Netherlands

R&D Tax Credit

The Netherlands has a wide range  of incentives accessible to advocate innovation, investment and lower R&D costs. There are three alternative options for minimising research and development cost burdens, which include: (1) WBSO, which is incentives to reduce social security contributions; (2) R&D Allowance where taxpayers may deduct super of 160% for qualifying expenses; (3) the innovation box scheme.

Description of Incentives

For employees who engage in R&D for eligible activities, the R&D Tax Credit works to reduce the wage tax payable by the employer. The first €250,000 a credit of 35% is applicable, this rate then reduces to 14% for any remaining R&D wage costs that qualify. When the taxpayer is an employer for the first five years of claiming, the percentage rises to 50% for the first €250,000, then decreases to the standard 35% thereafter. The annual benefit of claiming this incentive is capped at €14 million annually. Furthermore,  there is a requirement to repay the tax office where actual R&D hours are not in line with estimated or claimed hours.

A super deduction of 160% for qualifying R&D expenses other than wage expenses for R&D is available. This application is performed concurrently with the WBSO request.

Eligibility Requirements

All incentives for R&D activities including wage tax benefits, R&D super deduction and Innovation box are available to all industries, with R&D defined as:

• Development of new products, processes, software or components;
• Technical-scientific research that is aimed at proving a hypothesis, must fall within the fields such as physics, chemistry, biotechnology etc;
• Technical feasibility of a R&D project; and
• Research aimed at enhancing production processes or software.

Wages paid to relevant R&D staff qualify for the WBSO tax incentive. RDA costs may be operating expenses, including, raw materials, licenses or contractor services and capital costs –  such as business assets (excluding land or assets qualifying for energy and environmental investment allowance).

Other Considerations

The innovation box is available for patented and non-patented innovations ensuring that R&D performed is eligible for the wage tax benefits for innovation. The innovation box is not capped at a particular monetary amount, with development costs and losses for the exploitation of IP deductible against qualifying income. The tax rate 5% for any income with is raised from qualifying inventions (net of development costs) when allocating towards the innovation box.

Services

Swanson Reed offers the following services:

• Advice on tax preparation relevant to claiming the R&D tax credits incentive
• Preparation of documents relating to filing and substantiating a R&D taxation claim
• R&D tax advice and consultations
• R&D tax claim planning and preparation

For a full range of services in relation to the credit, please click here.