The Dutch Innovation Box Regime

In order to grow as a company it is important to keep innovating. No innovation means stagnation and thus decline. Technical development in particular is stimulated enormously by the Dutch government through various tax incentives.

Dutch Tax Incentive for Innovation

No innovation means stagnation and thus decline. A company can innovate in various ways, for example by launching a new marketing concept or by introducing a new revenue model, but especially through the development of new products, services and process innovation. Technical development in particular is stimulated enormously by the Dutch government through various advantageous tax incentives. The aim is to preserve technical innovation forces in the Netherlands. In addition to the tax benefits, there are also a number of regional and European subsidies and other forms of financing (such as the Dutch innovation credit) that aim to stimulate technological developments in the Netherlands. Do not miss these opportunities and free money! If your company is going to develop or refine a product, service, software or a new software platform, than be sure to timely consider the next tax incentives for new technical developments.

How does the Dutch Innovation Box Regime work?

By applying the Dutch Innovation Box Regime, a large part (72%) of the profits - arising from technical developments or the intangible fixed assets on which 'WBSO' and possibly a patent is based - will be fully exempt from Dutch Corporation Tax. As a result, the innovative profits will merely be taxed at an effective tax rate of 7% (till 31/12/2017: 5%) corporation tax. This way, a substantial reduction of Dutch Corporation Tax can be achieved.

What are the Conditions?

The most important conditions for applying the Dutch Innovation Box Regime are:

  • The development of the intangible asset takes place by your company;
  • You have applied for / received a patent for this, and / or you receive a WBSO subsidy (an R&D statement). For larger sized taxpayers, who are part of a group with a turnover exceeding € 50 million per year, an extra requirement applies. In addition to WBSO, a patent, an exclusive user right or software is required; and
  • The income you earn with the innovative asset must for at least 30% be attributable to the patent you received.

If your company already meets these conditions, it is certainly useful to consider applying the Dutch Innovation Box Regime. And even if you do not yet fully meet the aforementioned conditions, going over the possibilities during a conversation may prove useful. In many cases a logical step would be for you to apply for a ‘WBSO’ subsidy first, which then also functions as your ‘entrance ticket’ for the Dutch Innovation Box Regime. In order to be able to apply the Dutch Innovation Box Regime you must consult with the Dutch Tax Authorities. You must demonstrate in advance that you have an innovative activity / company, and that you can meet the conditions for application of the Dutch Innovation Box Regime. Next, you must agree with the Dutch Tax Authorities on the percentage of ‘innovative profit’. This is the percentage of the company’s profit deemed to qualify for the Dutch Innovation Box Regime.

What can we do for you?

Thanks to our extensive experience with innovative companies in various business sectors, such as in the high tech, automotive, health, ICT and software sectors, we have already successfully assisted and cooperated with many companies to land their first Innovation Box agreement with the Dutch Tax Authorities, to evaluate their existing Innovation Box agreement or to extend their existing Innovation Box agreement.

Our approach is characterized by a joint and pragmatic approach. This has proven to be an efficient and the most successful way of preparing for the consultation with the Dutch Tax Authorities and to obtain approval for application of the favorable Dutch Innovation Box Regime.

Harm   Kolen

Harm Kolen

High-Tech, Construction & real estate, Manufacturing industry

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