Analysis of Belgium's R&D Incentives has been saved
Analysis of Belgium's R&D Incentives
2015 Global Survey
The general corporate tax rate is 33.99 percent.
Nature of incentives
R&D super deduction: As from 1 January 2014, a taxpayer may elect a 13.5 percent one-time deduction of all R&D investments recorded on the balance sheet (tangible and intangible) or 20.5 percent of the total depreciation amount for the same R&D investments (i.e., the taxpayer computes the depreciation amount and multiplies this amount by 20.5 percent). This deduction is granted in addition to the standard depreciation deduction for such expenses, resulting in a super deduction of 120.5 percent of the amount of depreciation for capital assets, etc. used during the research process. Excess deductions may be carried forward indefinitely or converted into a tax credit that may be refunded if not utilized after five years. The above rates are reviewed annually.
Patent income deduction (PID): The PID allows taxpayers to deduct 80 percent of their qualifying patent income from their taxable income (resulting in a 6.8 percent maximum effective tax rate).
Partial wage tax exemption: An 80 percent withholding exemption is granted to a company for wages paid to qualifying researchers working on R&D projects. Eligible employees must have a masters degree or above in the scientific area. This incentive allows a 20 percent-25 percent decrease of the salary cost for a researcher dedicated to working on qualifying R&D activities. The diploma requirements do not apply in certain circumstances (i.e., young innovation company or university research agreement), and there are exemptions for expatriates working in R&D.
Accelerated depreciation: Assets used in R&D may be depreciated over three years.
Additionally, a company may be granted temporary “innovation premiums” for its employees, thus eliminating tax and social security withholding requirements.
The regional government may offer cash grants for R&D-intensive entities, which can cover up to 80 percent of total project expenditure depending on the location of the project, the type of R&D activities and the type of funding instrument. Regional cash grants generally are not taxable. Specific wage tax exemptions apply to night or shift work independently of R&D activities.
Patent income deductions, super deductions, and wage tax exemptions are just a few of the incentives offered in Belgium.
Eligible industries and qualifying costs
Eligibility is broad and is not limited to particular industries. To receive the deduction or claim the benefit, the taxpayer must certify that the R&D investments aim to develop products and services that are:
- Innovative in the Belgian market; and,
- Will not have a negative impact on the environment (or, if there is an environmental impact, the taxpayer has taken steps to mitigate that impact).
Qualifying costs include: salaries and wages, direct costs, subcontracting costs, overhead, and depreciation.
Intellectual property (IP) and jurisdictional restrictions
The R&D super deduction may be claimed for R&D work performed outside Belgium; but the claimant must retain some associated IP in Belgium to receive the tax benefit.
There is no IP ownership requirement for the partial wage tax exemption.
The PID is applicable to patents developed by the Belgian entity and to improvements to existing patents owned by other legal entities.
A taxpayer must file a claim an environmental certification from the regional authorities by 31 March and obtain a certificate from the region in which the qualified activity takes place.
As from January 2014, the partial wage tax exemption is applicable only to new projects that have been submitted for notification to the Belgium authorities.
Summary of key criteria
A summary of key criteria that distinguishes research tax incentives:
- Refundable research of tax credits
- Location of IP May Impact Research Incentives
- Countries that allow some research to be performed outside the country
- Treatment of income and expenses related to IP