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.
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New innovation income deduction in Belgium (Flanders)
- 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 year.
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:
With Dutch as its official language, Flanders (Dutch: Vlaanderen) is the northern region of Belgium. The capital of both Belgium and Flanders is Brussels.