Incentives

Refundable Research and Development Tax Credit

The Refundable Research & Development Tax Credit provides a credit against income tax owed up to 15% credit of first $300,000 of qualified research (or 20% of first $300,000 if the research was done with a Virginia University). If the Company is not profitable or otherwise owes no tax in a year, the credit is refundable in cash. The maximum credit to any one company is $45,000 ($60,000).  There is a $7 million cap of available credits per year from 2016-2022.

1. Form RDC: Application for the Refundable R&D Tax Credit. Due July 1st.
2. Virginia Department of Taxation Information Page (VA Refundable R&D Credit)
3. Link to original legislation (SB 1326, 2011)

Major Research and Development Tax Credit

This is an alternative R&D tax credit for taxpayers with large R&D expenditures, and is effective for taxable years beginning on or after January 1, 2016, but before January 1, 2022. Eligible applicants must incur R&D expenses in excess of $5 million. The credit is equal to 10% of the difference between (i) the Virginia qualified research and development expenses paid or incurred by the taxpayer during the taxable year and (ii) 50% of the average Virginia qualified research and development expenses paid or incurred by the taxpayer for the 3 taxable years immediately preceding the taxable year for which the credit is being determined. Application for the Major company R&D Tax Credit.  Due July 1st.

100% Capital Gains Tax Exclusion for Founders and Investors

Capital Gains Tax Exclusion provides a 100% capital gains tax exclusion for founders of and investors in high technology (including life sciences) start-up companies primarily engaged in business and with principal office in Virginia. (May be used instead of the Angel Investor Tax Credit).  The Company must have had less than $3M revenue in the fiscal year prior to the investment.  The exemption has been extended to June 30, 2020.

1. Virginia Secretary of Technology Information Page (Capital Gains Exclusion)
2. Link to certification form from the Secretary of Technology (Application)
3. Link to original legislation (SB 428, 2010)
4. Qualifying for the Capital Gains Exclusion: 1. When filing your taxes, fill out the appropriate tax form. The following tax forms & schedules include this exemption: Form 500 ADJ, Form 502 ADJ, Form 760 Schedule ADJ, Schedule 760PY ADJ, and Schedule 763 ADJ. OR 2. Have the business in which you are investing apply through the Secretary of Technology’s office for certification that the company is an approved technology company. And then submit the appropriate tax form.

Virginia Angel Investor Tax Credit (Virginia Qualified Equity and 
Subordinated Debt Credit)

The Angel Investor Tax Credit (Virginia Qualified Equity and Subordinated Debt Credit) provides tax credits for individuals or corporations making an investment in a prequalified Virginia small businesses in biotechnology, medical device or other qualified similar technology, to commercialize technology developed at or in partnership with a Virginia institution of higher learning equal to 50% of qualified investment, up to $50,000.  There is a $5 million cap in available credits each year, after which credits are prorated. Credit is non-refundable but may be carried forward 15 years.

1. Virginia Department of Taxation Information Page (VA Angel Investor Credit).
2. Link to Qualified Business Application form (Form QBA) Due December 31 every year.
3. Link to Investor Application form (form EDC) Due April 1 every year.

Virginia Catalyst Grants

Virginia Catalyst awards grants based on the following:

• Collaborations involving at least two Virginia research universities and one industry partner in the bioscience field in order to accelerate translational research and commercialization.
• Grants require proportionately matched industry partner funding scaled for size of enterprise
• Letters of intent, applications and awards are made in discrete Rounds, triggered by an RFP at various times throughout the year; awards in range of $200,000 – $800,000.

Commonwealth Research and Commercialization Fund

The Commonwealth Research Commercialization Fund (CRCF) awards grants and loans to advance targeted research and commercialization in Virginia, including life science.  $2.8 million of new funding was added for Fiscal Years 2018-2019.

The three main subprograms are:

• Research Matching: Awards up to $100,000 to collaborative research partners seeking outside grants but cannot identify a suitable match
• The SBIR (Small Business Innovation Research) Matching Funds Program awards grants of up to $50,000 to Virginia-based technology companies that have won a Phase 1or 2 SBIR or STTR Award from the National Institutes of Health (NIH).
• Commercialization: Awards to companies to encourage the commercialization of products and services in Virginia; $50,000 maximum grant