EU backs €2 mln scheme for innovative SMEs

The European Commission has approved an estimated €2 mln Cypriot scheme to support private investments into innovative small and medium-sized enterprises (SMEs), contributing to the country’s Recovery and Resilience Plan.

The support is in the form of income tax relief favouring private investors, both individual and corporate investors, who decide to invest in early-stage, innovative SMEs.

The scheme provides investors who finance eligible companies with tax relief of up to 30% of the amount invested, with an overall cap that cannot exceed 50% of their total taxable income, up to a maximum of €150,000 per year and €750,000 within five years from the investment.

It will run until 31 December 2023.

Brussels decided the financial incentive provided by the scheme is “a necessary and appropriate instrument to foster the underdeveloped venture capital market in Cyprus…the aid will be proportionate, i.e. limited to the minimum necessary”.

“The positive effects of the scheme on providing additional risk finance to innovative SMEs in Cyprus outweigh any potential distortions of competition and trade brought about by the support”, according to the Commission’s assessment.

It assesses measures entailing state aid contained in the national recovery plans presented in the Recovery and Resilience Facility (RRF) context as a matter of priority.

Cyprus’ Recovery and Resilience Plan was positively assessed by the Commission in the context of the RRF and adopted by the Council.

The Commission assessed the measure under EU State aid rules which enables Member States to support the development of certain economic activities.