Implied Tax Subsidy Rates for Research and Development Expenditure in European OECD Countries (2019)

The implied rate of tax credits, developed by the OECD, is one way to measure the extent of R&D tax credits based on spending in different countries. Tax credit rates are measured as the difference between one R&D investment unit and the pre-tax income required to earn commission from that investment unit, assuming the firm is representative. In other words, it measures the scope for preferential treatment of R&D in a given tax system. The more generous the tax rules on R&D, the higher the implied subsidy rates for R&D. The alleged subsidy rate of zero means that R&D is not eligible for preferential tax treatment.