7 March 2023

How far does your innovation reach?

It’s no secret: innovation is a key driver of economic growth. It means improving products processes and/or services, and this is hugely encouraged in Belgium! But do you know that these efforts also lead to tax benefits? These often remain misunderstood and complex so they are also underused.   

Belgium as European leader  

Belgium is at the European top in terms of Research and Development (R&D). The decision to invest more in R&D has been one of the most successful policy choices in recent years: with 3.4% of GDP spent on R&D, Belgium ranks 6th among industrialised countries. This is thanks to a combination of:  

  • Conscious policies to support R&D  
  • Companies actively innovating  
  • And actively investing in R&D+I  

According to the European Commission, Belgium is one of the four innovation leaders in Europe. For instance, it appears in the ‘innovation leaders’ group on the European Innovation Scoreboard 2022 (EIS) for the second year in a row. This points to strong and rapid innovation growth, an effort that people remain committed to.  

However, this leading position did not come overnight. It is mainly the favourable location in the heart of Europe that plays in Belgium’s favour, but also the innovative spirit and R&D spending within sectors such as biotech, pharma, energy, climate, …  

The R&D driver of companies  

Companies account for some 75% of R&D investment in our country, driving the rapid spurt that made Belgium an innovation leader globally.  

Thus, thanks to growing R&D budgets of companies, our country is investing more than 3% of GDP in research and development for the first time. It largely explains why our country has a strong competitive advantage in R&D activities and innovation, including spill-overs to other economic actors, compared to our neighbours other strong R&D countries.   

Companies in Belgium simply do more R&D. So we must continue to focus on developing economic activities based on research and development. Knowing what benefits can be attached to this, knowing and understanding the tax principles, is already a first step.  

Tax incentives  

Belgium encourages R&D+I investment efforts through an advantageous tax framework. But tax incentives remain in many cases misunderstood and complex, thus also underused. The incentives create positive results in innovative companies of all sizes, from Startups and SMEs to large companies, and generate profits. However, few companies know about it:  

  • The Partial Wage Withholding Tax Exemption for Researchers is a replicable R&D measure with great benefits for the employer. Further stimulate your company’s Research & Development by investing in equipment and staff. Save up to 80% on withholding tax on your employees’ wages and boost your economic growth! 
  • The Increased Investment Deduction is an R&D tax measure on R&D investments of the year (movable and immovable) related to your list of expenses. Save based on your list of investment expenses. Under certain conditions, personnel expenses can also be valued!  
  • The Innovation Income Deduction, or IPBox, is designed to bring your innovative idea to market! This measure aims to further stimulate your innovative business activities through intellectual property. This applies not only to patents but also to patented products, IT and software developments, … that generate revenue. Don’t be limited and further develop the knowledge economy with your ideas!  

Knowing the principle is already a first step. Applying it correctly is another!  

Does your level of innovation lead to economic growth?

A favourable innovation landscape offers multiple economic opportunities in Belgium. This ensures a strong start, also at regional level with:  

FI Group will look at a company’s level of innovation to decide which favourable R&D tax measures can be applied.  

  • On the one hand, research & development must be discussed within the company and/or project activities  
  • On the other hand, it must be properly documented and submitted  

In addition to registration with the BELSPO portal and its annual follow-up, the documents needed to prove the R&D+I activities (diplomas, timesheets, individual accounts, etc.), each company must also justify the R&D level.  

Our expert consultants consider all the factors that are easily forgotten, in order to achieve the most optimal business results without risk. 

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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