Entrepreneurs with R&D activities will be incentivised in the development phase with a subsidy on payroll tax and in the exploitation phase with a reduced rate of corporate income tax. These schemes are known as WBSO (Promotion of Research and Development Act) and Innovation box. Below, we set out the changes to these schemes that were announced on Budget Day.

WBSO subsidy (payroll tax)

In April 2019, the evaluation report on the effect of the subsidy scheme for research and development work (WBSO) was sent to the Lower House of the Dutch Parliament (Tweede Kamer). The evaluation of the 2011-2017 period has shown that some of the users of the scheme believe that the current system is not sufficiently in line with the way these users work. The amount of time taken to deal with an application and the fact that an application can be made no more than three times per year are seen as particular sticking points. The Cabinet responded to the report by indicating that it would look at simplifying the application system, but with the basics remaining the same. The legislative proposal that has now been presented extends the number of application opportunities from three to four. The deadline for submitting an application is also set at one day before the period to which the application relates. Currently, the deadline is still a month before the period begins. However, an application relating to a period that starts on 1 January of a new year must be submitted no later than 20 December of the preceding year. Finally, there is now a legal provision relating to an exemption for exceeded deadlines in certain cases. In practice, the Netherlands Enterprise Agency (RVO) was already used to dealing with exceeded deadlines in an accommodating way in the event of disruptions to the digital service point. This relates to deadlines for the WBSO application itself, for the declaration of social security  numbers (BSN) and the subsequent notification of R&D hours worked and actual fees and expenses. The proposed statutory provision will provide more legal certainty for individuals who are entitled to WBSO in situations where a disturbance occurs.


Comment by PKF Wallast

From our experience with WBSO applications, we welcome these changes to the scheme. Particularly for undertakings with short innovation cycles, the current waiting period of a month between the application and the start of a project is an inconvenient obstacle. In software development and innovation driven by client demand, for example, the time between identifying and starting an R&D project is often less than a month. However, we would have also liked to see a reduction in the time taken to process WBSO applications. It seems that this will remain at three months, meaning that a situation could arise where a project period has already expired before the WBSO decision has even been issued. However, there will be no increase in the capacity of the Netherlands Enterprise Agency (RVO), so this and a number of other desires for the WBSO will remain on our wish list.

However, the financial impact of the WBSO (subsidised labour costs) can be so significant that it is well worth the effort of applying for innovation in your undertaking. Since 2017, a WBSO decision – regardless of the size of the subsidy – has also been one of the set conditions for applying the innovation box regime to corporate income tax (reducing the rate of profit tax).


Innovation box (corporate income tax)

The Budget Day documents refer to a proposal of the Cabinet to increase the effective corporate income tax rate for the innovation box regime from 7% to 9%. The increase would be set to come into effect in 2021.


Comment by PKF Wallast

The innovation box rate is the rate of corporate income tax that is applied to profit associated with qualifying (meaning: WBSO-subsidised) innovation instead of the regular rate, which is currently still 25%. The proposed increase in the rate in 2021 would reduce the financial benefit of the innovation box. We have no reason to assume that the methods toattribute profit to the innovation box will also be changed. However, it is our experience in practice that this part of the innovation box regime is being looked at more strict every year.

dr. J. (Jeroen) van Strien Advisor
dr. J. (Jeroen) van Strien, Advisor
Prof. dr. J.C.M. (Hans) van Sonderen Advisor
Prof. dr. J.C.M. (Hans) van Sonderen, Advisor
mr. drs. R.W. (Ruud) van der Linde Advisor
mr. drs. R.W. (Ruud) van der Linde, Advisor
mr. S. (Sicco) van den Berg Advisor
mr. S. (Sicco) van den Berg, Advisor
I. (Ibrahim) Ahmed LL.M. Advisor
I. (Ibrahim) Ahmed LL.M., Advisor
drs. A.T. (Andor) Valkenburg Manager Amsterdam, Advisor
drs. A.T. (Andor) Valkenburg, Manager Amsterdam, Advisor
mr. R.C. (Ron) Henzen Advisor
mr. R.C. (Ron) Henzen, Advisor
Tax advice Legal Budget Day special
2020 2019 2018 2017 2016 2015 2014 2013 2004

Related publications