Innovation Income Deduction (IID)

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The measure

  • Objective: to ease the tax burden on revenue from innovation or innovative improvements generated in Belgium.
  • The Innovation Income Deduction or IID, also known as “Innovation Box”, is a tax deduction scheme allowing enterprises to erase part of the tax assessment basis by deduction of a quotient from the net income generated in Belgium through patents, plant variety rights, orphan medical products, market and data exclusivity, software protected by copyright.
  • Subject to compliance with the conditions it is possible to deduct up to 85% of the net innovation income from the tax assessment basis of the enterprise.
  • The Innovation Income Deduction was designed to replace Patent Income Deduction (PID, also known as “Patent Box”, which will disappear as from 1 July 2021.

Conditions of application

  • The expenditures that correspond with the incomes must be effected in Belgium; it is of the utmost importance that they are written up in the accounts for the calculation of the “Nexus ratio”, which brings out the intensity of the R&D projects on Belgian soil;
  • The income that is taken into consideration is the direct revenue from innovation projects and that part of the improvements applied to licenses or patents delivered by third parties (royalties).

Your challenges

  • Maximum possible recouping of the basis of the deduction
    Ayming’s consultant can identify the costs of R&D projects paired with the income, such that they can then calculate and agree an optimum Nexus ratio with the tax authorities.
  • Applying for a ruling from the PRD
    In accordance with specific procedural requirements and a clearly defined planning Ayming experts, with your authorization, approach the Department of Prior Rulings in tax affairs to guarantee that your complaints for the closed fiscal year and for the coming year are processed successfully. They then implement the results in your balance.

The added value of Ayming Belgium

  • Since Ayming’s experts are as well versed in science, corporate finance, accounting and tax law, they can subject the sources of your income and the associated costs for R&D to a thorough investigation in order to calculate and secure the Nexus ratio.
  • The ruling involves special procedural requirements and strict observation of the steps that must be followed. The Innovation Performance consultant from Ayming not only makes it possible to adapt to the obligations but also spares you time-consuming tasks.
  • Ayming sends you a regular clear report on the progress of your declarations, examines any complaints you might have and ensures the implementation of the measure in your balance.

For more information