Belgium offers the most generous tax benefits for R&D among OECD countries
Tuesday, 07 May 2019
Of all the OECD countries, Belgium and France are the most generous in terms of fiscal advantages granted for research and development (R&D), Belgium’s planning office reported on Tuesday. In Belgium, the budgetary cost of such tax eases as a percentage of GDP continued to exceed that of France in 2015 and, moreover, it has shown no sign of going down, according to the Planning Office. “The tax credit for R&D investments and the tax deduction for revenue from patents represent the lion’s share of the budget cost of the fiscal advantages for R&D,” it said.
“However, the evaluation shows that these fiscal advantages do not seem to encourage new R&D activities in an efficient manner,” it noted. “One can therefore deduct that there is a certain room for manoeuvre for limiting the increase in their budget cost in a way that does not hamper the potential of the fiscal incentives to develop R&D activities.”
In 2015, the budget cost of the various fiscal advantages for R&D combined was about 1.5 billion euros. The evaluation done by the Planning Office shows, for example, that lifting the requirement to deposit 80% of the withholding tax on the salaries of R&D staff encourages companies to carry out R&D activities which, without such support, would not see the light of day.
“On the other hand, the evaluation does not, so to speak, show statistically significant results for the benefits of company tax advantages like the tax credit for investment in R&D, and the 80% tax deduction on income from patents,” the Planning Office stressed.
Fiscal advantages are passed on to researchers’ salaries or through the corporate tax.