BELGIUM
Competitiveness as HQ and R&D
location compared with other
European countries
Wim Eynatten
12 May 2015
© 2015 Deloitte Belgium
Belgium as HQ and R&D location
Agenda
•
Belgium as HQ location
•
•
Relevant tax & non-tax factors for HQ location
Belgium as R&D location
•
Belgian R&D and IP tax incentives
•
Comparative overview of European R&D and IP tax incentives based on
Deloitte 2014 Global Survey of R&D Tax Incentives
https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Tax/dttltax-global-rd-survey-aug-2014.pdf
•
Concluding remarks
© 2015 Deloitte Belgium
Belgium as
HQ location
© 2015 Deloitte Belgium
Belgium as HQ location
Relevant tax and non-tax factors for HQ location
• Headline tax rate / effective tax rate
• Holding tax regime
• Tax incentives
• Tax rulings
• Treaty network
• Withholding taxes
• Political and legal environment
• Labour pool
• Infrastructure
• Accessibility
• Standard of living / cost of living
© 2015 Deloitte Belgium
Belgium as
R&D location
© 2015 Deloitte Belgium
Belgium as R&D location
R&D and IP tax incentives
Partial exemption professional withholding
tax
R&D tax credit / investment deduction
R&D investments
80% exemption
13.5% - 20.5% investment deduction
R&D activities + qualifying diplomas
Can be converted into a refundable tax
credit
up to 25% decrease of salary cost
Notification to Belspo
Several conditions (R&D center,
certificates…)
Combination with special expat status for
foreign researchers
5 to 7.5% net saving on R&D investments
Tax exemption for regional grants
Tax exemption for grants received from the
regions (e.g. IWT, BioWin)
Patent income deduction
80% deduction
Patents or improvements of patents
Condition: R&D center
0 to 6.8% effective tax rate
© 2015 Deloitte Belgium
European R&D (corporate) tax incentives regimes
COUNTRY
Nature of incentive
Refundable / carry-forward
10% volume-based R&D tax credit
Refundable to the extent R&D tax credit exceeds
amount of tax liabilities
13.5% one-time or 20.5% spread investment
deduction for capitalized investments in R&D (in
addition to standard deduction/depreciation)
Refundable R&D tax credit (5%-7.5% credit);
refundable after 5 years to the extent R&D tax credit
exceeds amount of tax liabilities
80% partial wage tax exemption (increased from 75%
to 80% as from 1 July 2013))
Immediate cash benefit
30% volume-based R&D tax credit for first € 100M +
5% on any amount exceeding the € 100M threshold
Refundable after 3 years (immediate refunds
possible for SMEs, new companies, young
innovative companies and companies facing
financial issues)
Austria
Deloitte Assessment
Very competitive R&D tax regime in Europe,
supplemented with cash grants (regional R&D
subsidies)
Belgium
France
(also: Innovation Tax Credit for SMEs)
25% incremental based R&D tax credit (carry back 1
year + carry forward)
Refundable in limited circumstances
25% R&D Facilities Credit (carry back 1year + carry
forward)
Refundable in limited circumstances
WBSO (reduction of wage tax and social security
contributions for employees engaged in R&D
activities): 35% of the first € 250K in R&D wage costs
and 14% of remaining costs; capped at € 14M per
taxpayer (rates applicable for 2014)
Immediate cash benefit
160% super deduction on qualifying non-wage R&D
expenses (rates applicable for 2014)
No
No R&D tax incentives (yet), but very favourable
corporate tax regime
-
Switzerland
UK
130% super deduction or 10% refundable tax credit
(225% for SMEs)
For SMEs: up to 24.75% of the qualified
expenditure
Most competitive R&D tax regime in Europe.
Ireland
Netherlands
Gaining competitiveness following introduction of
super deduction as from 2012.
Planning introduction of R&D tax incentives in view
of keeping/attracting R&D investments
© 2015 Deloitte Belgium
European IP (corporate) tax incentives regimes
COUNTRY
Austria
Nature of
incentive
ETR
Type IP
Type income
R&D outside
country possible
-
-
-
-
-
Patent Income
Deduction
0% - 6.8%
Patents and supplementary
protection certificates
Patent (improvement)
income
Yes, but certain
substance/activity in
Belgium required
Most competitive income tax regime
for qualifying patent (improvement)
income as 80% exemption is applied
on gross basis.
15%
Patents and patentable
technology
Royalties and capital gains
Yes
Not competitive
-
12.5%
-
-
-
Abolished patent income exemption
regime as from 24 November 2010.
Competitive standard corporate tax
rate of 12.5%.
IP Tax Regime
5.76%
Software copyrights,
patents, trademarks, domain
names and designs
Royalties and capital gains
Yes
Very competitive tax regime for other
types of IP rights.
Innovation Box
5%
Patents and IP resulting
from R&D activities
qualifying for WBSO
Royalties and capital gains
Yes: within EEA
Very competitive regime for nonpatented IP.
Ruling Practice
0% - 11%
All IP
Royalties and capital gains
Yes
Planning introduction of patent/IP box
tax regime replacing existing tax
rulings and privileges.
The Canton of Nidwalden already
introduced License Box system as of 1
January 2011 (ETR 8.8%).
Patent Box
10% (Patent
Box phased
in as from 1
April 2013)
Patents and supplementary
protection certificates
Royalties and capital gains
Yes
10% ETR is not competitive compared
to ETR’s possible under other
regimes; defensive measure in view of
keeping R&D activities and IP
ownership in the UK
Belgium
France
Ireland
Luxembourg
Netherlands
Switzerland
UK
Deloitte Assessment
© 2015 Deloitte Belgium
Contact details
Wim Eynatten
International Tax Partner
Deloitte
Berkenlaan 8a, B-1831 Diegem, Belgium
Tel/Direct + 32 2 600 67 59
Mobile + 32 478 78 26 27
[email protected]
Belgian-Japan Association & Chamber of Commerce
Legal & Tax Committee Chairman
www.bja.be
© 2015 Deloitte Belgium
Appendix:
Summary of
Belgian R&D
tax incentives
and Patent
Income
Deduction
10
© 2015 Deloitte Belgium
R&D Tax Incentives in Belgium
Partial exemption professional withholding tax
• Definition:
‒ Partial exemption (80%) of payment of professional withholding tax, based
on the monthly salary of the researchers
‒ Benefit for employer
• Impact:
‒ Up to 25% reduction of salary cost
• Conditions:
‒ Qualifying diplomas (Ph.D., Masters)
• Diploma condition not required for Young Innovative Company or University
Research Agreement
‒ R&D activities
‒ Mandatory upfront reporting obligation with Belspo
© 2015 Deloitte Belgium
R&D Tax Incentives in Belgium
R&D Tax Credit (1)
• Definition
‒ Increased investment deduction for R&D projects without negative impact
on environment
• 13.5% / 20.5% x capitalized investment (Belgian GAAP) = deduction at 33.99%
• Additional deduction against tax basis
• Carried forward if not used
‒ Tax credit for R&D projects without negative impact on environment
• 13.5% / 20.5% x capitalized investment (Belgian GAAP) x 33.99% = tax credit
• Euro for Euro against corporate taxes
• Refundable if not used after 5 years
© 2015 Deloitte Belgium
R&D Tax Incentives in Belgium
R&D Tax Credit (2)
• Impact:
‒ 5% - 7.5% net saving on R&D investments (potential optimization)
• Conditions:
‒ Qualification as investment under Belgian GAAP
‒ R&D Centre (separate BS and P&L for R&D activities)
‒ No negative impact on the environment
‒ Certificate from the region
© 2015 Deloitte Belgium
R&D Tax Incentives in Belgium
Patent Income Deduction (PID)
• Definition:
‒ 80% deduction on patent (improvement) income (direct or indirect)
‒ Applicable on self developed or acquired patents (if improvements)
• Impact:
‒ Maximum effective tax rate (“ETR”) = 6.8%, in practice 0% is possible
• Conditions:
‒ Patents or improvements of patents
‒ R&D centre in Belgium or abroad (not required for SMEs)
‒ As of granting date (not filing) patent
‒ To patents / improvements marketed as of 1January 2007
© 2015 Deloitte Belgium
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