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Belgium

Belgium offers two key R&D tax incentives:

  1. An exemption of 80% of the payroll withholding tax (wage tax) for PhD and Master’s qualified employees and 40% of the wage tax for Bachelor’s qualified employees working on R&D projects. This partial exemption benefits the employer and does not affect the net salary of the ‘researcher’, reducing the effective employment cost for R&D activities.
  2. A 13.5% one-off deduction or a 20.5% per year spread investment deduction for fixed assets recorded on the balance sheet. The deduction applies to the development or acquisition of patents and assets used to promote R&D of new products/services and advanced technology that is environmentally friendly.

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Layer 1 Belgium SE MLC Generosity 11.6% 8.3% Ease of Application L e v el of r e vi e w or enquiry e xpec t ed? A r e other R&D In c enti v es a v ailabl e ? Belgium SE Belgium MLC Is f o r eign- o wned R&D eligibl e ? R&D mu s t o c cur in the c ountry Is p r eapp r o v al r equi r ed? Previous financial years claimable 1 o r 4 1 o r 4
Small Enterprises (SE)
Medium sized and Large Companies (MLC)
Benefit Overview
  1. Payroll Withholding Tax: 80% of wages are exonerated (on a prorata basis) for Masters and PhDs, when activities are related to R&D, and 40% for Bachelors. The exempted amount related to the Bachelor amount may not exceed 25% of the total
  2. R&D Investment Deduction: the corporate tax base deduction is equal to 13.5% of the investment value or 20.5% on Belgian Generally Accepted Accounting Principles (BEGAAP) depreciation on justifiably capitalized R&D costs.

R&D Tax Credit: the corporate tax deduction is equal to the calculated R&D investment deduction multiplied by the applicable CIT rate.

  1. Payroll Withholding Tax: 80% of wages are exonerated (on a prorata basis) for Masters and PhDs, when activities are related to R&D, and 40% for Bachelors. The exempted amount related to the Bachelor amount may not exceed 25% of the total
  2. R&D Investment Deduction: the corporate tax base deduction is equal to 13.5% of the investment value of or 20.5% on BEGAAP depreciation on justifiably capitalized R&D costs

R&D Tax Credit: the corporate tax deduction is equal to the calculated R&D investment deduction multiplied by the applicable CIT rate.

Eligible Claim Period
  1. Regularization is possible back to 4 years, provided the notification requirement is met (however, the Belgian tax administration (“BTA”) does not allow retrospective application for years prior to the moment of notification).

Note: The partial wage withholding tax exemption is applicable only to projects that have been notified before the start of the project to the Belgian competent authority. Based on this rule, the Belgian tax administration takes the position that a retroactive application (i.e. application for the past once notification is done) is not allowed.

  1. This is to be applied in the annual corporate income tax return, covering the most recent taxable period (corresponding with accounting period in corporate tax matters) – unused investment deduction “ID” can be carried forward and applied in subsequent taxable periods without time limit, but capped.
Historical Background
  1. This benefit was introduced in 2005 and in its current form from 1 January 2007. It’s a mature system and was upgraded on 1 January 2018 to include listed Bachelor degrees (whereas previously only listed Masters’ degrees and PhDs.)
  2. This was introduced into Belgian domestic tax law in December 2005 and this measure is quite mature.
Application Process
  1. Claims in regards to the withholding tax on wages benefit can be reviewed by the Ministry of Scientific Policy Support Agency of RnD (BELSPO), which employs technical experts, and they can issue binding decisions on the R&D character of activities. However, the benefit application is reviewed and audited by the Belgian tax administration (the Federal Public Service of Finance).
  2. The 13.5% one-off deduction or a 20.5% per year spread investment deduction for fixed assets is administered and operated by the Belgium Federal Public Service of Finance. Claims are not reviewed by technical experts.
Regulating Body Practices
Federal Public Service of Finance, the Belgian tax administration, is the regulatory body.
Eligible Costs
  1. Withholding tax on salaries paid to eligible researchers on the payroll to the extent these salaries can be attributed to R&D activities
  2. R&D expense justifiably capitalized under BEGAAP
Issues to Consider
  • A technical documentation file not strictly required. It is however highly recommended in anticipation of an audit and a tax control which is likely.
  • Belgium is a multi-lingual and multi-cultural federal state, and this may give rise to some inconsistencies between regional administration bodies and local examinations.
  • Several bodies are involved in the process. Strong project management is crucial to obtain the full potential of the benefit.
  • Obtaining “a structural R&D certificate” from BELSPO can help companies support R&D justification of their activities.
  • A pre-notification of the project before applying is mandatory.
  • An environmental certificate should be obtained from the competent Regional authority.

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