Definition and description

Tax incentives are the concessions in tax codes that mean a conscious loss of government budgetary revenue. They are usually intended by public authorities to encourage particular types of behaviour (in relation to education and training, in this case) and/or to favour specific groups (certain companies, e.g. SMES, in this case). Tax incentives reduce either the tax base (tax allowance) or the tax due (tax credit).

In the 2020 edition of the database, a differentiation is made between specific tax incentives for companies going beyond the tax treatment of company expenditure on training as a business/operational costs, and those related to the tax treatment of company expenditure on training as a business/operational costs only.

Training costs of companies are typically treated as operational costs, i.e. incurred by the economic process, and treated on equal footing with other costs such as costs for material or merchandise, rents or wages. By adding up to the total costs, they reduce the taxable balance (profits) between incurred costs and received income. When firms’ training costs are accepted as regular costs (and thereby reduce taxable profits), for the current period, the cost sharing equals to the marginal applicable corporate income tax rate. In years, where no profits are made, however, training costs are not balanced by reduced profit taxes, when no particular arrangements are in place allowing for deducting currents losses from future profits.

As far as training constitutes an investment in skills and competences, today’s costs for training (potentially resulting in lower profits) are expected to imply higher gains at a later stage, implying higher profit taxes, so that reduced tax revenues in one year are expected to be balanced by increased tax revenues in a later year.

Particular costs for training may be perceived as a component of an employees’ wage income (‘fringe benefits’), implying that while the companies’ profit taxes are reduced by this wage component, individuals may be required to pay personal income tax for a defined amount, defined as the wage equivalent for the received training support (e.g. fees covered for attending programmes leading to a formal qualification). (See incentives for individuals).

Across countries, company training expenditure typically reduces company tax base. However, variations exist across countries with regard to the maximum amount of deductible training costs, the tax rate applied (which may include different rates by company size), the share of training costs that can be deducted, the possibility to include other costs than fees (e.g. travel, accommodation), and whether wage costs can be included. While the tax treatment of training costs as operational costs is a general rule,  in a small number of countres enterprises might receive additional tax incentives related to their training activities.

Key features and statistics

Tax incentives for companies - key features
ID Country Name of the instrument - Local language Name of the instrument - English translation Type of tax incentive Sub-type of instrument Net effect of the tax incentive Threshold of eligible costs eliciting a tax incentive (maximum) (EUR) Threshold of eligible costs eliciting a tax incentive (minimum) (EUR) Personnel absence costs/ wage costs during training covered  Preferential treatment options established
27 BG Данъчно стимулиране при предоставяне на стипендии Tax incentives related to the provision of scholarships Tax allowance (deduction from tax base) Incentive for promoting training Not available No No No No
88 FR Crédit d'impōt pour dépenses de formation des dirigeants d'entreprise Tax credit for training expenses of entrepreneurs Tax credit (deduction from tax due) Incentive for promoting training 34% to 71% EUR 406, maximum deductable amount from taxable profits (in 2020) 40 hours per year corresponding to EUR 406. No No
95 HR Državna potpora za obrazovanje i izobrazbu State aid for education, training and research and development projects Tax allowance (deduction from tax base) Incentive for promoting training 35% to 80% 35% (55% for SMEs) of the cost of specific education and training. No Yes No
187 RO Bursă privată Private scholarships Tax allowance (deduction from tax base) Incentive for promoting training Not available Up to 3% of yearly turnover but under 20% of the due tax on the profit No No No
193 SI davčna olajšava za vlaganja v raziskave in razvoj Research & development tax incentive Tax allowance (deduction from tax base) Incentive for promoting training Not available Up to 100% of labour cost of employees on the project, all training expenses connected with the project. No No No
194 SI olajšava za izvajanje praktičnega dela v strokovnem izobraževanju Tax allowance for practical part of vocational education Tax allowance (deduction from tax base) Incentive for promoting training Not available Up to 20% of average monthly salary per person No No Yes
219 FI Koulutusvähennys Tax allowance for companies - Deduction in company income tax for employee training expenses Tax allowance (deduction from tax base) Incentive for promoting training Not available Half of average wage costs for up 2-3 days of training per employed More than one day of training (shorter training spells are not eligible) No Yes
292 IT Credito di imposta formazione 4.0 Training tax credit 4.0 Tax credit (deduction from tax due) Incentive for promoting training Not available EUR 300 000 (50%) for small enterprises; EUR 250 000 (40%) for medium-sized enterprises; EUR 250 000 (30%) large enterprises No Yes No
Tax incentives for companies - statistics
ID Country Name of the instrument - Local language Name of the instrument - English translation Year Volume of funding (EUR) Year Number of beneficiaries (companies)
27 BG Данъчно стимулиране при предоставяне на стипендии Tax incentives related to the provision of scholarships Not available Not available Not available Not available
88 FR Crédit d'impōt pour dépenses de formation des dirigeants d'entreprise Tax credit for training expenses of entrepreneurs 2020 EUR 53 000 000 2018 52 840e
95 HR Državna potpora za obrazovanje i izobrazbu State aid for education, training and research and development projects Not available Not available Not available Not available
187 RO Bursă privată Private scholarships Not available Not available Not available Not available
193 SI davčna olajšava za vlaganja v raziskave in razvoj Research & development tax incentive Not available Not available 2017 568
194 SI olajšava za izvajanje praktičnega dela v strokovnem izobraževanju Tax allowance for practical part of vocational education Not available Not available Not available Not available
219 FI Koulutusvähennys Tax allowance for companies - Deduction in company income tax for employee training expenses Not available Not available Not available Not available
292 IT Credito di imposta formazione 4.0 Training tax credit 4.0 Not available Not available Not available Not available