In line with a long-standing AmCham Belgium recommendation, the partial wage withholding tax exemption for scientific research personnel has now been broadened to also include personnel with bachelor’s degrees. This new measure will further improve Belgium’s conducive environment for R&D and innovation.
Innovation starts with people. Belgium, well-known for its highly skilled and knowledgeable workforce, is a frontrunner when it comes to adapting proactive R&D measures to stimulate innovation, thereby attracting foreign investments and safeguarding a competitive advantage over neighboring countries.
One of the main incentives to increase R&D activities in the country is the partial exemption from wage withholding tax for qualified researchers. This measure allows employers to remit only 20% of the total withholding tax for qualified research personnel to the state, while they may retain the remaining 80% for company use. Until recently this exemption was limited to research personnel with doctoral and master’s degrees. Now this measure has been expanded – in line with our long-standing recommendation – to include research personnel with certain bachelor’s degrees.
“The extension of the wage withholding tax exemption incentivizing R&D to bachelor degrees, mainly in biotechnology and IT, will contribute to the positive image of Belgium. It is important to know that the IT sector specifically attracts more bachelor degrees than master degrees. The extension will therefore provide substantially more 'oxygen' to that sector.”
– Brent Springael, Partner, IP Tax Specialist at Bird & Bird, Vice Chair of AmCham Belgium’s Employee Tax Subcommittee
The expanded measure applies to wages paid as of January 1, 2018. The exemption currently amounts to 40% and will increase to 80% in 2020. The total amount is, however, limited to 25% (50% for SMEs) of the total amount of the exemption for wages of researchers with a doctoral or master’s degree, although this limit only applies if that company also employs researchers with those degrees who qualify for the exemption. The general conditions (i.a. pre-registration with belspo, the Belgian Science Policy Office) continue to apply.
AmCham Belgium welcomes the broadening of the scope of the wage withholding tax exemption and encourages the Government to continue their efforts to improve the Belgian R&D climate. The Chamber recommends implementing the other elements of its 2016 position paper “Improving R&D Tax Incentives to Spur Innovation”. To further improve the R&D investment climate, the Government should look to expand the exemption to all project team members, to simplify the homologation procedure for foreign diplomas and to move towards a more relaxed notification condition.
Belgium is already recognized as a ‘strong innovator’ in the 2018 European Innovation Scoreboard, and should now strive to become an ‘innovation leader’, stimulating even more companies to say #Yes2Belgium!
With our thanks to our Employee Tax Subcommittee.