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Incentives for Foreign Investors in Four Countries

Contributed by BridgeWest
September 11, 2017

Many countries use foreign direct investments incentives to attract entrepreneurs. Financial subsidies and beneficial company set-up conditions are common strategies to promote and encourage foreign companies to expand their business activities to another country.

Tax incentives for companies in Ireland

Ireland has a pro-business policy and an attractive environment for foreign investments. There are no requirements for special foreign direct investments (FDI) permissions and foreign entrepreneurs are treated the same way as the Irish ones.

Capital grants, interest subsidies and a grant for rent reduction, R&D activities, employment, and training are available. For some investors, grants for technology purchases may be available. Access to these grants is determined by the type of investment, the location of the business in the country and whether or not the business creates quality employment conditions. The knowledge development box regime in Ireland allows some qualifying investors to benefit from a reduced 6.25% tax rate on profits from qualifying assets.

A team of local lawyers can give you detailed information on these tax breaks and R&D incentives for foreign investors.

FDI incentives in Spain

Spain's laws for foreign direct investments are in line with the EU provisions and principles. Spain has a research and development incentive regime and a patent box regime. An R&D tax credit is awarded for 25% of the R&D expenses incurred by a company during a tax year. In some special cases, the percentage is as large as 42% of the qualifying expenses. Companies in Spain that activate in the software industry can also benefit from an R&D incentive for advanced software activities.

Tax credits are accessible for investments in areas like music and artistic performance, cinema production and also for the employment of young individuals and of those suffering from disabilities.

Foreign investors benefits in the UK

The United Kingdom is one of the top locations for basing a European headquarters for non-EU companies and the Government offers a number of incentives for foreign companies. Tax incentives for R&D expenditure are available both for small and medium sized companies and for large corporations. More than twenty special investment zones are spread throughout the country, to encourage investments in areas that have seen an economic decline. A patent box regime allows companies to implement an effective 10% corporate income tax to profits made from qualifying patents and other creations.

Tax incentives are also available for the creative industries, including a film tax relief, theatre and orchestra tax relief and an animated production tax relief. In the United Kingdom, failure to comply with the tax laws and regulations is considered a business crime and is sanctioned accordingly.

Incentives for foreign companies in Japan

Japan encourages foreign direct investments and the Council for the Promotion of Foreign Direct Investment was set-up specifically for the purpose of implementing new strategies to make the country an important investment hub.

Tax incentives are available in Japan for investments in productivity improving assets and for the promotion of income growth. Job creation is encouraged and companies that hire new employees receive a certain amount per every new person they hire (subject to certain conditions and ending on 31 March 2018). A research and development tax credit with values between 8% and 10% of the R&D expenses is available.

Certain laws are in place for foreign exchange and foreign trade. You can talk to a team of experts in the country if you are interested in the process of establishing a company in Japan.

To find out more about a country's overall business policy and conditions for foreign direct investments we recommend that you talk to a local tax and/or company formation specialist.


Tags: investment | tax | law | business | Tax | Spain | Japan | Ireland | entrepreneurs | United Kingdom | interest | research and development | legislation | employees | individuals | tax breaks | environment | patents | regulation | training | company formation



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