Belgium: Year-end actions for R&D incentives

Belgium: Year-end actions for R&D incentives

Taxpayers may need to take certain action steps regarding Belgian research and development (R&D) incentives as the year-end approaches.

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Exemption from paying professional withholding tax for R&D

The tax audits with regard to the exemption of professional withholding tax for researchers are becoming more and more frequent and especially much stricter. Consequently, taxpayers need to pay sufficient attention to the information included in the online platform. The tax authorities sometimes take a very formalistic approach, and require that the start-date and end-date of the project or program are always completed. In situations when a project or programs take more than a year, the Belgian Federal Science Policy Office (BELSPO) advises a copy each year and then updates the dates.

Taxpayers need to review the BELSPO filing in view of the upcoming year-end (and especially to determine that the description of the project or program is comprehensive), and if not yet done, taxpayers need to update the underlying R&D documentation package for 2020.
 

End of the patent income deduction, conversion to innovation income deduction

From 30 June 2021 onwards, companies will no longer be able to apply the patent income deduction. Consequently, taxpayers still making use of this deduction under the grandfathering regime must determine the effect of the transition to innovation income deduction. Even though under the innovation income deduction regime, the tax deduction is only based on the net innovation income after application of the so-called “nexus fraction,” the regime also offers opportunities compared to the patent income deduction. Also, the first rulings on the innovation income deduction are near expiring (as are the more recent three-year rulings for software companies).
 

Deadline for pre-filing innovation income deduction rulings

All pre-filing requests with regard to the innovation income deduction for financial year 2020 must be filed no later than 31 January 2021 so that the ruling will be obtained before the filing deadline of the corporate income tax return.
 

Deadline to request attestations for investment deduction

  • The deadline to request the attestations for the investment deduction and the R&D tax credit is 31 March 2021 for the Brussels and Walloon region. 
  • The deadline for the investment deduction is, in principle also, 31 March 2021 with regard to the Flemish region.
  • For investments in R&D, the deadline is in principle the same as the deadline for filing the tax returns.


Read a December 2020 report prepared by the KPMG member firm in Belgium

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