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R&D in Belgium Gets Extra Boost with New Innovation Income Deduction

Belgium’s flourishing R&D sector and the newly implemented Innovation Income Deduction – which reflects AmCham Belgium’s recommendations – are bound to further establish the country as a European innovation leader.

Belgium’s efforts to encourage research and development (R&D) are bearing fruit. It is a ‘strong innovator,’ according to the EU Innovation Scoreboard, outperforming the EU average by almost 16%. Belgian companies also recorded 12.4% annual growth in R&D investments – 5% above the European average. For example, one of these investors is Solvay, an AmCham Belgium member company, which has recently created and marketed new removable partial dentures that boast lighter materials.



Yet, R&D investment rates in Belgium would be significantly higher if US companies were included. US firms invested more than $13 billion in R&D from 2009 to 2014 and account for over one-third of all private sector R&D investment in Belgium. International companies are attracted by Belgium’s highly skilled labor force, well-developed clusters and favorable tax deductions.


"Belgium has what it takes to be recognized as a leader in innovation and R&D"

- Hendrik Serruys, Member of AmCham Belgium's Innovation and R&D Taskforce.


Last month, Belgium made further strides in its R&D tax incentive policy by replacing the Patent Income Deduction (PID) with the Innovation Income Deduction (IID). Under the new IID regime, qualifying intellectual property (IP) income is eligible for a tax deduction up to 85%. As recommended by AmCham Belgium, the IID applies to a broader range of IP rights than the regime it replaces, is available as from the patent application and allows for the carry-forward of unused deductions. It is also BEPS compliant. With this measure, Belgium – which recorded one of the highest patenting growth rates at the European Patent Office last year – will remain an innovation leader.

AmCham Belgium recommends to further boost Belgium’s competitiveness by improving the country’s two other R&D fiscal incentives: the tax credit on R&D investments and the withholding tax exemption on researchers’ salaries. This can be achieved by expanding the deductions’ eligibility criteria and enhancing their flexibility. Learn more on our position here.

Belgium is a leader in R&D, and many US companies have chosen to innovate here. By adopting necessary measures such as the Innovation Income Deduction, Belgium will likely attract ever more R&D investments in the future.

Interested to know more? Keep an eye out for AmCham Belgium’s Lunch & Learn event on R&D on May 31, 2017. More information to follow!