15 June 2022

Understanding how tax incentives work and which ones are available for you to empower you to take greater control of your finances. FI Group explains 5 types of fiscal incentives to help you align your fiscal strategies and reach your financial goals. 

Who has to pay tax in Belgium? 

All commercial companies in Belgium are subject to corporation tax. Legal mechanisms make it possible to lower the nominal rate. Various tax incentives for individuals and companies make Belgium one of the most attractive places to locate and do business. 

Some Belgian taxes are collected and charged at regional level, while others are managed by individual municipalities.  

What are tax incentives about? 

Your taxable income is the income left after deductions for the likes of social security contributions, personal allowance, and professional costs. 

Belgian private companies and public institutions can profit from several tax incentives and fiscal schemes. These affect both the taxable income and tax return. 

  • Any company with eligible employees (degree and activity); 
  • Paying professional income tax in Belgium. 

FI Group Belgium consists of a team of expert consultants ready to guide you through the five different tax incentives we can support you with: 

1.- Partial wage withholding tax exemption for researchers 

Within this national tax incentive, up to 80% of the withholding tax on professional income can be recovered by a company. Within this enterprise tool, the following needs to be considered: 

  • A specific degree (starting from bachelor)   
  • Involved in R&D-activities   

This exemption can apply to: 

  • Companies that pay or grant salaries to researchers having PhD degrees, civil engineers, industrial engineers and holders of some master degrees.  
  • Companies that pay or grant salaries to researchers involved in research projects within the framework of cooperation agreements concluded with universities or colleges of higher education in the European Economic Area (EEA) or with accredited scientific institutions (no requirements as to degrees);  
  • Young innovative companies (cf.note) that employ scientific staff (researchers, research technicians, project managers in research and development) 

2.- Increased investment deduction 

The investment deduction reduces the amount on which tax must be paid. The amount of the deduction is determined by the percentage of the investment. 

The Corona III law increased the basic rate of the investment deduction from 8 % to 25 % for investments made between March 12th 2020 and December 31st 2020. This measure is from now on extended for investments carried out till December 31st 2022. 

Intended to encourage enterprises to make investments in Belgium, this national incentive is mainly for eco-friendly investments in R&D or for energy-saving investments. 

  • A reduction of the amount on which tax must be paid  
  • The amount is determined, among other things, by the category of investment 

The investments should apply to: 

  • depreciable tangible or intangible fixed assets, 
  • that are newly acquired or achieved, 
  • during the calendar year or tax year, 
  • and used in Belgium for professional activities. 

The investment deduction is applied to the profits or benefits of the tax period in which you acquired or achieved the aforementioned fixed assets. 

3.- Innovation income deduction (IPBox) 

To reduce the revenue amount on which tax must be paid, intellectual property rights reduce the enterprise’s taxable basis. These can be acquired through patented products, developed software, plant variety rights, … 

  • The net income from intellectual property rights can be deducted from 85% of the corporate income tax 
  • Income resulting from innovation can be additionally deducted 

Via the innovation income deduction, the net income from several intellectual property rights can be deducted for 85% from corporation tax. The innovation income deduction applies to the following IP rights:  

  • Patents and supplementary protection certificates (SPC’s);  
  • Plant breeders’ rights  
  • Copyright protected software;  
  • Orphan drug designations;  
  • Data and/or market exclusivity (for plant protection products and medicinal products for human or animal use) 

The deduction applies to self-developed IP rights as well as IP rights acquired or licensed from related or unrelated third parties. Marketing intangibles, such as trademarks, are excluded.  

4.- Cadastral income reduction and Property tax reduction 

Industrial taxes are also related to the cadastral assets of a company (building and machinery). The service provided is to review the taxable basis to optimize (and reduce), based on the analysis of the enterprise’s assets and use.  

5.- Copyrights regime 

If a taxpayer receives income from the assignment or the concession of copyright and related rights, these are in principle taxable as movable income.  

  • Movable income tax rate is lower than the professional income tax rate, providing thus to the employee a lower taxation.  
  • This is a means of increasing the appeal of your business   

To further encourage you to invest in R&D+I, our FI Group consultants help identify, implement and maintain the necessary financial processes. We support you in understanding and intercepting the available R&D+I opportunities.    

Yvette Poumpalova

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