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R&D Tax Alerts

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Researcher withholding tax exemption extended to certain bachelor’s degrees from 1 January 2018

16 November 2017

Article 275/3 of the Belgian Income Tax Code (“ITC”) provides a partial withholding tax exemption for some employees active in R&D. The exemption currently amounts to 80% of the withholding tax deducted. In order to benefit from this exemption, several conditions need to be met, including a scientific master’s degree requirement in most cases certain bachelor’s degrees will become eligible.

The IID is finally here! Is your business ready?

21 February 2017

Previous R&D tax alerts (12 July, 29 August, 20 October and 5 December 2016) announced that a new innovation income deduction would be introduced. The regime is now a reality after IID legislation has been published in the Official Journal on 20 February 2017. The adopted version of the law can be accessed by clicking (Dutch | French).

IID closer to reality

5 December 2016

Previous R&D tax alerts (12 July, 29 August and 20 October 2016) covered the Government’s objective to adopt a new innovation income deduction (“IID”) legislation before year-end. As the Council of Ministers approved the pre-draft IID legislation in first reading last Friday, 2 December 2016, this may finally become reality. Subject to a positive outcome from the State Council review, the approval in second reading by the Council of Ministers and discussions and votes in the Chamber, the adoption of the law may be expected as a “new year’s present”.

Update on Innovation Income Deduction legislation replacing the PID regime

20 October 2016

In order to activate the conclusions from the OECD’s BEPS Action 5 report and similar discussions at EU level, Belgium has abolished the patent income deduction (PID) regime from 1 July 2016, subject to a conditional grandfathering rule which allows the old PID regime to be claimed until 30 June 2021 (see previous alert of 12 July 2016).

The Belgian government is preparing (pre-draft) legislation with a view to replace the previous PID regime with an “innovation income deduction” (IID) regime that is compliant with the “modified nexus approach” agreed upon within the OECD and EU Code of Conduct group. In the previous R&D tax alert of 29 August 2016, the new regime’s headlines were outlined based on information available at that time.

Following further discussions within the government, the new IID regime has been further improved. The present alert outlines these changes to the IID regime based on the latest information and enhanced insights. The below outline may still be subject to possible changes until the pre-draft law’s approval by the Council of Ministers and adoption by Parliament.

Innovation Income Deduction will replace the PID regime

29 August 2016

In order to activate the conclusions from the OECD’s BEPS Action 5 report and similar discussions at EU level, Belgium has abolished the patent income deduction (PID) regime from 1 July 2016, subject to a conditional grandfathering rule which allows the old PID regime to be claimed until 30 June 2021 (see previous alert of 12 July 2016).

Abolition of patent income deduction with “grandfathering”

12 July 2016

A draft bill containing urgent tax measures, deposited with Parliament on 23 June 2016 and approved by the Finance Committee on 8 July 2016, will abolish the patent income deduction (PID) regime, subject to a grandfathering period.

Frascati Manual – New Edition 2015

12 November 2015

Published for the first time in 1963 by the OCDE, the initial aim of the Manual was to enable the measurement and comparison of Research and Development (R&D) efforts carried out over different countries. Therefore, the Manual states global R&D definitions and statistical tools to evaluate the R&D investment.

Since then, the evolution of the economic context strengthened the interest of such a manual. Therefore, the application of the manual exceeded its target, as well in geographical terms by becoming a worldwide standard, as in application terms by being used in a wide range of policy areas, notably for funding and tax incentives purposes.

European Commission’s favourable decision on wage withholding tax partial exemption for Young Innovative Companies

29 January 2015

On Friday 23 January 2014, the European Commission issued a positive decision regarding the compatibility of the application of the wage withholding tax partial exemption for Research & Development by Young Innovative Companies (“YICs”) with the internal market. The European Commission’s decision has not yet been published but it is understood that this positive decision covers the partial exemption’s application by YICs up to 30 June 2014.

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