Exemption from payment of the withholding tax on income for research and development
November 2021 – For some years now, the legislator has been using the withholding tax on earned income (bedrijfsvoorheffing/précompte professionnel) to support employers in making investments that generate employment. The employer withholds the withholding tax, as he usually does, but he only has to pay part of the withheld tax to the tax authorities. The exemption from paying the withholding tax for research and development has recently been made more flexible.
Employers who carry out R&D
The aid measure "exemption from payment of the Research & Development levy" actually contains five different (partial) exemptions, depending on the type of employer.
The different types of employers covered are:
universities, colleges, the Federal Fund for Scientific Research (FFRS/FFWO), etc;
accredited scientific institutions;
companies that pay or remunerate researchers working on research or development projects or programmes carried out under partnership agreements with universities, colleges or recognised scientific institutions;
Young Innovative Companies;
companies that pay or award remuneration to researchers with a specific degree who are engaged in research or development projects or programmes.
This last category will be discussed here: commercial enterprises that employ researchers in research or development projects or programmes.
Researchers
Up to and including 31 December 2017, such researchers had to hold a master's or doctoral degree in a specific field of study.
In 2018, the exemption was extended to researchers holding a bachelor's degree in a specific field of study. In the first year, the waiver was only 40%, but since 2019, the waiver is as high as for researchers with a master or doctoral degree, namely 80%.
Which diplomas
Education is a Community competence: the diplomas eligible for exemption from payment are different for the Flemish Community and the French Community.
For the Flemish Community, these include the following diplomas: doctor's degrees in applied sciences, exact sciences, medicine, etc. master's degrees (or transitional bachelor's degrees) in sciences, applied sciences, medicine, pharmaceutical sciences.
Since 1 January 2018, the following are also taken into consideration: professional bachelor's degrees in biotechnology, health care, industrial sciences and technology, nautical sciences, commercial sciences and business management (limited to courses that are mainly aimed at IT and innovation).
In the French Community, doctoral and master's degrees in virtually the same fields are eligible for exemption. As far as professional bachelor's degrees are concerned, the following orientations are concerned: paramedical and technical (limited to courses that are mainly aimed at biotechnology, industrial sciences, technology, nautical sciences, product development and IT).
Exemption
The waiver of payment can only be applied to the withholding tax due on the remuneration of researchers who hold a bachelor's degree in a specific field of study and which relate to research and/or development carried out in the framework of one or more research or development projects or programmes.
The remuneration of researchers who have actually spent only part of their time on research and/or development is only taken into account for the exemption in proportion to the time spent on these activities.
The total amount of the exemption for bachelor's degree holders is limited to 25% of the total amount of the exemption from payment of the withholding tax withheld from the remuneration of researchers holding a master's or doctoral degree in a specific field of study. If the contractor is an SME, this limit is 50%.
In view of this limit, you cannot claim the exemption if you do not employ masters or PhDs in your research programmes!
Example
You employ a master in a research project and you apply a waiver of the payment of the withholding tax of 40 000 euros: the waiver of the payment of the withholding tax on the remuneration of employed bachelors cannot be higher than 10 000 euros in a large company or 20 000 euros in an SME.
Formalities and other conditions
The exemption from the payment of the withholding tax is also subject to a number of other conditions (e.g. the research project must be approved by BELSPO) and formalities (you will have to submit no less than three declarations to the withholding tax).
It certainly takes some effort to invoke the exemption, but it can be worth it.
