“State aid to companies has a significant steering effect. By supporting the innovation process and stimulating environmental and climate protection in businesses, they are helping to make our economy progressively more sustainable and digital,” Economy Minister Franz Fayot said during the press conference.

Between 2018 and 2022, €906m was provided as state aid in different forms such as grants, advances and guarantees. During this period, around 2,000 requests for subsidies were processed.

More than half of the state aid funds (51.7% or €469m) were liked to investments, and generated investments worth €1.5bn into the Luxembourg economy. The remaining amount (48.3% or €437m) was not directly related to investments, but instead represents COVID and energy guarantees (€349m), reimbursement advances (€24.6m), and compensation for additional energy costs (€10.3m).

Breakdown of state aid linked to investments: R&D and innovation

A total of €218m in state aid prompted an additional €561 million in research, development and innovation investments. 81% of the applications processed received support from Luxinnovation. 35 projects were executed in collaboration between companies and public research organisations. In in order to further stimulate public-private partnerships in research and innovation, strategic calls for projects were issued in the fields of healthtech, high performance computing (HPC) and defence.

Environmental protection schemes

Between 2018 and 2022, state aid for environmental protection totalled €95m. This investment increased more than four times in terms of the overall investment it generated.

In order to help businesses transition to more sustainable business practices, the government launched the Fit 4 Sustainability programme in 2022. Managed by Luxinnovation, the programme is aimed at helping companies identify their potential for using resources more efficiently with the help of an external expert.

Support for small and medium-sized enterprises (SMEs)

SME financing schemes promote a multiplier effect for investments and provide an incentive for these entities to put some skin in the game. A total of €16m in state aid generated a total investment of €128m.

“Neistart Lëtzebuerg” scheme

The “Neistart Lëtzebuerg” package was launched at the start of the COVID crisis to propel a sustainable economic recovery, encourage employment and support companies in the hardest-hit sectors. 229 projects received a total of €83m in state aid between 2020 and 2021, resulting in additional investments of up to €225m. 40% of the projects were supported by Luxinnovation. 20% of the portfolio was devoted to increasing energy efficiency, 55% to finding new ways to innovate on processes and organisation, and 25% to promoting growth and diversification.

Photo credit: MECO

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