EU research grants and audit of royalties received
We often hear about the success of a business venture in the field of high-tech and
research and development. It is important to know that behind all the successes of
these ventures is a support system with a turnover of billions of NIS a year, and for a
good reason. Funding for research and development companies is crucial for the
continued existence and success of their ventures. It can sometimes take many years
until a new venture is able to achieve success and financial independence.
For this purpose, the Israeli government – through the Innovation Authority and
various other government bodies, and the Innovation Authority of the European
Union Commission offer support and R&D grants in a wide variety of fields. They
provide funding, incentives and numerous grants in a wide variety of development
fields: high-tech, medicine, agriculture, engineering and more.
There are many sources of funding, but the competition for funding is tough and
complex and includes different criteria for each entity, therefore it is important to
manage the grant application and the royalties audit with a CPA who understands the
process and is familiar with the fine details. Our office accompanies dozens of
companies in the process that includes submitting the application, receiving the
financing and calculating the amount of royalties if necessary.
The funding application process continues to be complex even after the application in
principle has been approved, and includes propriety and completeness checks of
internal organizational calculation processes, and their review before submission to
the funding agency. We accompany many companies in this continuous process of
calculating the amount of royalties, including simulations of royalty calculations and
their effect on the companys financial situation (derived from the success of the
companys sales). and perform a variety of advanced reviews
We handle applications for R&D grants from a variety of sources, in the State of
Israel and abroad:
A. Israel Innovation Authority.
B. The various government ministries in Israel.
C. The Innovation Authority of the European Union Commission.
Advantages of receiving R&D grants:
• Capital raising is not dilutive – that is, not against the allocation of shares.
• Awarding a “Quality Mark”- which helps a lot both in raising further capital from
the private sector, and in international business development.
• Gaining a footing in the target markets – in the programs of international
conglomerates.
• Increasing the chances of receiving additional R&D grants.
Our services include:
• Individual advice in choosing the most suitable grant program.
• Accompanying, guiding and advising throughout the application process – including
preparing a budget and funding runway.
• Preparation workshop for the meeting with the professional evaluators.
• Professional accompaniment during the professional evaluation.
• If the request is approved:
– Professional support during the process of signing the grant.
– Preparation of periodic performance reports and a summary performance
report for the granting agency.
Tax Incentives
We handle requests for tax benefits from the Israel Tax Authority – in two main areas:
A. “Technological Innovation Promoting Enterprise” standards stamp from the Israel
Innovation Authority – within the framework of the Law for the Encouragement of Research, Development and Technological Innovation in Industry.
B. The Law for the Encouragement of Capital Investment – through the Authority for Investments and the Development of Industry and the Economy in the Ministry of
Economy.
These two areas provide significant tax benefits – which may amount to millions of
shekels:
A. reduced corporate tax.
B. reduced dividend tax
C. accelerated depreciation.
D. additional reduced taxes – such as purchase tax, appreciation tax, and more.
Our services include:
• Complete writing of the application.
• Preparation of all required accompanying documents.
• Technical submission of the application.
• Dealing with the approving authority until final approval is obtained.
• Preparation of annual reports for the granting authority.
Closing a Project with the Israel Innovation Authority
A company that received an R&D grant from the Israel Innovation Authority is –
almost always – required to return the grant money, by transferring royalties from the
sales of the product for which the R&D grant was given.
However, when the project fails for some reason, or when the company stopped
selling the product for which the R&D grant was granted, or when the company
stopped using the technology for which the R&D grant was granted – a request can be
submitted to close the project and stop the royalty payments (if they have started).
Our services include:
• Complete writing of the application.
• Preparation of all required accompanying documents.
Assistance for companies that have encountered a problem with the Israel Innovation Authority
Receiving a grant from the Israel Innovation Authority involves meeting a series of
legal and accounting conditions established by the Authority. Failure to comply with
these conditions may expose the company – and its managers – to disciplinary
measures, and even to criminal prosecution
Our service includes addressing the following situations:
• Periodic performance reports that were not submitted, or were submitted and
rejected by the authority.
• A summary performance report that was not submitted, or was submitted and
rejected by the authority.
• Periodic royalty reports that were not submitted, or were submitted and
rejected by the Authority.
• Improper use of grant funds.
