"I was lucky to work with BDO's Tax & Legal team on a number of complex matters relating to innovation income deduction. Their team did a quality job, following up on the application from the Ruling Commission to the BELSPO. The constant availability of the BDO team was a major asset, reinforcing our confidence throughout the process.
Make the most of your innovation income.
« Thanks to the innovation income deduction, Belgium is the ideal country for companies with innovative ideas. »
What is the innovation income deduction?
The innovation income deduction is a support measure for companies with innovative ideas.
This support measure applied since 1 July 2016 to patents, plant breeders' rights, data or commercial exclusivity, orphan drugs and copyright-protected computer software.
For software, you must be able to demonstrate that it results from a research and development (R&D) project or program. A binding opinion can be requested from the Belgian Science Policy (BELSPO).
The innovation income deduction is calculated on the basis of net income from innovation, i.e. gross income from innovation reduced by all R&D costs relating to the intellectual property right concerned. The deduction that can actually be deducted from the taxable base corresponds to 85% of this net innovation income.
It is important to note that the aforementioned net innovation income is limited according to what is called the “nexus ratio”. The purpose of the nexus ratio is to limit the deduction for companies that carry out a lot of research and development through a related company or that have acquired intellectual property by not having carried out enough development themselves internally (via their own payroll). It should be noted that outsourcing to unrelated companies does not limit the deduction.
For more details on the above points, please refer to the various articles we have written on the subject.
