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New innovation income deduction in Belgium (Flanders)

To help stimulate innovation at companies and research centers and to stay ahead of the pack as an R&D hub: these are two reasons why Belgium has given the green light for a brand-new fiscal deduction scheme applicable to net earnings from innovation. 

Tax deduction of up to 85%

The main effect of the new measure: up to 85% of a company’s net earnings from innovation is exempt from corporate taxation in Flanders. The innovation income deduction thus replaces the former patent income deduction with a broader alternative.

In short, this is what’s new

  • The deductibility has gone up from 80% to 85%.
  • The deduction is based on net income instead of gross income.
  • The scope has been expanded – whereas the former fiscal deduction scheme only covered incomes from patents, the innovation income deduction is now also valid for innovation revenues from:
    • plant variety rights;
    • orphan drugs;
    • data and/or market exclusivity;
    • copyrighted computer programs.
  • Compensations for the breach or transfer of intellectual property rights can now be part of the scope too.
  • If not used, the deduction can now be transferred to the next accountable years.

Leading R&D hub

Apart from the new innovation income deduction, there are a number of other incentives that make Flanders, and Belgium as a whole, stand out as a leading R&D hub within Europe. The two main examples:

  • the R&D payroll tax incentive – companies in Flanders can recover up to 80% of the withholding tax on professional income for academic staff and researchers;
     
  • the tax credit for R&D investments – 13.5% of the investment value (at once) or 20.5% of the annual depreciation (staggered).

Research at AmatsiQBiologicals in Ghent, Flanders

About Belgium and Flanders

With Dutch as its official language, Flanders (Dutch: Vlaanderen) is the northern region of Belgium. The capital of both Belgium and Flanders is Brussels.

More info

Click here for more info on the innovation income deduction.Click here for more info on all Flanders’ tax incentives.
Reported by
Belga news agency
9 February 2017

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