Innovation and research and development (R&D) are critical drivers of economic growth and competitiveness in Belgium. Recognizing this, Belgian authorities have implemented various fiscal incentives to support R&D activities and innovation within small and medium-sized enterprises (SMEs). These incentives are designed to reduce financial burdens, stimulate investment in new technologies, and promote the commercialization of innovative products. In this article, we will explore four key fiscal incentives that can significantly benefit innovative SMEs.
1. Exemption from Professional withholding tax for Researchers
What is it?
The exemption from professional withholding tax is designed to provide immediate financial relief to employers who engage researchers in R&D programs. This incentive allows companies to save on the withholding tax they would otherwise pay for their researchers.
Benefits
Immediate financial gain: Employers save money by reducing professional withholding tax for researches by 80% on the portion, resulting in an average total cost reduction for the employer of 10-20%.
No impact on employees: The withholding tax is considered paid for the employees.
Eligibility
Academic research: Universities and higher education institutions.
Collective research: Approved research institutions.
Company research: Staff with specific degrees (PhD, Master's, Bachelor's), those in partnership agreements with educational institutions, and personnel from Young Innovative Companies.
Implementation
To benefit from this exemption, companies must ensure complete registration of their R&D projects with Belspo, maintain valid diplomas, justify R&D activities, and accurately track working hours. A tax ruling is not possible, which is why mastering the process internally or delegating to a trusted service provider is crucial to avoid complications during subsequent tax audits.
2. Tax exemption for regional grants and subsidies
What is it?
This incentive exempts companies from paying corporate income tax on grants and subsidies provided by Belgian regional authorities, in Wallonia, Flanders or Brussels.
Benefits
Tax relief: Significant savings on grants and subsidies linked to R&D activities.
Conditions
All companies receiving regional grants can benefit from this incentive.
Grants must be linked to R&D activities and comply with European state aid regulations.
Additional conditions for subsidies include being tied to tangible or intangible assets.
3. Tax credit for investments in R&D – or R&D Tax Credit
What is it?
The R&D investment tax credit provides a tax benefit for companies investing in new tangible and intangible assets that support the development of new products and advanced technologies.
Benefits
Flexible use: If the tax credit is not fully utilized, it can be refunded after five years.
Encourages innovation: Supports the acquisition of new assets that drive technological advancements.
Conditions
All Belgian companies investing in R&D can apply for this tax credit, making it a versatile tool for fostering innovation.
R&D tax credit require an environment-neutral certification from the regional authorities.
4. Deduction for Innovative Income
What is it?
The Deduction for Innovative Income allows companies to deduct income derived from qualifying intellectual property (IP) rights from their taxable profits.
Benefits
Reduced corporate tax: Lowers the overall corporate tax burden, particularly beneficial for companies in the commercialization phase of their innovation.
Comprehensive coverage: Applies to various types of IP, including patents and software developed through R&D.
Conditions
All Belgian companies with eligible intellectual property (IP) can benefit from this deduction.
To qualify, companies must either own, co-own, or hold the rights to the IP.
Implementation
The deduction requires a thorough calculation and verification of eligible income. It is advisable to seek a tax ruling for clarity and legal certainty, and to consult tax specialists due to the complexity of the matter.
How our Tax & Accounting team can help
Understanding the intricacies of these fiscal incentives can be challenging. Our Tax & Accounting team at Altesia is here to assist your SME in maximizing these benefits.
We can help you with the following services :
Verifying eligibility: Ensuring your company meets all necessary criteria to qualify for each incentive.
Calculating benefits: Accurately calculating the financial benefits you can expect.
Handling accounting: Managing the detailed accounting processes involved in claiming these incentives.
Coordination with Tax Experts: Facilitating tax ruling requests and ensuring compliance with all legal requirements.
By partnering with us, you can focus on driving innovation while we handle the administrative and compliance aspects of these valuable fiscal incentives.
Contact us for an introductory chat!
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