WBSO and Innovation box

Tax benefit

Are you developing and selling an innovative product or service? By applying the innovation box, a substantial saving on corporate income tax may be achieved on the profit attributable to innovation. This profit is effectively taxed at 9% (for financial years prior to 2021, it was 7%) corporate income tax, while the standard rate is a maximum of 25,8% (the 2024 rate).

Before profits are taxed at the reduced rate of 9%, the costs incurred by a taxpayer in relation to the development of the intangible asset must first have been recovered.

It is possible to apply the innovation box retroactively in the years for which the corporate income tax assessments are not yet final, provided that the requirements of the innovation box scheme are met.

General requirements innovation box

The innovation box is open to entities subject to corporate income tax established in the Netherlands, such as B.V. (private company with limited liability) and N.V. (public limited company).

The innovation box may apply to taxpayers who carry out research and development work in which:

• The R&D work is carried out by the taxpayer itself in the Netherlands - or in certain situations involving contract research
• The R&D work has resulted in an intangible asset, such as a product, process, software and / or computer programme
• The development of the intangible asset is at the risk and expense of the taxpayer
• The benefits obtained (e.g. sales proceeds, royalty or licence fees) are substantially (at least 30%) attributable to the intangible asset
• A patent, plant variety right or similar right or a WBSO statement has been issued in respect of the intangible asset

Small versus large enterprises

For the innovation box, a distinction is made between “small” and “large” taxpayers. Your company is regarded to be a small taxpayer if over a period of 5 years:

• You realise a group turnover of no more than €250 million
• The profit attributable to the innovation box amounts to no more than €37.5 million

If your company qualifies as a small taxpayer, a WBSO statement must underpin the development of an intangible asset.

Does your company qualify as a large taxpayer? In that case, in addition to an R&D statement, you must also be in possession of one of the following items for the intangible asset:

• A patent (or an application for a patent)
• A plant variety right (or an application for such right)
• Development of new biological crop protection products
• Software
• A marketing authorisation for medicinal products
• A registered utility model for the protection of innovation
• A supplementary protection certificate granted by the Netherlands Patent Office.

WBSO (Research & Development Promotion Act)

Does your company carry out innovative research and development work? If so, it is advisable and lucrative to apply for R&D statements. In addition to a saving in employment taxes to be paid, an approved WBSO application serves as the (required) entry ticket for the lucrative innovation box.

Coordination with the Dutch Tax Administration

The innovation box optional rather than mandatory. In principle, the manner in which the profit is allocated to the innovation box is always agreed in advance with the Dutch Tax Administration. As each company is unique, this coordination is tailor-made.

Forvis Mazars can assist you

By means of a quick scan we can determine whether your company is entitled to application of the innovation box and we can make an estimate of the benefit to be gained. Our experienced experts can draw up innovation box applications and processes in a professional manner. We can also assess which other forms of tax relief may apply to your innovative business.