The Belgian Tax Authorities have published a long awaited list of Frequently Asked Questions (FAQ) with respect to the Innovation Income Deduction (IID). Under this regime, Belgian taxpayers can deduct 85% of qualifying net innovation income from their corporate income tax basis. The FAQs are available in Dutch and French.
This publication is important as it provides further guidance and exemplary calculations on different aspects of the IID, such as:
- The requirement to record the intangible on the balance sheet
- The requirement to improve acquired IP
- The need to request a binding opinion with the competent authorities on the R&D character of software generating activities
- The impact of incentives reducing the R&D expenses on the netting of innovation income and the nexus ratio
- Tax neutrality in case of restructurings
With its input on 31 questions, the FAQs provide for valuable insights in a number of relevant aspects of the IID regime. Some burning questions remain nevertheless unanswered or unclear such as the treatment of R&D activities performed within foreign branches of Belgian companies.
In order to better understand the applicability of the IID and the relevance of the FAQs on the calculation thereof for your organisation, please do not hesitate to contact your regular PwC contact.