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Innovation Centres Subsidy Control

The SFC’s Innovation Centre Programme operates under UK-EU Trade and Cooperation agreement (TCA) and within UK Subsidy Control requirements.

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Innovation Centres logoThe main aims of the programme are to support transformational collaboration between Scotland’s Higher Education Institutes (HEIs) and businesses and to enhance innovation and entrepreneurship across Scotland’s key economic sectors, create jobs and grow the economy.


Legal Basis

The legal basis for the scheme is the UK-EU Trade and Cooperation agreement (TCA) and the Further and Higher Education (Scotland) Act 2005 – Funding of Further and Higher Education specifically:

Support for

The published vision for the Innovation centre programme is as follows. Using the Scottish university infrastructure, human resources and research excellence as a platform for collaborations across the whole of Scotland, Innovation Centres will create sustainable and internationally ambitious open communities of university staff, research institutes, businesses and others to deliver economic growth and wider benefits for Scotland.

The scheme covers a range of discretionary funding awarded to assist enterprises and organisations in their activities with Higher Education Institutes in their areas of research and development and innovation as set out below.

The principal objective of the Scheme is to encourage enterprises in Scotland to undertake innovative research and technological development with commercial potential using Scotland’s Higher Education Institutes in order to stimulate growth, strengthen competitiveness and boost employment in Scotland across key economic sectors.

The Innovation Centre Programme’s Objectives

The Innovation Centre Programme aims to enhance innovation and entrepreneurship across Scotland’s key economic sectors, create jobs and grow the economy. To achieve this, the programme’s main objectives are:

  • To offer collaborative knowledge exchange activities to help solve industry defined problems and co-create innovative opportunities for growth.
  • To enhance two way knowledge exchange between universities, industry and others towards realising tangible benefits for businesses while also stimulating and challenging the Scottish research base.
  • To provide an environment that supports the development of the next generation of business innovators, academics and entrepreneurs in Scotland and a culture change towards greater and more effective university / industry collaboration.
  • To simplify the innovation landscape in Scotland through creating conduits to the university knowledge and expertise for all businesses in Scotland and being complementary to and exploit existing initiatives such as Interface and the planned Single Knowledge Exchange Office.

General Provisions

There is no automatic entitlement to support from SFC’s Innovation Centres. Assistance may be offered through a range of grants delivered by the Innovation Centres, based on the merits of the proposed project, and an assessment of need for assistance. Any funding is subject to due diligence appraisal and approval by a panel made up of industry, academia and the Innovation Centre. Any business interested in assistance from an Innovation Centre relating to the Scheme outlined below should consult the Innovation Centres page.

Subsidy can be awarded to enterprises of all sizes.

Applicants must submit an application for assistance to an Innovation Centre before work on the project or activity has started, and the application must be approved in writing by an Innovation Centre before work can commence on the project.

Where the applicant is a large company, additional conditions will be applied to ensure that the subsidy has an incentive effect. The applicant must provide documentation which establishes that the subsidy will achieve one or more of the following: a material increase in the scope of the project / activity; a material increase in the total amount spent by the beneficiary on the project / activity; or a material increase in the speed of completion.

The Scottish Funding Council (SFC) is required to provide regular returns to the Scottish and UK Governments detailing subsidies provided under this Scheme, and to maintain detailed records regarding individual subsidy provided under the Scheme. Such records must contain all information necessary to establish that the conditions laid down are fulfilled, including information on the status of any undertaking whose entitlement to subsidy or a bonus depends on its status as an SME, information on the incentive effect of the subsidy, and information making it possible to establish the precise amount of eligible. Records must be maintained by the beneficiary organisation(s) for 10 years from the date on which the last subsidy was granted under the Scheme. The information which must be provided to SFC and its Innovation Centres and / or retained by the subsidy recipient will be set out in any offer of grant made under the programme.

Research and Development Subsidies

Subsidies for research and development projects in the following areas compatible with internal market:

  • Fundamental Research.
  • Industrial Research.
  • Experimental Development.
  • Feasibility Studies.
The eligible costs of research and development projects shall be allocated to a specific category of research and development as outlined above and those permitted by SFC’s Innovation Centres are:

  • Personnel costs to the extent employed on the project.
  • Instruments and equipment to the extent used in the project.  Where equipment is not used for its full life, only the depreciation costs for the life of the project are eligible.
  • Costs for buildings and land to the extent and for the duration period use for the project.  With regard to buildings only the depreciation costs corresponding to the life of the project, as calculated on the basis of generally accepted accounting practices.
  • Costs of contractual research, knowledge, consultancy and equivalent services used exclusively for the project.
  • Additional overheads and operating expenses (including materials, supplies and similar products directly incurred as part of the project).

Eligible costs for feasibility research are the costs of the study

  • Subsidies for each project type shall not exceed the stated maximums, with supplements available) for Industrial and experimental research for small (+20%) and medium (+10%)enterprises and a further 15%, up to a cap of 80% if one of the following conditions is met:
  • (a) The project involves effective collaboration: between undertakings among which at least one is an SME and no single undertaking bears more than 70% of the eligible costs; or between an undertaking and one or more research and knowledge dissemination organisation, where the latter bears at least 10% of the eligible costs and has the right to publish their own research results.
  • (b) The results of the project are widely disseminated through conferences, publication, open access repositories, or free or open source software.

The intensities for feasibility studies may be increased for small (+20%) andmedium (+10%) enterprises.

In summary the permitted intensities are as follows:

Permitted intensities

Research Type

Subsidy Intensity (%)

Large Company

Medium Company

Small Company

Collaboration / Dissemination bonus (up to a maximum of 80%)
















Investment for Research Infrastructures

Eligible activities include subsidies for construction or upgrade of research infrastructures that perform economic activities. This can be subsidy granted to large firms and / or SMEs in a grant or loan capacity.

The eligible costs shall be the investment costs in intangible and tangible assets.

Conditions attaching to the Subsidy

Where a research infrastructure pursues both economic and non-economic activities, the financing, costs and revenues of each type of activity shall be accounted for separately on the basis of consistently applied and objectively justifiable cost accounting principles.

The price charged for the operation or use of the infrastructure shall correspond to a market price.

Research and development Aid – Fisheries and Aquaculture

Subsidised projects shall be of interest to all undertakings in the sector or sub-sector involved.

The following information shall be published on the internet before a project starts:

  • That the subsidised project will be carried out.
  • The goals of the project.
  • Approximate date of publication of results and its place of publication on the internet.
  • A reference that the results of the subsidised project shall be made available on the internet at the end of the project and remain there for a period of 5 years.
  • Subsidy will be granted directly to the research and knowledge dissemination organisation involved in the project.
The subsidy shall not exceed 100% of eligible costs.


Export Subsidy

The Regulation and accordingly the Scheme does not apply to:

  • Subsidy to export-related activities towards third, namely  directly linked to the quantities exported, to the establishment and operation of a distribution network or to other current costs linked to the export activity.
  • Subsidy contingent upon the use of domestic over imported goods.


The Scheme applies to all sectors of the economy, with the exception of:

  • Activities in the processing and marketing of agricultural products where subsidy is aimed at directly influencing the price or quantity of primary production (i.e. where the amount of the subsidy is fixed on the basis of the price or quantity of such products purchased from primary producers or put on the market by the undertakings concerned or the subsidy is conditional on being partly or entirely passed on to primary producers).
  • Subsidy to facilitate the closure of uncompetitive coal mines.

Recovery of Illegal Aid / Undertakings in Difficulty

The following are explicitly excluded from the Scheme:

  • Payment of subsidy in favour of an undertaking which is subject to an outstanding recovery order following a previous Commission decision declaring a subsidy illegal and incompatible with the common market.
  • Subsidy to undertakings in difficulty.

Cumulation of Subsidy

Subsidy provided under the Scheme may be cumulated with other forms of subsidy exempted under the scheme and provided through this or another funding scheme as long as those subsidy measures concern different identifiable eligible costs.

Subsidy provided under this Scheme may only be cumulated with other subsidy exempted under the, where, in respect of the same totally or partially overlapping eligible costs, such cumulation does not result in the highest subsidy intensity or subsidy amount applicable under the scheme and / or relevant scheme(s) being exceeded.

All sources of public funding shall be taken into account when considering cumulation and in determining that the relevant subsidy intensity or subsidy amount is not exceeded.