Restriction to tax credit for research & development

What’s changing?

Until now, domestic companies and the Belgian branches of foreign companies have been able to make use of a wide range of tax benefits applicable to research & development. These include the innovation deduction, withholding tax exemption, exemption from regional subsidies and investment deduction or tax credit for investments in R&D.

Enterprises used to be able to combine these benefits – and that’s what’s changing. The government has decided to introduce a restriction to the way in which companies can apply the tax credit for environmentally friendly investments in R&D and patents and the partial withholding tax exemption for researchers. Under the new restriction, the calculation basis for the tax credit (procurement value of the R&D investment) will be adjusted by the value of the unpaid withholding tax.

The calculation basis for the partial exemption from withholding tax does not change at all. It is also important to note that the law does not include any equivalent restriction regarding the investment deduction for R&D.

When does the new restriction come into effect?

The new restriction applies to taxable time periods closing on or after 1 April 2022. This means that companies with account closing on 31 December 2022 are likely to feel the impact. In particular, the tax due for the 2022 financial year may well be higher and an additional advance payment may be necessary to avoid a tax increase.

If you have questions about the tax credit for environmentally friendly investments in research & development and patents and the partial withholding tax exemption for researchers, just get in touch with one of our specialists.