The Belgian government has approved a draft law introducing a deduction for innovation income. The text has been sent to the Council of State for advice (subject to change).
The new regime will replace the patent income deduction which has been abolished earlier (but with a grandfathering period until 30 June 2021) as it was not in line with the OECD ‘modified nexus approach’. It will enter into force retroactively as from 1 July 2016.
The main features of the new regime are:
[qualifying R&D costs/total R&D costs] x total income from intellectual property
= qualifying income from intellectual property
For the qualifying costs, the cost of outsourcing to related parties are excluded, contrary to the cost of outsourcing to unrelated parties which qualifies as ‘qualifying costs’. An up-lift of 30% of qualifying costs is provided.
© 2017 KPMG Tax and Legal Advisers, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.