PATENT BOX OR INNOVATION BOX

Is your company active in the domain of innovation? Do you have a patent or license? In that case, you can benefit from supplementary public support! How? With the measure deduction for incomes on licenses (or “patent box”). Recently the authorities have launched the deduction for incomes on innovation (or “innovation box”). We list shortly the principal differences between the two deductions.

Would you like to know which system is the most advantageous for your company? Get in contact with one of our experts in innovation.

What is it about?

The patent box and innovation box allow you to deduct certain incomes from the taxable base of your company. To do that the measures in which a patent contributed to the revenue of your company are determined.

If you have a patent, and you license that patent to others, the royalties generated are applicable for patent box / innovation box. If the company uses the patent in owned production processes or services, it’s a bit more complicated. In that case to calculate the revenues from the patent, techniques commonly used for transfer pricing are applied.

Your company can, depending on the chosen system, deduct 80 to 85% of the realized revenue from the patent on the taxable base.

Which system can you choose?

The innovation box replaces the patent box and starts on July 1st 2016, with a transition period.

For patents requested or obtained before June 30th 2016, you can still apply for the patent box until June 30th 2021, if these patents are not yet commercialized before January 1st 2007. For these patents, you can also choose immediately for innovation box. Starting July 1st 2021 the patent box disappears and the innovation box remains.

Which are the main differences?

The OECD has qualified the Belgian fiscal deductions for revenues coming from patents in its initial form as harmful tax practice. In response of the criticism from the OECD, multiple important points of that deduction of incomes on licenses have been modified. The new regime, titled “deduction for incomes on innovation” is consequentially potentially less advantageous. Similarly Belgium used this occasion to enlarge the application area for the innovation box.

 

Patent BoxInnovation Box
Calculation baseGross revenuesNet revenues (calculation of R&D costs)
Deductible percentage80%85%
Other corrections?

Calculation of licenses paid or depreciated amortizations for acquired patents.

Nexus fraction (part of “own” R&D expenses of total R&D expenses)
Fiscally transferrable?NoYes (unlimited)
Other rights on intellectual property?NoYes: growing rights for plants, orphan pharmaceuticals, market exclusivity and copyright protected software

Which system should you choose for your company?

The choice between patent box and innovation box can be complex. To help you make the right choice, take contact with one of our experts in innovation.

We realize an indepth analysis for your R&D revenues and expenses, according to a methodology adapted to your situation. We take into account the objectives for your company. We inform you so your company can choose the most appropriate deduction. We also make sure your company gets the most results from deductions for license or innovation incomes.