Belgium: innovation incentives overview

Belgium offers a comprehensive framework of federal tax incentives designed to support and stimulate R&D and innovation across the full R&D cycle. These incentives can often be combined to enhance their overall impact. In addition, regional authorities provide further funding opportunities, primarily through grants and subsidies.

• WHT exemption: This incentive follows a monthly process. The benefit is claimed via the payroll tax return as the costs are incurred. This is separate from the annual tax filing and is contingent on a mandatory pre-notification of the project to BELSPO.   
• IID and Investment deduction / R&D tax credit: These incentives are claimed via the annual corporate income tax return by filing the relevant forms. The claim is made, at the earliest, after the end of the financial year in which the income, expenses or investments arose.

 01: Employment

• Partial wage withholding tax (WHT) exemption for researchers
  • A federal cost-based incentive that provides a direct cash benefit by reducing payroll costs for companies employing researchers. This incentive follows a monthly process where the benefit is claimed via the monthly payroll tax return.
  • Employers can directly retain 80% of the wage tax due for researchers working on a qualifying R&D project or programme. Researchers should hold a qualifying scientific degree (bachelor’s, master’s or PhD) and prior registration of the project/program with the Belgian Science Policy Office (BELSPO) is required.
• Special tax regime for researchers (expat regime)
  • A tax regime for specialised foreign researchers recruited from abroad or transferred within an international group, offering part of the gross salary as a lump-sum cost allowance exempted from personal income taxes and social security contributions. Following recent legislative enhancements effective from 2025, the cost allowance has increased to 35% of the gross salary and the previous €90,000 absolute cap has been abolished for tax purposes (but not for social security purposes).
  • No minimum salary is required, but the researcher should hold a qualifying master’s or PhD degree (or have 10 years of relevant experience) and spend at least 80% of their working time on R&D.
• Tax free innovation premium
  • A bonus granted to creative employees who contribute a new idea with added value. This premium is 100% exempt from personal income tax and social security contributions. The maximum bonus is equal to one month’s gross salary and may in total not exceed 1% of the total salary cost.
• Copyright (IT)
  • A favourable personal income tax regime – 15% withholding tax with a 50% lump-sum cost deduction up to a certain amount – may apply to qualifying copyright income, subject to the applicable statutory conditions. The proposed re-extension of the regime to the IT-sector is still pending legislative approval and should not yet be presented as enacted law.

02: Innovation income derived from eligible IP (such as patents and copyright-protected software)

• Innovation Income Deduction (IID)
  • A federal profit-based incentive for income generating R&D projects. Introduced in 2016, the regime aims to stimulate innovation by significantly reducing the effective corporate tax rate on eligible IP-related profits.
  • Allows 85% of net income from qualifying intellectual property (IP) to be deducted from the corporate income tax base. At a 25% corporate tax rate, this results in an effective tax rate of 3.75% on those profits. The IID should be claimed via the annual corporate income tax return by filing the relevant forms.

03: Investments

• Investment deduction (basic, thematic and technology deduction)
  • The investment deduction is a deduction from the tax base, in addition to the normal tax depreciation on investments. A company can benefit from a one-off investment deduction on new, depreciable, tangible or intangible assets acquired or established during the taxable period, which are used in Belgium for the business activities. The investment deduction should be claimed via the annual corporate income tax return by filing the relevant forms.
  • As from 1 January 2025, a comprehensive reform of the investment deduction regime has been introduced based on a new three‑track system consisting of: (i) the basic deduction (10% and 20% for digital assets, exclusively for SMEs), (ii) the thematic deduction for green and digital investments (up to 40%), and (iii) the technology deduction for R&D and patents (13.5% as a one-off or 20.5% on the annual depreciation amount).
• R&D tax credit
  • An alternative to the technology tax deduction (identical application conditions), which gives rise to a direct reduction of the current-year tax liability, rather than a deduction from the taxable base. Crucially, if the credit cannot be used, it is refundable in cash after four years.
  • The tax credit is calculated by applying the relevant technology deduction percentage (13.5% as a one-off deduction or 20.5% on the annual depreciation amount) and multiplying the result by the standard Belgian corporate income tax rate of 25%.
• Tax exemption for regional subsidies
  • R&D grants and subsidies provided by regional authorities (such as VLAIO, Innoviris, or SPW) may, subject to conditions, be exempt from Belgian corporate income tax.   

While Belgium offers a broad range of innovation incentives, the following sections focus on the wage withholding tax exemption for researchers, the innovation income deduction, and the investment deduction and/or R&D tax credit, as these are among the most commonly applied measures in practice.

Are there specific industries that qualify or are there reliefs that require a particular industry focus?

All three federal R&D tax incentives are available across all industries and can, in principle, be claimed by companies of all sizes, including SMEs, provided the relevant eligibility criteria are met.

In practice, companies in research- or technology-driven sectors are often best positioned to benefit, including scientific R&D, pharmaceuticals, software development and computer programming, chemicals, machinery and equipment, food manufacturing, computer and electronic products manufacturing, and architectural and engineering activities. However, R&D should not be interpreted too narrowly: activities in more traditional sectors may also qualify where they involve a structured and innovative approach to solving technical challenges or developing new knowledge or solutions.

Belgium has established itself as one of the most prominent life sciences clusters in Europe, with a particularly strong position in pharmaceuticals, biotechnology and advanced medical research. Specifically within the broader Belgian ecosystem, Ghent has emerged as one of the most vibrant technology and entrepreneurship hubs in the country. The city combines academic excellence, a strong innovation culture and a growing network of investors and incubators, making it particularly attractive for start-ups and scale-ups.

Do you have to apply for incentives prior to conducting the research?

Requirements regarding pre-application differ across the various incentives.

• Partial wage withholding tax (WHT) exemption for researchers: Mandatory. R&D projects or programs must be notified to the Federal Science Policy Office (BELSPO) before their start date. Failure to meet this pre-notification deadline results in the irreversible loss of the incentive for that project.
• Innovation Income Deduction (IID): No prior application is required. The deduction is claimed through the annual corporate income tax return. However, it is available only where the company holds eligible intellectual property, such as patents, patent applications or qualifying copyright-protected software, and where the relevant income is attributable to that qualifying IP. For qualifying copyright-protected software, a BELSPO filing is not a formal legal requirement to claim the IID, but it is generally strongly recommended in practice, in line with the Belgian tax authorities’ approach, as supporting evidence that the software results from a qualifying R&D project or programme.
• R&D investment deduction / R&D tax credit: In principle, no prior application is needed. The claim is made through the annual corporate income tax return by filing the relevant forms.

Are there specific documentation or reporting requirements for claiming incentives?

Yes, Belgium's documentation requirements are extensive and strictly enforced.

• Partial wage withholding tax (WHT) exemption for researchers: Requires (i) the BELSPO pre-notification file; (ii) copies of the qualifying master's, PhD, or bachelor's diplomas for each researcher; and (iii) detailed time-tracking records. The 80% exemption applies pro rata to the actual time the researcher spent on the notified R&D projects, and this time allocation must be provable.   
• Innovation Income Deduction (IID): Requires Form 275 INNO, alongside (i) evidence of the qualifying IP right and the related innovation income stream (for example, patent documentation or, for copyrighted software, supporting evidence that the software results from a qualifying R&D project or programme), and (ii) extensive documentation of both the net innovation income computation and the modified nexus fraction.
• Investment deduction / R&D tax credit: Requires specific forms (Form 275U for the investment deduction, Form 275W for the R&D tax credit) to be filed as an enclosure to the corporate income tax return. As of 1 January 2025, under the new regime, a regional attestation is also required for the thematic and technology deduction.

• WHT exemption: A direct cash saving of 80% of the wage withholding tax due on the taxable salary of qualifying researchers (applied pro-rata to the time actually spent on R&D). This is not a tax deduction but a direct reduction of payroll tax payments. This incentive is claimed via a monthly process where the benefit is claimed via the monthly payroll tax return.
• IID: A tax deduction of 85% of the net income derived from the qualifying IP.  At a 25% corporate tax rate, this results in an effective tax rate of 3.75% on those profits. As of 2025, taxpayers may also opt to convert eligible current-year or carried-forward IID amounts into a non-refundable tax credit, subject to the applicable statutory conditions and reporting requirements. This option is not limited to taxpayers within the scope of the Global Minimum Tax, although it may be particularly relevant in that context. The claim for the regime is made through the annual corporate income tax return by filing the relevant forms
• Investment deduction (Technology deduction) / R&D tax credit: The benefit is based on the acquisition value of the qualifying asset. For the investments as from 1 Jan 2025 in environmentally friendly R&D assets and patents a 13.5% (one-off) or 20.5% (spread regime based on yearly depreciation amount) would be available. For the R&D tax credit, the obtained benefit should be multiplied by the 25% corporate income tax rate. The claim for the regime is made through the annual corporate income tax return by filing the relevant forms.

• WHT exemption: This incentive follows a monthly process. The benefit is claimed via the monthly payroll tax return as the costs are incurred. This is separate from the annual tax filing and is contingent on a mandatory pre-notification of the project to BELSPO.   
• IID and Investment deduction / R&D tax credit: These incentives are claimed via the annual corporate income tax return by filing the relevant forms. The claim is made, at the earliest, after the end of the financial year in which the income, expenses or investments arose.

The claimant must be a Belgian company or a Belgian establishment (branch) of a foreign company. 

• WHT exemption: The employees must meet the specific diploma requirements (master's, PhD, or specific bachelor’s degrees in relevant scientific fields). For researchers holding a qualifying bachelor's degree, the total exemption is capped at 25% of the exemption granted for researchers with a qualifying master's or PhD degree. This cap is increased to 50% for small companies. Exception: qualifying Young Innovative Companies (YICs) are exempt from the strict diploma requirement and may apply the exemption to technical and supporting staff directly involved in R&D activities.
• IID: The income must be derived by a qualifying taxpayer, namely a Belgian company subject to corporate income tax or a Belgian establishment of a foreign company subject to non-resident corporate income tax, provided that the relevant intellectual property has been allocated to that Belgian establishment. In addition, the income must relate to qualifying IP rights, including patents and supplementary protection certificates, plant breeders’ rights, orphan drug designations, data or market exclusivity rights, and copyright-protected computer software resulting from a qualifying R&D project or programme.
  
  Qualifying innovation income may include licence fees, embedded royalties, IP income derived from process innovation, compensation for IP infringement, and proceeds or gains from the transfer or disposal of qualifying IP rights, subject to the applicable conditions.
• Investment deduction/ R&D tax credit: Eligibility requires that investments be made in new, depreciable, (in)tangible assets, used in Belgium for the business activities and comply with the applicable track conditions and formal requirements.

For all Belgian incentives, the definition of R&D is aligned with the OECD's Frascati Manual.   

Eligible activities fall into three categories :   

1. Fundamental research
2. Applied (industrial) research
3. Experimental development

To qualify, the project must meet all five Frascati criteria: it must be novel (new), creative (based on original concepts), uncertain (as to the final outcome), systematic (planned and budgeted), and transferable/reproducible.   

Do the R&D activities have to be performed within the country to qualify? If not, is there a distinction made between the country where the claimant company is resident, EU countries, and non-EU countries?

• WHT exemption: This incentive is a reduction of Belgian income tax. The employee must be employed in Belgium and subject to Belgian taxes.   
• IID: The IID is based on the OECD modified nexus approach. It does not primarily hinge on where the R&D is physically performed (EU or non‑EU), but on the nexus between qualifying expenditures (own R&D and outsourcing to independent third parties) and overall expenditures (including related‑party outsourcing and IP acquisition costs), provided the qualifying IP income is included in the Belgian taxable result of the Belgian company or Belgian permanent establishment claiming the benefit.
• Investment deduction / R&D tax credit: The qualifying assets must be held and used exclusively for professional activity in Belgium by the Belgian company or the Belgian permanent establishment of a foreign company.

Does the tax authority have to review the resultant developments to allow a deduction or credit?

Technically, no. Belgium operates on a declaratory system under which companies apply the incentives in their tax or payroll returns themselves. However, the system includes strict notification requirements and options for pre-validation to guarantee legal certainty.

That said, the regime is not unchecked. Access to certain incentives is conditional upon procedural and substantiation requirements that may entail verification by competent authorities and/or ex post scrutiny by the tax administration. For example, the wage withholding tax exemption for researchers requires a timely prior notification of qualifying R&D projects/programmes to BELSPO, and compliance is commonly assessed during subsequent tax audits (for example, review of notification timing/content, researcher eligibility, and time allocation evidence).

Types of expenditure that qualify for R&D

The qualifying expenditure is different for each incentive:

• WHT exemption: Exclusively payroll costs. The benefit is based on the gross salary of the qualifying researchers.
• IID: The IID is calculated on net innovation income, meaning that gross innovation income must first be reduced by the relevant R&D costs directly connected to the qualifying IP right, including current-year costs and, through the recapture mechanism, relevant R&D costs from previous taxable periods. These costs may include personnel costs, depreciation, overhead costs and contract R&D costs, to the extent attributable to the relevant IP. In addition, the nexus fraction limits the deduction based on the proportion of qualifying R&D expenditure incurred by the taxpayer itself or outsourced to unrelated parties, compared with the overall expenditure incurred to develop or acquire the IP. For this purpose, overall expenditure also includes acquisition costs and R&D costs related to outsourcing to related parties, which are generally included in the denominator of the nexus fraction but not in the numerator.   
• Investment deduction/ R&D tax credit: Exclusively acquisition and investment costs. The benefit is based on the acquisition value of depreciable (in)tangible assets used for R&D.   

Are the incentives temporary or permanent?

They are permanent. All three main incentives are embedded in the Belgium's Income Tax Code (BITC 1992) and provide a stable framework for long-term R&D investment, though specific rates and conditions may be adjusted during periodic tax reforms.

How is the benefit obtained?

• WHT exemption: Immediate monthly cash‑flow benefit. The employer may retain (i.e. is exempt from remitting) up to 80% of the wage withholding tax due on the remuneration of qualifying researchers.
• IID: As a reduction of the taxable base in the annual corporate income tax return.
• Investment deduction: As a reduction of the taxable base in the annual tax return.   
• R&D tax credit: As a reduction of the current-year corporate income tax liability due (i.e. a tax credit). If the tax credit is larger than the tax due, the remainder is carried forward and may be refunded four years after claiming.   

Are the incentives incremental in nature or volume-based?

These incentives are predominantly volume‑based: benefits are determined by the qualifying base.

• WHT exemption (researchers): The process begins with verifying that your employees hold a qualifying degree, or that your firm qualifies as a Young Innovative Company. You must strictly register your R&D program with BELSPO before applying the benefit, as retroactivity is not permitted. Finally, apply the exemption in your monthly payroll while maintaining rigorous timesheets (track and trace) to defend the claim during future tax audits.
• IID (software): For copyrighted software, projects are frequently registered on the BELSPO portal to confirm that the software results from a qualifying R&D project or programme. The IID itself is claimed via the annual corporate income tax return.
• Investment deduction / R&D tax credit:
  • A company can claim the benefit directly by enclosing Form 275U (investment deduction) / Form 275W (R&D tax credit) to its corporate income tax return (Biztax) for the year in which the investment was made.
  • For the thematic and technology deduction, an attestation from the regional tax administration is required. The request must be filed with the competent authority for the relevant investment category. For investments acquired or created from 1 January 2025 through 31 December 2026, transitional filing rules apply.

Is there a cap on the maximum level of benefit that can be received per year, per company, or for all the qualifying taxpayers together?

In principle, Belgium's main federal R&D incentives do not have a general monetary cap.   

Are tax credits refundable?

Yes. The R&D tax credit is refundable. If it cannot be used against the yearly CIT liability due, it may be carried forward and the remaining unused balance becomes refundable after four years, subject to the applicable statutory rules.

Can surplus incentives be carried back or forward and used in years other than the origination years?

• Carry-back: No.
• Carry-forward:
  • WHT Exemption: Not applicable, as it is an immediate monthly cash saving.   
  • IID: Yes. Any unused deduction can be carried forward indefinitely.   
  • Investment Deduction: Yes. Unused investment deductions may be carried forward indefinitely.
  • R&D tax credit: Yes. Unused tax credits may be carried forward for 4 years before a request for a refund could be requested with the Belgian tax administration via the CIT return filing.

Are there any other types of limitations?

While there is no general monetary cap, specific conditions and limitations do apply in relation to the investment deduction / R&D tax credit:

• Basic deduction: Exclusively available for SME companies. This implies that for the most recent fiscal year, no more than one of the following criteria may be exceeded: (i) average annual headcount: 50; (ii) annual revenue excluding VAT: € 11.25m; (iii) total assets: €  6m
• Basic deduction: Investments may not be based on or use substances harmful to the environment and climate, unless there would be no comparable carbon-emission-free alternative available.
• Increased basic deduction for digital investments: For SMEs, certain qualifying digital investments may benefit from an increased basic deduction, provided that the investment is included in the dedicated investment list published by Royal Decree. Qualifying investments include a.o. digital assets supporting payment and invoicing systems, accounting and financial management, GDPR compliance, client acquisition, or the digital management of commercial and contractual relationships.
• Thematic deduction: The thematic deduction applies to investments included in the dedicated investment list published by Royal Decree. Qualifying investment include a.o. investments in efficient energy use and renewable energy, carbon-emission-free transport, environmentally friendly investments, and digital investments supporting those thematic categories. Additional conditions apply as well: (i) the investment amount must exceed EUR 1,000; (ii) the investment may not unreasonably harm the environment; and (iii) the company may not be an enterprise in financial difficulties or subject to recovery orders. Specifically for investments on the energy list, the internal rate of return may not exceed 13% and the payback period must be longer than three years.

Are the R&D costs deductible when deriving taxable income? Are costs required to be capitalized for tax purposes?

All the incentives described are granted in addition to the standard 100% deduction of all underlying R&D costs (such as salaries, depreciation and consumables) as normal business expenses.   

With regard to capitalization, R&D costs are typically treated as follows:

• Research costs are generally expensed immediately.
• Development costs can either be expensed immediately or capitalised as an intangible asset and depreciated over at least three years.