The Belgian government has always had a strong focus on companies involved in R&D activities and provides support via a large number of tax incentives for employers as well as employees.
Innovative income deduction: As from 1 July 2016, the new Innovation Income Deduction replaces the former Patent Income Deduction. Companies can now deduct up to 85% of their net innovation income, which may result in an effective corporate tax rate of 5 percent. Not only granted patents fall within the scope, but also copyrighted software and process innovation. The qualifying income comprises royalties, license fees (embedded in sales prices), as well as capital gains. Further to the BEPS Report on Action 5 (“Modified Nexus Approach”), the tax deduction is calculated on the net income and subject to a specific formulae.
