Tax Subsidies for R&D Expenditures in Europe, 2025

The implied tax subsidy rates for large profitable firms vary significantly among countries that grant notable relief, ranging from 1 percent in Denmark to 39 percent in Portugal. France and Poland provide the second and third most generous relief after Portugal, with an implied tax subsidy rate of 36 percent.

Of the countries that grant notable relief, Denmark (1 percent), Cyprus (2 percent), and Estonia (4 percent) are the least generous. The implied tax subsidy rates of Bulgaria, Georgia, Latvia, Luxembourg, Malta, and Switzerland do not show any significant expenditure-based R&D tax relief.

Among the 33 major European countries with available data, the average implied subsidy rate for profitable large firms was 15.7 percent in 2024. In comparison, the United States only grants a subsidy rate of 3 percent to large profitable firms, while the People’s Republic of China grants a subsidy rate of 32 percent.

The OECD also provides implied tax subsidy rates for loss-making firms and for small and medium-sized enterprises (SMEs). Most countries covered in today’s map provide the same expenditure-based R&D tax relief to large firms and SMEs. Only France (in the case of loss-making firms), Germany, Iceland, the Netherlands, and the United Kingdom (in the case of profitable firms) are relatively more generous to SMEs than to large firms. Croatia and the United Kingdom (in the case of loss-making firms) offer slightly higher relief to large firms than to SMEs.

Some countries’ R&D tax incentives include refunds and carryover provisions, changing the implied tax subsidy rates for loss-making firms relative to profitable firms. This has resulted in lower average implied tax subsidy rates for loss-making firms relative to profitable firms, both for SMEs and large firms.