Innovation support measures

The government is committed to the increase of the knowledge economy in Belgium. The Summer Accord continues to support the tax deduction for innovative measures and this is only one of the many measures that exist to stimulate the development of knowledge in our companies. Anthony Meul lists all innovation support measures.

Anthony Meul

Innovation support measures

The innovation deduction, what exactly does it mean?

The innovation deduction is actually a tax measure which consists in allowing entrepreneurs who are engaged in innovative topics to benefit from an additional tax deduction. A deduction that goes up to 85% of the income that comes from those innovative assets.

Is it being used a lot by companies?

Yes, it applies especially to people who are working on innovations and who are going to have that translated into patents. However, since 2016, the measure has been extended to include copyright protected software. And, of course, in our current spirit of IT development, I do not have to tell you that it is indeed very widely used in Belgium.

There is a whole range of measures in place to boost this knowledge economy. Which ones?

You have a number of tax items and a number of rather financial items which are related to subsidies. An important fiscal point I would like to touch on is the investment deduction. The investment deduction has been in existence for some time, but has now also been placed on an extra level with the Summer Accord. In fact, this means that entrepreneurs who invest in certain assets can deduct up to 20% of that amount from their taxable base.

You talked about subsidies. That is more complex as there are a lot of them.

That’s correct, there are a lot of them, but people are often unsure how to start. There is a lot of interesting things to do about subsidies, but it is very complicated. You really have to be guided and prepared very well. And importantly in the case of subsidies is that you have to start before you want to invest. You must have initiated the file before you have even paid or received the first invoice, otherwise you will be too late. So that is a very important element. The deductions there for the financial allowances are very high. There are various formulas that even go up to 3 million euros that you can save, so there are very important.

There is also such a thing as plant breeders' rights. That is for people in agriculture and horticulture?

In the case of plant breeders' rights, we come back to the story of the innovation deduction. It is very important for them as we did not have it before. Recently, since 2016, plant breeders' rights have also been eligible for these deductions. And due to our very large flower sector in Belgium, this helps us compete with the Netherlands. We did not have those deductions, the Netherlands had, and now we are playing on the same level.

We are quite modest in Flanders. Do you see a lot of innovative companies?

We do! I have been visiting companies now for a number of years, which is very nice, and you get to see a lot of interesting things. I have so a good example of a certain company we went to. We went around and I asked where the innovation of the company was. They replied that they didn’t really focus on innovation. During our walk I saw some people standing there in a corner. I asked what was happening there. Their foreman was working on a number of elements and when I started asking some questions, I discovered that they were actually doing something that was very innovative in their sector! And suddenly you can prove to them that what they are doing is patent worthy. The threshold to request a patent is not so high. We are simply far too modest to realise that.

So you also have to change the culture a bit as an advisor?


The exemption from the payment of tax on earned income is also a very interesting measure. Has it been successful?

Very succesful!

What were the main conditions?

There are quite a few conditions attached to it. It is a very interesting measure, which consists in transferring to the State up to 80% of the wage tax normally payable by employers for master's students, i.e. those with a higher education qualification.  This is an enormous cash saving. There are, of course, a number of conditions attached to it. You have to be involved in research and development, you have to apply for recognition from Belspo, which is an organisation of the government that is involved in the supervision of scientific research and suchlike. But it is a very interesting measure and now, thanks to the Summer Accord, bachelors are also it also goes for bachelors and there it goes for 40%.

Is the government actually doing enough to keep innovative companies in Belgium?

In my opinion that is the case. I think we are doing a good job, certainly in combination with the Flemish government, which is really doing its best. In my opinion, an important point is that we need to look at the surrounding countries, which are also making a strong commitment to this. In the context of the knowledge-based economy within Europe, all Member States are working on this. One very important point is also administration. It is administratively very difficult, certainly in the area of subsidies, to actually gain insight into what is possible. And, as I said a moment ago, you have to start applying for a subsidy dossier before you want to invest. And keeping the entrepreneurs under control is very difficult. Often they have an idea, they want to start, but then you have to slow them down. They first have to build up the file. And that is sometimes difficult.

So the procedures are still a bit complex?

They are somewhat complex.


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