Innovation pays off

Several schemes exist to encourage investment in inventions. The best known is the patent (patent), which gives a monopoly on the use of the invention. The inventor can prohibit others from using his invention. He can also allow this in exchange for compensation. The patent holder can thus (partially) recoup his investments. In addition, through the Research and Development Labor Scheme (S&O scheme), part of the labor costs for research and development work (similar to research & development) can be compensated fiscally.

To further promote innovation, since January 1, 2007, you may be eligible for application of the so-called Patent Box. This involves a reduced corporate income tax rate of 10 instead of 25.5% for revenues, less certain costs, that you earn from patents granted after December 31, 2006. Revenues may include royalties received, profits from the sale of patented inventions, or from the sale of a patent. Application of this low rate was previously only possible for benefits up to €400,000.

Since January 1, 2010, the Patent Box has been broadened, making it more attractive for companies engaged in innovation. The Patent Box now also applies to income obtained from innovations without a patent. The name has therefore been changed to Innovation Box. Companies that incur demonstrable research and development costs with or without a patent can benefit from the lower corporate tax rate under certain conditions. Moreover, the tax rate has been reduced to only 5%. The ceiling of €400,000 has also been removed.

Application of the tax rate is subject to a number of conditions. For example, it is still required that you have been granted a patent, or that you are in possession of a so-called R&D statement from the Ministry of Economic Affairs.

If your company is involved in innovation in any way, it is certainly worth checking whether you qualify for the favorable tax rate. Perhaps the R&D scheme is applicable, or patenting an invention (as yet) may be worthwhile.