As a foreign entrepreneur doing business in the Netherlands, you have a valuable opportunity to reduce your R&D costs through the WBSO (Wet Bevordering Speur- en Ontwikkelingswerk) scheme. This tax incentive program is designed to stimulate innovation and research activities in the country.
How the WBSO Works
The WBSO offers a tax credit that reduces the wage tax and social security contributions you pay for employees engaged in R&D work. For companies, this can amount to up to €20,000 per R&D employee annually. Self-employed individuals can also benefit from a fixed tax deduction if they conduct qualifying R&D work.
The WBSO in 8 steps
Applying for the WBSO
To access this benefit, you need to submit an application to the Netherlands Enterprise Agency (RVO) before starting your R&D activities. Here’s what you need to know:
- Timing: Applications can be submitted up to September 30th for the current year. The benefit period always starts on the first day of the month following your application.
- Project Description: You’ll need to describe your R&D projects in detail, focusing on the technical challenges and innovative aspects. Be prepared to explain why your work qualifies as R&D.
- Estimate R&D Hours: Provide an estimate of the number of hours your team will spend on R&D activities. If applicable, you can also include other costs and expenditures related to the R&D work.
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After Approval
If your application is successful, you’ll receive an R&D Declaration from RVO. This document specifies the tax credit you’re entitled to claim. For companies, you can start deducting this amount from your payroll tax returns immediately. Self-employed individuals apply the deduction to their income tax return.
Administrative Requirements
Benefiting from the WBSO comes with some administrative obligations:
- Time Tracking: You must keep detailed records of the R&D hours worked by each employee, updated within 10 working days.
- Project Administration: Maintain documentation that shows the progress of your R&D activities.
- Cost Records: If you’ve claimed for costs and expenditures, keep clear records of these.
- Annual Reporting: By March 31st of the following year, you must report the actual R&D hours worked and costs incurred.
You are absolutely right. It’s even stronger than just an advantage – it’s often a requirement. Here’s the paragraph with that crucial information clearly stated:
Patent Box (Innovation Box)
In addition to the WBSO, the Netherlands offers the “Innovation Box,” also known as the “Patent Box.” This scheme allows companies to apply a reduced corporate tax rate (currently 9% instead of the regular 25%) on profits derived from patented inventions and other qualifying intangible assets developed through R&D activities. To access the Innovation Box, companies often need to demonstrate that their intangible assets resulted from qualifying R&D. Holding a WBSO certificate is one way to meet this requirement, serving as official proof from the Dutch government that your R&D activities are eligible for a subsidy and thus qualify for the Innovation Box. This close link between the WBSO and the Innovation Box makes them a powerful combination for companies looking to maximize the financial benefits of their R&D efforts in the Netherlands. It allows companies to first reduce R&D costs through the WBSO and then enjoy a lower tax burden on the resulting profits through the Innovation Box, further incentivizing innovation and helping companies retain more of the financial rewards generated by their investments.
Maximizing Your Benefit
To make the most of the WBSO:
- Be thorough in your project descriptions, clearly explaining the technical challenges.
- Keep meticulous records – this is crucial for compliance and in case of an RVO inspection.
- Consider working with a Dutch tax advisor experienced in WBSO applications.
- Remember you can submit multiple applications throughout the year for new projects.
The WBSO can significantly reduce the cost of conducting R&D in the Netherlands, making it an attractive option for innovative foreign businesses. By understanding the process and meeting the administrative requirements, you can leverage this scheme to support your company’s growth and innovation in the Dutch market.
Further reading:
- Guideline for using the WBSO in 2024 Commissioned by the Ministry of Economic Afairs and Climate Policy
- WBSO 2024 manual
- Dutch patent box
- Subsidy scan
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