15 March 2023

R&D fiscal incentives are tools that the Belgian government uses to encourage innovative behaviors and/or investments by businesses through a favourable tax system. 

In Belgium, there are several fiscal incentives available to encourage research and development (R&D) activities by enterprises. These incentives aim to stimulate innovation and improve the competitiveness of Belgian companies.  

Partial wage withholding tax exemption for researchers 

In Belgium, enterprises can benefit from a specific tax regime called the “Partial Wage Withholding Tax Exemption for Researchers”, which is aimed at stimulating research and development activities. It can provide several fiscal advantages for Belgian enterprises that employ researchers, such as allowing Belgian enterprises to reduce the labor costs associated with hiring and retaining highly qualified researchers. This can make it more affordable for companies to invest in research and development, which can help to improve their competitiveness and drive innovation. By hiring highly qualified researchers, Belgian enterprises can benefit from increased productivity and innovation. Researchers can bring new ideas, skills, and expertise to the organization, which can lead to the development of new products, services, and technologies. 

Employing highly qualified researchers can also enhance the reputation of Belgian enterprises as innovative and forward-thinking organizations. This can help to attract new customers, investors, and partners, and improve the company’s overall standing in the industry. 

To be eligible for the exemption, the researcher must have a degree of at least bachelor’s level, be employed in a research position, and spend at least 50% of their working time on research activities. The exemption applies to a portion of the researcher’s gross salary, up to a maximum amount. The exemption amount is calculated based on the number of researchers employed and the amount of eligible research activities. 

Increased Investment Tax Deduction for R&D

In Belgium, companies that invest in research and development (R&D) activities can benefit from an investment tax deduction (ITD) aimed at encouraging innovation and technological development. The ITD is a tax benefit that allows enterprises to deduct a percentage of their eligible R&D expenses from their taxable income. 

The exact percentage of the ITD depends on the type of R&D activity and the company’s size. In general, small and medium-sized enterprises (SMEs) benefit from a higher percentage of ITD than large enterprises. 

For example, in 2021, SMEs could benefit from an ITD of up to 25% of their eligible R&D expenses, while large enterprises were eligible for an ITD of up to 13.5%. Eligible expenses may include salaries, patent costs, and other direct expenses related to R&D activities. 

It’s important to note that the ITD is subject to certain conditions and limitations, and the company must obtain a certificate of eligibility from the Belgian Federal Science Policy Office to benefit from the deduction. The ITD can be carried forward for up to seven years if the eligible expenses exceed the taxable income of the company in a given year. 

Innovation income deduction (Innobox) 

The Innovation Income Deduction (IID) is a tax benefit provided by the Belgian government to encourage innovation and research and development (R&D) activities within companies. 

The IID allows companies to deduct a portion of their net income from qualifying intellectual property (IP) rights from their taxable income, resulting in a reduced tax liability. The eligible IP rights may include patents, copyrights, software, and other related intangible assets. 

The percentage of the deduction varies depending on the type of IP right and the nature of the enterprise. For example, small and medium-sized enterprises (SMEs) can benefit from a higher deduction rate than larger companies.  

To be eligible for the IID, the enterprise must meet certain criteria and obtain a certificate of eligibility from the Belgian Federal Science Policy Office. The company must also be able to demonstrate that the IP rights were developed or acquired for the purpose of carrying out R&D activities. 

Overall, the IID is a powerful tool for companies in Belgium to promote innovation and investment in R&D by providing tax incentives to businesses. 

Industrial taxes 

In Belgium, companies that engage in research and development (R&D) activities may be subject to certain industrial taxes, such as the regional tax on productive activities (TPA) and the municipal tax on economic activities (TME). 

The TPA is a regional tax levied on the use of certain equipment and installations, such as machinery and tools, used in industrial activities, including R&D. The TPA rate varies depending on the region where the company is located and the nature of the equipment. 

The TME is a municipal tax levied on various economic activities, including R&D. The TME rate varies depending on the municipality where the company is located and the nature of the economic activity. 

However, in certain cases, companies that engage in R&D activities may be eligible for exemptions or reductions in these industrial taxes. For example, companies that invest in R&D activities may benefit from a reduced TPA rate or a complete exemption from the TPA. Similarly, some municipalities may offer exemptions or reductions in the TME for companies that engage in R&D activities. 

It’s important to note that the eligibility criteria and the rules for exemptions or reductions in these fiscal incentives can vary depending on the region and municipality in which the company is located. Companies should consult with local authorities and tax experts to determine their eligibility and the applicable rates for these taxes. 

R&D grants 

Overall, these incentives aim to make R&D investments more attractive by reducing the tax burden on companies and investors. By doing so, the Belgian government hopes to stimulate innovation and support the growth of businesses in the country. 

In addition to fiscal incentives, the Belgian government also offers grants to support research and development activities by businesses. These grants are designed to encourage innovation and improve the competitiveness of Belgian companies. 

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

Yvette Poumpalova

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