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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.

IP BOX

In addition to literary and artistic works, the legislator has extended the scope of the regime of IP Remuneration to creative works in a broader sense, in particular by targeting source codes, interfaces and computer program structures. This regime concerns income from work that is licensed or protected by copyright. For a work to be protected by copyright, it must meet two conditions cumulatively: it must be original and must be expressed and supported by concrete elements.

Creative functions include authors, journalists, designers (artistic field). But also software developer, project manager or data scientist (digital field).

This plan can be applied to up to 25% of the employee's salary envelope. It therefore provides for a 50% deduction on a first tranche up to EUR 16,320 (2019, tax year 2020) and then 25% on a second tranche from EUR 16,320 to 32,640 (2019, tax year 2020).

 

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.