Innovate with tax advantages in the Netherlands

Does your company execute research and development activities in the Netherlands? The Dutch government encourages innovation with two attractive tax schemes: R&D tax credit (in Dutch: WBSO) and the Innovation Box.

1. R&D tax credit (WBSO): the WBSO is a payroll tax deduction on salary costs related to innovative activities. The advantage is a tax credit on wage taxes to be paid of at least 16% to up to 40% for innovative start-ups. Consequently, less wage taxes will be due by your company if such R&D tax credit should be applicable
2. Innovation Box: profits that can be allocated to innovative activities may be taxed at an effective corporate income tax rate of 5% instead of a regular corporate income tax of 20% to 25%.

These tax schemes require an explanation.

 Quick scan innovation

Do not hesitate to contact us for more information. We will be happy to give you comprehensive information about the various options to use these schemes. We can carry out a quick scan for you, so that you can examine on short term whether and on which conditions you can make use of the R&D tax credit: WBSO or application of the Innovation Box.

1.  R&D tax credit (WBSO)

Is your company involved in research and development activities? For qualifying research and development activities, you can submit a WSBO application with the Dutch authorities. This enables you to reduce the (wage) costs related to research and development activities. The advantage is a tax credit of at least 16% to up to 40% for innovative start-ups on the wage taxes to be paid. Companies, but also independent entrepreneurs can apply for this scheme. If the R&D tax credit is granted by the Dutch authorities , an R&D decision will be issued. Subsequently, the taxpayer has to correctly record the hours spent on research and development activities.

The WBSO application can only be submitted by way of an eRecognition means with reliability level 2+. Your accon■avm consultant can act as an intermediary and make the application for you at the electronic service desk of the Dutch authorities. Would you like to examine whether you would be eligible for the WBSO scheme? Contact our consultants for a quick scan, so you can examine on short term whether your activities may be eligible for an application for a WBSO grant.

2.   Innovation Box

The Innovation Box is aimed at innovative businesses that are taxed for corporation tax. With the application of the Innovation Box, businesses investing in (technical) innovations may under certain conditions apply a reduced corporate income tax rate of effectively 5%. The application of the Innovation Box was amended on 1 January 2017, which entailed that a distinction would be made between ‘small’ and ‘large’ taxpayers. The changes are limited for small tax payers.

‘Small taxpayers’

The application of the Innovation Box has hardly changed for the so-called ‘small taxpayers’ after the amendment on 1 January 2017. If an R&D decision has been received following an awarded WBSO application for innovative activities of the company, it will in principle have access to the Innovation Box.

Two methods can be used to determine which part of the profit can be included in the Innovation Box at an effective corporation tax rate of 5%, i.e.:

• fixed amount allocation; or
• coordination of the allocation with the Dutch Tax Authorities.

accon■avm can assist you in preparing the proposal to the inspector and give you guidance on the relevant correspondence in order to achieve an optimal tax result.

‘Large taxpayers’

From 1 January 2017 onwards, additional requirements apply to the so-called ‘large taxpayers’ in order to be eligible for the Innovation Box. For more information, please contact us using the advice request at the bottom of the page.

In the white paper: Innovation facilities in the Netherlands, we give a clear definition of a ‘small taxpayer’ in this context and give further details of the two calculation methods for the Innovation Box. By using the button below, you can request to receive the white paper free of charge in your mailbox.