The Dutch R&D Tax Credit, or the Dutch Promotion of Research and Development Act (Wet Bevordering Speur- & Ontwikkelingswerk, “WBSO”), is an instrument that was introduced in order to stimulate investments and efforts in R&D in the Netherlands. It takes the form of a credit against employment taxes for any employee that participates in R&D activities.
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WBSO credit is given for the hours spent on R&D activities and associated costs for prototypes. R&D activities are activities that:
- Concern the development of (to the company) technically new (parts of) products, production processes or software, or:
- Can be considered technical (or scientific) research in the area of physics, chemistry, biotechnology, production technology or information technology.
The benefits that you will be able to obtain from the WBSO depend on the number of hours spent on the abovementioned activities. For every hour spent on R&D, 32% of the hourly rate of the employees is subtracted from labour taxes, for the first €350,000 of R&D-spending (hours and costs). After that, a rate of 16% applies. New businesses that have existed for less than five years receive a 40% benefit over their first €350,000.
WBSO as a Ticket to Innovation Box
Besides being a profitable tax incentive in and of itself, the WBSO is an important stepping stone in acquiring additional benefits through the innovation box. The innovation box is a tax credit that applies to the Corporate Income Tax. Any part of these profits that can be attributed to innovation performed in-house and relating to IP from these activities will be subject to reduced Corporation Tax, instead of the regular 25%. The exact income that can be attributed to the in-house R&D will be established in negotiation with the Dutch Tax officer. However, to be negotiable, all R&D activities must be covered with an R&D-statement. This declaration is issued through the successful application of a WBSO, making the WBSO the indispensable ticket for applying for an innovation box credit.
For more information and to find out whether you are eligible for the WSBO, contact the Duff & Phelps Site Selection and Incentives Advisory team for a free consultation.
In addition to gathering and presenting in this publication information from our own team of site selection and incentives advisors, we partnered with Varsha Ramlal, Funding and Innovation Consultant at The European Funding Alliance.