Types of financing instruments

“A ‘training fund’ is a dedicated stock or flow of financing outside normal government budgetary channels for the purpose of developing productive skills for work.”.

Training funds in the EU are very heterogeneous. The differences concern the governance models (bipartite or tripartite nature), the number of funds established per country, the type of (education and training) activities and target groups supported, and the way the money is collected and redistributed.

Tax incentives are the concessions in tax codes that mean a conscious loss of government budgetary revenue because they reduce either the tax base (tax allowance) or the tax due (tax credit). Concerning tax incentives for the purposes of corporate income tax, countries typically regard company expenditure on training as a business cost which is 100% deductible from the taxable income.

In some countries, companies may also receive additional tax incentives related to their training activities. 

Tax incentives are the concessions in tax codes that mean a conscious loss of government budgetary revenue because they reduce either the tax base (tax allowance) or the tax due (tax credit). Concerning tax incentives for the purposes of personal income tax, they may allow adults to deduct their costs for continuing vocational training or adult learning related to their current or future occupation from their individual income tax base or tax due.

Companies may receive public funding (grants) to cover (part of) their training costs. Public resources may come from general taxation, the unemployment insurance or the social security system. When companies receive grants from a levy-based training fund, these are presented under ‘training funds’ in this database.

Adults may receive public funding to cover (part of) the costs related to their participation in education and training. Public resources may come from general (income) taxation, the unemployment insurance or the social security system in general. Such co-funding schemes are implemented across EU countries under various names: grant, training voucher, training account, individual learning account (ILA), etc. They are part of a shift away from simply financing training providers to a more demand-led approach that finances learners.

Loan scheme allows individuals to borrow financial resources (on favourable conditions) from their future income to cover part of their (education and training) expenditure. The State may support the availability of loans and co-finance loan-related costs to encourage participation in adult learning.

The training/educational leave is a regulatory instrument which, either by statutory right and/or through collective agreements, sets out the conditions under which employees may be granted temporary leave from work for learning purposes. Furthermore, the training leave allows the employee to be absent from the workplace for education and training purposes without losing the right to return to work later on or other social rights connected to a current employment.

Payback clauses are a legal instrument that may encourage companies to invest in training by allowing them to bind employees for a certain period of time after training in return for providing the training. In fact, employees are free to move to another company but may be requested to reimburse (part of) the cost of the training.