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Tax deduction for innovation income relating to computer software

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Science Policy PPS - Tax deduction for innovation income relating to computer software

Tax deduction for innovation income relating to computer software

The explanatory memorandum and art. 6, e) of the law establishing a deduction for innovation income  (9 February 2017) allow for companies and the FPS Finances to request binding opinions from BELSPO regarding copyright protected computer programmes and derived works, or adaptations to computer programmes. They are considered to be intellectual property if they result from research and development programmes within the meaning of art. 275³ ITC (Income Tax Code), in particular the company withholding tax subsidy for knowledge workers.

Copyright protected computer programmes that have generated income before the 1st of july 2016, are excluded from the deduction for innovation income.

  • Binding opinions which are provided by BELSPO in the context of the company withholding tax subsidy may therefore also be used in support of the innovation deduction. When requesting an opinion, companies use the electronic notification pertaining to software development as part of experimental development: Withholding tax R&D
  • Companies which do not make use of the company withholding tax subsidy (for example, because staff do not have the qualifications specified in art. 275³ ITC, or because the company does not employ any contractual staff), can notify of their R&D activities and request an opinion using this electronic form.

When describing the R&D activity, 5 core criteria need to be taken into account:

  1. The R&D activities needs to be innovative with respect to current knowledge and competencies in the company's sector
  2. The R&D should be based on new concepts and ideas, (routine modifications to products and processes are excluded)
  3. R&D activities should be uncertain as to their outcome (both in terms of result, investments and time usage)
  4. R&D activities should be systematically planned, reported and budgeted 
  5. The results of R&D need to be replicable and transferable

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