To grow as a company, it is important to keep investing in R&D. Technical development (R&D) in particular is hugely encouraged by the Dutch government with various tax incentives.
Tax incentive in innovation
Not continuing to develop and innovate means stagnation and therefore decline. A company can innovate in various ways, such as in the area of marketing, for example by launching a new marketing concept, the introduction of a new revenue model, but especially when developing new technical products, software and process innovation. Technical development (R&D) in particular is greatly stimulated by the Dutch government with various tax benefits, such as the WBSO remittance reduction and the innovation box. The aim is to maintain technical innovation power in the Netherlands. In addition to the tax advantages, there are also a number of regional and European subsidies and other forms of financing (such as the innovation credit) that try to encourage technological developments in the Netherlands. Don't miss out on opportunities and free money! If your company is going to develop or further develop a new technical product, service or a new software platform or software, consider the following tax incentives for new technical developments in good time.
How does the innovation box work?
By applying the innovation box, a large portion (approximately 65%) of the innovative profit - resulting from technical developments or the intangible fixed asset on which WBSO and possibly a patent or software/programming are based - will be exempt from corporate income tax. As a result, the innovative profit will effectively be taxed at 9% corporate income tax. This can result in substantial savings in corporate income tax.
What are the conditions for applying the innovation box?
The main conditions for the application of the innovation box are:
- Self-developing an intangible asset;
- Your company owns the IP and also receives WBSO subsidy (an R&D statement) for its own R&D personnel. For large taxpayers, who are part of a group with an average turnover of €50 million per year, an additional requirement applies. In addition to WBSO, a patent, exclusive user right or software is required; and
- At least 30% of the income you derive from the asset must be the direct result of the R&D statement or patent you obtained;
If you are an OEM, such as a machine builder, and you own the (foreground) IP, which was created with WBSO, then application of the innovation box will usually be possible, assuming your corporate structure is set up properly.
Suppliers may also have access to the innovation box under circumstances, provided your company owns background IP in combination with WBSO.
If you already meet these conditions, you can apply for the innovation box. But even if you do not yet meet or do not fully meet the conditions, it may be useful to discuss the possibilities. The first step is to apply for a WBSO subsidy for your own R&D personnel, which can also be your "entrance ticket" to the innovation box. Without WBSO, application of the innovation box is not among the possibilities.
To be able to apply the innovation box, you must be in (preliminary) consultation with the Tax Office. You must demonstrate that you have an innovative activity/company, and that you can meet the conditions for application of the innovation box. You will then need to reach agreement with the tax authorities on the percentage of your profit that qualifies for the innovation box.
What can we do for you?
Due to our extensive experience with innovative companies, both OEMs and suppliers, in the various sectors, such as in the high-tech, agri, health and automotive industries, machine builders, ICT and software, we have already successfully assisted and guided many companies in making their first innovation box agreement with the tax authorities, as well as in evaluating and extending already existing innovation box agreements.
Our approach is characterized by a collaborative and pragmatic approach, so that we enter the consultations with the Inland Revenue well prepared to ultimately reach a successful innovation box agreement.