Locating in Limburg is financially interesting. Owing to a package of business-friendly measures, Belgium is one of the most interesting countries to establish and do business in. Furthermore you can benefit from a range of subsidies in Limburg. Hence the regional and national government co-invest in the growth of your company.
• Notional Interest Deduction (NID);
• R&D investment deduction;
• Tax credit for R&D;
• Excess profit ruling;
• Favourable dividend distribution though holding structures.
• Strategic Transformation Support (STS);
• Ecology Premium Plus (EP-PLUS);
• Wage withholding tax exemption in developing areas.
In Belgium a business is eligible to deduct its Research & Development investment. This can be calculated on either the acquisition value or on the yearly amortisations of the R&D investment, spread across a minimum of three years.
A specific percentage of the purchasing or investment value of the R&D investments made during the taxable period is fiscally deductible.
• Patents;
• Fixed assets used to develop products, services and technologies which are innovative
• and have no negative environmental impact or, if there is a negative impact, that the
• company has taken the necessary measures to limit this impact.
The increased investment deduction can be applied all at once. For tax year 2015 this one-shot investment deduction amounts to 13.5% of the purchase value.
The investment deduction can also be spread and is then calculated as a percentage of the annual amortisation applied to the qualifying asset. For tax year 2015 this spread deduction investment amounts to 20.5%. This deduction is not possible for patents.
Your profits are insufficient to completely deduct your increased investment? In that case you carry forward the missed investment deductions to the profits of subsequent taxable periods, under certain conditions (capped at 943,760 euros or at 25% of the total amount of the carried forward investment at the end of the preceding taxable year, if this amount exceeds 3,775,060 euros – fiscal year 2015).
Instead of making use of the increased investment deduction for R&D, companies can also opt for a tax credit.
The assets which qualify for the tax credit are the same as those of the increased investment deduction.
The tax credit amounts to 13.5% of the purchase or investment value, multiplied by the corporate tax rate of 33.99% (tax year 2015).
You can also opt for a spread R&D tax credit which is calculated as 33.99% of 20.5% on the annual amortisation of the qualifying investments (tax year 2015).
If the corporate income tax is not sufficient to offset the tax credit, then the tax credit will be carried forward to the four subsequent tax years (capped at160,440 euros -tax year 2015). Or, in case the total amount of the carried forward tax credit for R&D at the end of the preceding tax year exceeds 641,760 euros, 25% of this amount.
If the R&D tax credit has not been used by the company against taxable income within four years, the amount of tax credit is refunded by the Belgian State.
Businesses employing scientific researchers, only have to pay 20% withholding tax on the salaries of these researchers, provided the withholding tax is entirely withheld on the salaries of the researchers themselves. Thus the tax incentive doesn’t have any impact on the fiscal situation of the researchers, yet may retain the remaining 80% to support the R&D activities.
• Businesses paying salaries to researchers who are participating on a project within the
• framework of collaborative agreements with universities or colleges of higher
• education, established in the European Economic Area, or with recognised scientific
• institutions;
• Businesses paying salaries to researchers who are employed in research and
• development programmes and who have obtained a PhD degree in: applied and exact
• sciences, veterinary medicine or pharmaceutical sciences; a degree in civil and
• industrial engineering or some master degrees.
Most of the grants attributed by the Flemish government are exempt from corporate taxation (and taxation of non-residents/corporations).
The Belgian State allows for a fiscal deduction of 80% of patent income. The effective tax rate is thus reduced to a minimum of 6.8%.
WHAT DOES PATENT INCOME DEDUCTION APPLY TO?
The deduction applies to:
• Patent income;
• Income of supplementary protection certificates;
• Income of license agreement of patents and supplementary protection certificates
• (provided the corporation has obtained these rights).
The company (or its Belgian branch) has to be the owner of the patents or supplementary protection certificates and:
• They have fully or partly developed them in R&D centres which qualify as a ‘branch of
• activity’, which means that it should be a division of an entity that is capable of
• operating autonomously;
• The patented products or services have fully or partly contributed to an improvement
• in research centres which qualify as a ‘branch of activity’, even though this
• improvement hasn’t led to any supplementary patents.