Health-Holland

The Netherlands has several measures in place that promote research & development. These include general corporate and specific R&D tax incentives. These pro-innovation R&D tax measures not only cut R&D costs but also lower a company’s taxable base. R&D Tax Credit (WBSO) The WBSO tax credit is an example of a scheme for businesses involved in developing technically new products and production processes as well as those performing scientific research in biotechnology, physics, chemistry, production technology and IT technology. Clinical trials are also included in this scheme. The WBSO provides a payroll tax deduction as well as compensation for other costs for companies involved in R&D. Self- employed entrepreneurs can also qualify and are entitled to a fixed deduction of 12,623 euros, while start-up entrepreneurs can receive an additional deduction of 6,315 euros. Companies may be entitled to as much as a 32% reduction on the first 350,000 euros in R&D wage costs and other R&D-related expenses, and 14% for costs over 350,000 euros. Public knowledge institutes are excluded from the scheme. Innovation Box Under the Innovation Box initiative, companies can benefit from an effective tax rate of only 7% for R&D income from patented and unpatented intangible assets. This includes technological innovations created by the Dutch taxpayer and for which an R&D tax credit was received. The normal corporate income tax rate is 20% to 25%. Companies are not required to apply for the Innovation Box and the level of income allocated is restricted. This means that as more R&D activities are outsourced, fewer profits can be allocated to the intangible assets that result from these activities. There is a flat-rate regulation for SMEs, which can decide each year to apply 25% of their profits to the Innovation Box with a cap of 25,000 euros. The corporate income taxpayer claims the lower 7% rate on their return. The lower rate is, in fact, an exemption of 72% of the profits that can be allocated to the Innovation Box, giving an effective rate of approximately 7%. The effective rate applies to profits exceeding any development costs and losses made. Such losses and expenses are deductible at the normal tax rate of 25%. Supportive R&D incentives 65