Innovation rewarded
In 2010, the Netherlands improved its tax incentive for investment in innovation with the introduction of the innovation box regime (formerly known as the patent box regime).
Attractive for innovative companies
Corporate income tax (CIT) law offered a tax incentive for profits from certain technological intangible assets through the patents box regime. This regime reduced the standard rate of up to 25.5% to 10%. New legislation replaced the patents box with an “innovation box”, offering an additional 5% reduction.
Innovation box regime
To qualify for the innovation box, the company has to be active in Research & Development (R&D) resulting in patents or apply for the wage tax credit.
Profits resulting from Research & Development will be taxed at a rate of 5%, rather than the statutory rate of 25.5%. In addition, the maximum profit attributable to the patent box regime no longer applies and the cap of 400,000 euros for non-patented intellectual property (IP) has been removed.
In 2009 and 2010, innovation development costs and losses on the exploitation of IP that are allocated to the patent box can be deducted against the ordinary corporate income tax rate of 25.5%. Costs can now be deducted against 25.5% whereas future profits are taxed at 5%. The amount of future income up to the costs deducted will be taxable at the ordinary rate. However, this provides for a substantial cash-flow benefit and reduces the potential risk of innovation substantially since the costs are fully tax deductible to other income derived.
Additional information
More information about the innovation box regime can be found in the KPMG Meijburg & Co. flyer.
Related topics
Tax benefits for innovative business
Fiscal advantages of doing business in the Netherlands
The 30% tax ruling for knowledge migrants
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