Increasing competitiveness of EU companies: faster depreciation and tax breaks
The European Commission has recently presented its Clean Industrial Deal, a new initiative aiming to boost competitiveness of EU businesses and promote decarbonisation. Under the initiative, a new state aid framework is to be established allowing EU member states to support investments in clean technologies through new tax relief schemes.
The initiative presents a comprehensive roadmap to developing competitive and decarbonised industries in the EU. The aim is to increase sustainable and resilient manufacturing in Europe, with a particular focus on energy-intensive industries and the promotion of clean technologies. These are seen as a key factor for industrial transformation, competitiveness, and decarbonisation.
The initiative foresees the creation of a new state aid framework that would allow EU member states to encourage investments in clean technologies through shorter depreciation periods for key technologies and new tax reliefs.
Corporate tax policy is key to achieving these objectives. Shorter depreciation periods will allow businesses to faster cover the high initial cost of investments in critical technologies facilitating the transition to a low-carbon economy. The new framework would also allow member states to introduce tax relief schemes for companies operating in sectors that are strategic for green transformation, which should lead to increased investment in green technologies. A recommendation to introduce new tax relief schemes is expected in the second quarter of this year.
As part of the initiative, the European Commission has also presented other planned measures, such as ensuring affordable energy for industry, better access to critical raw materials and resources, and forging new trade and investment partnerships with a focus on sustainability.
The EC is expected to adopt a new state aid framework by June 2025, building on the current Temporary Crisis and Transition Framework and allowing separate support schemes for specific technologies such as wind and solar, and for the production of other clean technologies such as batteries and renewable technologies.