Withholding tax payment exemption for research and development

For some years now, the legislator has used the withholding tax (BV) to support employers with investments that generate employment. The employer withholds the BV, as usual, but he must transfer only a part of the withheld BV to the tax authorities. Recently, the exemption from transferring BV for research and development was loosened.

Employers engaged in R&D

The supporting measure 'exemption from transferring BV for research and development' actually contains five different (partial) exemptions, depending on the type of employer.
These are:

universities, colleges, the 'Federal Fund for Scientific Research - Fonds fédéral de la Recherche scientifique (FFWO/FFRS)', …

recognized scientific institutions

companies that pay or grant remuneration to researchers who work on research or development projects or programs implementing cooperation agreements with universities, colleges or recognized scientific institutions

Young Innovative Companies

companies that pay or grant remuneration to researchers who hold a specific degree and who are employed in research or development projects or programs.

Here the last category is concerned : commercial companies that employ researchers in their research or development projects or programs.

The researchers

Until 31 December 2017, such researchers had to hold a master's or doctorate degree in a specific field of study.

In 2018, the exemption was extended to researchers holding a professional or academic bachelor's degree in a specific field of study. In that first year, the exemption from transferring payment was 40%, but since 2019 the exemption is the same as for researchers with a master's or doctorate degree, i.e. 80%.

Which diplomas

Education is a Community competence: the diplomas that qualify for the transfer exemption are different for the Flemish and the French-speaking Community.
For the Flemish Community, this includes: PhDs in Applied Sciences, Exact Sciences, Medicine… Masters (or academic bachelors) in Sciences, Applied Sciences, Medicine, Pharmaceutical Sciences…

As of 1 January 2018, professional bachelors in biotechnology, health care, industrial science and technology, nautical and commercial sciences, and business administration (if the program is mainly focused on computer science and innovation) are also eligible.

In the French-speaking Community, the degrees of doctors and masters in approximately the same fields entitle the holder to the exemption. The professional bachelor's programs concern the following fields of study: Paramedical and Technology (limited to courses that are mainly focused on biotechnology, industrial sciences, technology, nautical sciences, product development and computer science).

The exemption

The payment exemption can only be applied to the BV owed on the salaries of researchers who hold a professional or academic bachelor's degree in a specific field of study and who relate to research and/or development carried out in the context of one or more research or development projects or programs.
If the researchers have only spent part of their time effectively on research and/or development, the BV is only eligible pro rata on their salary.

The total amount of the exemption for bachelors may not exceed 25% of the total amount of the exemption from transferring BV to the salaries of researchers who hold a master's or doctorate degree in a specific field of study. If your company is an SME, the limit is 50%.

Because of this limitation, you cannot invoke the exemption if you do not employ masters or doctors in your research programs!

Example
Suppose you employ 1 master degree in a research project and you apply an exemption from transferring BV of 40.000, then the transfer exemption of the BV on the salaries of employed bachelors cannot exceed 10.000 in a large company or 20.000 in a SME.

Formalities and other conditions

BV's payment exemption is still linked to a number of other conditions (for example, the research project must be recognized by BELSPO) and formalities (you will have to submit no less than 3 BV declarations).

It certainly takes some effort to apply the exemption, but it can really be worth it.