The Dutch innovationbox regime is a preferential tax regime to stimulate R&D activities in the Netherlands. The main benefit of the Dutch innovationbox is that profits generated with innovative activities are subject to a reduced effective corporate income tax rate in the Netherlands.
For the purpose of the Dutch innovationbox a distinction is made between “small taxpayers” and “large taxpayers”. A taxpayer is considered small if the gross benefits from the qualifying immaterial assets over a five year period do not exceed € 37.5 million and the group’s turnover does not exceed € 250 million over a five year period (based on consolidated annual accounts). A taxpayer that exceeds these thresholds will be qualified as a large taxpayer.
In order to successfully apply for the innovationbox the following requirements needs to be met:
- The taxpayer has performed R&D activities for which it has received R&D tax credits (WBSO),
- The R&D activities have resulted in a self-developed immaterial asset, and
- When qualified as a large taxpayer, the taxpayer has an additional legal ticket (e.g., patent, software) with respect to the self-developed immaterial asset
Why would you use the innovation box?
The use of the innovationbox provides a tax advantage as the effective Dutch corporate income tax rate is lowered from 25.8% to 9% for qualifying (innovation) profit.
How can QG help
There are quite a few attention points to make optimal use of the innovationbox. Determining the qualifying income for the innovationbox is based on transfer pricing principles where items such as remuneration of routine activities, identification of core functions, level of contract R&D, nexus approach and allocation of income to the R&D function / immaterial assets are taken into account.
QG can assist you with applying for the innovationbox and to obtain the most optimal result by using a 3 steps approach:
- Feasibility and impact analysis
Determine whether you fulfil the innovationbox conditions and perform a high-level financial impact analysis of what a successful innovationbox request could entail.
- Preparing and filing the innovationbox request
Preparation of the innovationbox request to be filed with the Dutch tax authorities. Such includes the substantiation (e.g., documentation) and the calculation of the qualifying income.
- Discuss and agree with the Dutch tax authorities
This includes drafting/reviewing the formal agreement on the innovationbox.
Are you performing R&D activities and considering to apply for the innovationbox, then we would be pleased to assist you in obtaining the innovationbox ruling.