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Innovation Income Deduction


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INNOVATION INCOME DEDUCTION (IID)

The new corporate income tax regime labelled as ‘Innovation Income Deduction’ (IID) replaces the previous ‘Patent Income Deduction’ (PID) and offers a broader scope. It takes effect retrospectively from 1 July 2016.

The new regime allows a tax deduction up to 85% of the net income from innovation in corporate income tax or non-resident income tax (companies).  Where the PID was limited to patents, IID also considers other intellectual property (IP) rights, such as copyright-protected software and plant breeders' rights. Additionally, under certain conditions, the sale of IP or services based on IP could be considered income for the purposes of IID.

 

COPYRIGHT-PROTECTED SOFTWARE

Software, including derivatives or adaptations, are considered to be copyright-protected if it results from a research and development project or program within the meaning of art. 275 ITC (Income Tax Code), in particular the company withholding tax subsidy for knowledge workers.

Copyright-protected software that has generated income before the 1st of July 2016, is excluded from the deduction for innovation income.

 

HOW WE CAN HELP

To successfully adopt the tax incentive for innovation income, tax payers should rethink the way they are organising their intellectual property activities. Leyton assists you in identifying eligible R&D activities and in preparing exhaustive supporting documentation through the whole process from scoping through document preparation, submission and controls.  Our approach consists of mainly 3 milestones to assist tax payers in this particular domain:

             Analysis of the potential corporate tax advantage

             Request advise at The Belgian Science Policy Office (BELSPO)

             Request tax ruling at the Belgian Tax Authorities

The goal is to identify and optimise, in a very pragmatic approach, how your company can benefit from this tax regime on a secured and safe basis. Leyton combines tax expertise with experienced scientists and engineer’s capabilities to ensure efficiency and effectiveness.