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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 year.

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 Flanders’ tax incentives.
Reported by
Belga news agency
9 February 2017

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