The glossary to understand and take action

Incentive effect of aid

A condition intended to establish that public support plays a role in the decision to carry out a project under the rules of the scheme.

Notion comptable, fiscale ou juridique · Luxembourg Fiduciaries Editorial Team · Reviewed on

Understand the scope

Definition and points to distinguish

For general aid to SMEs in Luxembourg, timing is decisive: a complete application must precede the start of work and the binding commitments of the project concerned. This condition must be checked under the scheme actually applied for; submitting an application does not guarantee approval.

In your file

What this changes in practice

The incentive effect means that aid must help trigger or alter the project under the conditions of the scheme. For many types of aid, the application must precede the start of work or certain commitments. The exact definition of the start date must therefore be checked before signing an order. An expense that is useful to the business is not automatically eligible, and submitting an application does not guarantee approval.

A scenario to help you understand

Educational example

An SME is considering an investment. It reviews the aid conditions and the application timetable before accepting a quotation that commits it to the project.

Fictitious situation, presented to illustrate the concept.

Prepare for what comes next

Points to check

  • Identifier le régime d’aide
  • Vérifier la notion de début du projet
  • Conserver la preuve du dépôt

The practical question

Find out more

Un devis accepté peut-il constituer un début de projet ?

Selon le dispositif, un engagement juridiquement contraignant peut être pertinent pour apprécier le début des travaux ou de l’activité. Il faut lire la définition du régime avant de signer, sans attendre la première facture ou la livraison. Les études et autres actes préparatoires peuvent avoir un traitement propre : la chronologie doit être examinée avec précision.

Connecting concepts

Terms to know as well

Continue with the concepts, contacts and procedures related to this topic.

Business planThe business plan presents the project, its market, its organisation and its financial forecasts.Financial forecastThe financial forecast translates the project's assumptions into expected results, cash flows and financing needs.Investment aid applicationAn investment aid application presents a project and its expenditure under a specific public scheme. Eligibility depends on the company, the project, the costs and the conditions of the scheme.Ministry of the Economy — business proceduresThe Ministry of the Economy is involved in several business procedures, including business permits and various aid schemes. The competent department depends on the exact purpose of the application.LuxinnovationLuxinnovation is the national innovation agency. It supports companies in their innovation and development projects and directs them towards relevant programmes, partners and schemes.Working capital requirement (WCR)The working capital requirement (WCR) measures the financing absorbed by the operating cycle, notably inventory and receivables, less operating liabilities.

Put it into practice

Explore further with our guides

Practical guideBusiness aid in Luxembourg: preparing a fundable application

Sources and verification

References consulted on 20 September 2026. Official procedures specify the applicable conditions and exceptions.

This guide explains a general process. The applicable rules depend on your situation; it does not constitute personalised advice. Report a correction.

A definition gives you a reference point. To examine your situation, clarify your question with a professional.