At best, a successful research and development process leads to a commercializable innovation. From that moment on, your company can try to valorise its R&D efforts by realizing profits from the commercialization of its innovations.
Protecting innovation
From this perspective, companies often try to protect their inventions and innovations. This can be done, for example, by applying for a patent. In certain sectors there are also other options, such as plant breeders' rights (for plant varieties) or copyright protection (for software developments). Such a patent (or other intellectual property right) not only offers intellectual protection, but is also linked to a very interesting tax incentive, in particular the deduction for innovation income.
The innovation income deduction is a favorable tax regime that enables companies to exempt part of the profits they make from the commercialization of an innovative product/service/process, up to an amount of 85% from corporate tax. The effective tax rate on this part of the income is therefore limited to 3.75% (instead of the usual 25%).
REQUIREMENTS TO MEET?
The main condition to benefit from this deduction is that your company has a qualifying intellectual property right. In addition to patents, plant breeders' rights and copyright-protected software are also eligible. Furthermore, the application of the deduction for innovation income is often checked in advance with the Preliminary Decisions Service (via a ruling). Such a ruling offers legal certainty regarding the application and the amount of the deduction. That way you avoid discussions with the tax authorities.
HOW OUR ADVISORS CAN HELP YOU
VGD can assist you with the integral innovation process, starting with the non-binding assessment of the feasibility to the final application and determining the size of the deduction. All this with a hands-on approach and a proven track record with the Preliminary Decisions Service.
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