AmCham Belgium released a new position paper last week on tax incentives to promote research & development (R&D) and innovation in Belgium.
Attracted not only by the highly skilled and knowledgeable workforce, successful industry clusters and good collaboration between public and private actors, but also – and perhaps more importantly – by the fiscal incentives, US investment in R&D and innovation in Belgium has grown significantly in recent years. Incentives include the 80% exemption rate on withholding tax for qualified researchers, the patent income deduction (PID) and the R&D investment deduction. In order to maintain and further improve Belgium’s attractiveness for R&D and innovation activities in the face of global competition and a changing international tax landscape, AmCham Belgium makes a number of recommendations in a new position paper, Improving R&D Tax Incentives to Spur Innovation. Many of these recommendations focus on easing the administrative burden around existing incentives and providing more legal certainty and transparency to investors.
Innovation starts with people; recruiting and retaining the right talent is essential for an R&D organization. The partial payroll tax exemption is a highly effective incentive in this regard, but it is limited to researchers with certain diplomas. AmCham Belgium recommends simplifying the homologation procedure for foreign diplomas and also allowing researchers to qualify for the exemption based on relevant experience. Moreover, as research is conducted by teams, the Chamber recommends broadening the exemption in stages to where ultimately all employees working on a specific R&D program or project would be included.
Patents and other forms of intellectual property are the fruit of R&D and innovation. The PID regime is already important in retaining large companies holding patent rights in Belgium, but to stay competitive with neighboring countries and comply with BEPS, AmCham Belgium recommends applying the deduction as from the patent application, allowing the carry-forward of excess PID and broadening the scope of eligible intellectual property rights.
Finally, among other changes to the R&D investment deduction/tax credit system (which currently does not have a significant impact on investment decisions), AmCham Belgium recommends abolishing the capitalization requirement and increasing the rate of the tax credit.
Belgium is already a very attractive country for investment in R&D and innovation. AmCham Belgium believes that with the adoption of these recommendations, Belgium’s innovation ecosystem will continue to prosper and be an important source of economic growth and employment.
With our thanks to Brent Springael and our R&D Taskforce.