Innovation box and 7% corporate income tax, that must be music to your ears. What is an innovation Box?
Innovation box and 7% corporate income tax
The Dutch Government stimulates innovations, as a result a lower corporate tax rate applies to the profit made related to the innovation box income. Another tax credit that can be obtained in case knowledge is attracted from abroad. That is the case when the 30% ruling is applied. The income of the employee less taxed.
Furthermore we have an R&D development tax credit. These three credits, innovation box, 30% ruling and R&D development go hand in hand.
Conditions set to the innovation box by the Dutch tax office
The subject is about intangible assets created by the company. This implies that the company performs the research and development. The result of the R&D is an intangible asset.
However, the intangible assets can be owned by the company, but the company is not in charge of the R&D, this is not regarded an innovation box type of company.
In the event of purchased intangible assets and the company continues to perform R&D on the intangible assets, then the innovation box tax rate applies. The box applies to the yielded income related to the R&D. Not the yielded income related to the purchased intangible assets.
Condition to small companies
An R&D statement is obtained for the work done related to the intangible assets.
The criteria of a small company are as follows:
- The turnover from this innovative intangible assets does not exceed EUR 37,5 mln in the current and 4 proceeding years combined, and
- the profit of the company cannot exceed EUR 250 mln in the current and 4 proceeding years combined.
Condition to large companies
The same as for small companies, however, also one of the following criteria need to have been met:
- An octroy is present
- There is a growers right
- Development of innovative biological plant protection products
- Program software
- License to introduce a drug on the market
- Registered user model for protection of the innovative development
- An extended protection certificate issued by the Octroy board in the Netherlands
As tax lovers we are also uncommon with some of the above mentioned points. That said, if your company is a large company operating in this field, the above mentioned points will be familiar to you.
Nexus approach and the innovation box
In the situation the company outsourced the development of the intangible asset to an affiliated company the nexus approach applies. A rather specific calculation agreed by the tax offices around the world to avoid tax evasion.
We think tax-is-exciting, paying less tax than required makes everybody exciting. The innovation Box in the Netherlands helps companies that truly do innovative work, to pay less tax. You can see this as a support the Dutch Government want to give to innovative work.
The conditions that apply to this box are very specific and strict, so please have all the administrative work in place and properly processed . This enables you to indicate what part of your turnover is related to the innovative intangible asset, hence the reduced corporate tax can be applied.