technological innovation.
It’s not just about rewarding great science or complex engineering, it’s about promoting a culture of innovation in which experimentation, development and improvement are actively supported.
Do you have questions about whether your project can qualify for the R&D criteria?
Here are some questions we suggest you ask yourself:
– Are you solving a technical problem with no clear solution at the outset?
– Does it involve a significant advance in either what is being done or how it is being done?
– Are you experimenting with untested ideas or developing new methodologies?
– Is there a measurable element of uncertainty or technical risk?
– Will you generate knowledge that did not previously exist in your company, sector or region?
– Are you applying existing technologies in innovative ways?
If you can confidently answer ‘yes’ to several of these questions, there’s a good chance your project will qualify, and it may be time to explore your eligibility for R&D tax benefits or other innovation-centred incentives.
With a global vision and clients around the world, FI Group specialises in the technical and legal criteria of R&D classification, monitoring the entire process. Our teams of experts combine technical knowledge and strategic vision to ensure that your projects meet the necessary standards and have the best chance of success.
Remember: your innovation today can generate tax benefits tomorrow.
The European Commission has published the latest edition of the 2025 European Innovation Scoreboard (EIS), confirming a positive long-term trend in the EU’s innovation capacity. Since 2018, the European Union’s innovation performance has grown by 12.6%, reflecting efforts to strengthen R&D ecosystems, promote public-private collaboration, and accelerate digitalization.
Although the most recent data show a slight slowdown (with an average decline of 0.4 points between 2024 and 2025), the overall outlook remains positive. All Member States have improved since 2018, with especially notable progress in key countries such as Spain, Belgium, Italy, Germany, and Portugal, where innovation ecosystems have continued to strengthen alongside a sustained commitment to public-private collaboration and business-driven R&D.
In Spain, several regions stand out for exceeding the European average:
Catalonia, the Basque Country, Madrid, Navarre, and the Valencian Community, consolidating themselves as competitive innovation hubs at the European level.
The 2025 Regional Innovation Scoreboard (RIS) presents a mixed but converging picture. Between 2018 and 2025, 233 out of 241 European regions improved their innovation performance, narrowing the gap between the most and least advanced areas. However, 82 regions recorded a decline between 2023 and 2025, highlighting a recent slowdown in some territories and underlining the need to reinforce policies that enhance competitiveness across all regions.
The European Innovation Scoreboard is not just a statistical report; it is a strategic reference tool for guiding public policy, planning investments, and supporting business decision-making. Its integration into the New European Innovation Agenda further strengthens its strategic role, helping to reduce disparities among countries, promote collaboration, and accelerate the adoption of cutting-edge technologies.
It also supports initiatives such as:
In a context of growing global competition and the urgent need for sustainable transformation, companies must take advantage of the funding and innovation incentives available. The strengthening of the European innovation ecosystem creates a favourable framework for:
At FI Group, we have teams specialized in funding programs, offering comprehensive support that covers everything from idea conceptualization, project definition, to fostering collaborations and coordinating proposals.
We accompany our clients throughout the entire project lifecycle, up to the final closure by the administration, including:
We turn opportunities into tangible results. With a strong presence across Europe and deep expertise in EU funding programmes, we support businesses in identifying and securing resources for innovation-driven projects.
If your organisation is looking to enhance its competitiveness through strategic innovation, explore how we can assist you via the EU Grants.
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