Innovation is a critical driver of economic growth and competitiveness. Countries around the world are increasingly investing in policies and programs to support innovation and research and development (R&D) activities. The Dutch government has established several policies and programs to support innovation, including the WBSO subsidy and the Innovation Box. In this blog, we discuss the relationship between these two policies and how they can support innovation in the Netherlands.
The WBSO subsidy is a tax credit provided by the Dutch government to support companies engaged in R&D activities. The subsidy is designed to encourage companies to invest in R&D and develop new products, processes and services. The subsidy provides a tax credit based on the hours the company's employees spend on R&D and the amount of the subsidy depends on the number of hours worked and the hourly rate.
In contrast, the Innovation Box is a tax incentive that reduces the tax burden for companies that generate income from patented or innovative products or processes. The incentive allows companies to pay a lower tax rate on all profits from these innovative products or processes.
To qualify for the Innovation Box, a company must have an innovative product or process that is patented or meets specific criteria for innovative technology. Also, the company must be based in the Netherlands or have a permanent establishment in the Netherlands.
The relationship between the WBSO subsidy and the Innovation Box is simple. Companies that receive the WBSO subsidy can use the subsidy to cover the costs of R&D activities that may lead to the development of innovative products or processes. If these products or processes are patented or meet the criteria for innovative technology, the company can then apply for the Innovation Box to reduce the tax burden on profits from these products or processes.
Thus, the WBSO subsidy and the Innovation Box are complementary policies that support innovation in different ways. The WBSO subsidy provides financial support for R&D activities and the Innovation Box then provides financial support for the commercialization of these innovative products or processes. By combining these two policies, companies can receive financial support for the entire innovation process, from R&D to commercialization.
So what does it provide?
The benefits of the innovation box are great. Companies that qualify for the box can pay a lower tax rate on their profits from innovative products or processes. The tax rate for the Innovation Box is 9% (2023) for qualifying profits, which is significantly lower than the regular corporate tax rate of 25%. So, all in all, definitely worth looking into as an entrepreneur!