The strategic importance of R&D tax incentives: why Europe cannot afford to fall behind

To answer these questions, we spoke to Bert Boerrigter, Tax Director and head of the R&D community at Forvis Mazars Netherlands. Through his work with a wide range of companies, he sees how tax incentives influence investment decisions and the role they play in stimulating innovation.

'Innovation has long ceased to be a side issue for policymakers. It is central to economic growth, strategic autonomy and future employment. The countries that create the right conditions for innovation today will reap the benefits for decades to come,' says Boerrigter.

R&D incentives are about more than tax

Schemes such as the Dutch WBSO and the Innovation Box are often viewed mainly from a tax perspective. According to Boerrigter, that is too narrow an approach. The schemes are designed to encourage companies to invest in R&D, attract highly qualified staff, and build and retain intellectual property in the Netherlands.

The WBSO reduces the wage costs of employees who carry out qualifying R&D activities by lowering the payroll taxes that must be paid. The Innovation Box can then offer a lower effective tax rate on qualifying innovation-related profits.

'Most importantly, these measures support the innovation cycle as a whole: from the first engineer writing code to the commercialisation of a technology or software platform,' Boerrigter explains.

For companies, the schemes can provide the financial headroom to develop further, recruit new staff and expand internationally. This is particularly important in sectors where R&D investment is high and the outcome uncertain, such as software companies developing AI applications, medtech companies building diagnostic technology and high-tech companies working on new semiconductor components.

After all, innovation involves risk. Projects can be delayed or fail, while the costs have already been incurred. Tax incentives can help absorb those risks and encourage companies to keep investing.

The effects can also be felt beyond the company itself. R&D leads to new knowledge, high-quality jobs and collaboration with universities and specialist suppliers. In this way, investment by individual companies can contribute to the development of an entire sector.

The Innovation Box: tax benefits linked to R&D

The Innovation Box is sometimes seen as a tax-planning instrument. According to Boerrigter, that does not do justice to how the scheme is designed. The tax benefit is linked to genuine innovation activities, not solely to where intellectual property is held.

A key element is the nexus approach of the Organisation for Economic Co-operation and Development (OECD). This links the tax benefit to qualifying R&D activities and to the extent to which the taxpayer carries out those activities itself.

'The nexus approach is essential. The benefit is tied to the innovation activities that generate the income. The scheme is intended to stimulate genuine innovation where that innovation actually takes place, not to facilitate artificial structures,' Boerrigter stresses.

This also plays a part in assessing Dutch innovation policy. Tax incentives may cost the government tax revenue in the short term, but this can be offset by investment, jobs, intellectual property and future economic growth.

The use of the Innovation Box by large companies regularly prompts debate about whether the scheme is achieving its aim. Boerrigter understands why these questions are asked, but believes the assessment should go beyond the size of the tax benefit.

'The question is not only who benefits from the tax advantage today. You also have to look at the contribution to high-quality R&D, employment, technological leadership and future economic growth,' he says.

According to Boerrigter, the Dutch high-tech manufacturing industry shows what long-term investment in research, automation and precision technology can deliver. Companies once known as traditional industrial businesses have, partly through investment in R&D, developed into advanced technology companies. Retaining that knowledge and those activities matters both to the companies themselves and to the Dutch economy.

International competition for R&D and talent

Innovation increasingly disregards national borders. Companies collaborate with foreign universities, spread development activities across several countries and sell their technology worldwide. As a result, decisions about where to locate R&D activities are becoming ever more important.

When establishing a new development centre, companies consider a range of factors, including the availability of talent, research infrastructure, funding, market access, regulation and tax incentives.

'Companies rarely look at a single factor in isolation. They assess the overall business climate and weigh up the various elements together,' says Boerrigter.

The availability of highly qualified staff plays an important role. Researchers, engineers and software developers are in demand internationally. A favourable tax climate can help create an attractive business environment, but it is not sufficient on its own.

This is certainly true in sectors such as biotech and medtech, but also in photonics and chips. There, years can pass before a product reaches the market, while substantial investment is needed in the meantime. Financial headroom and access to capital are then vital for development to continue.

Investors, too, look at the quality and scalability of innovation programmes. Tax incentives can strengthen the business case, but ultimately a company must be able to develop its technology successfully and bring it to market.

The Netherlands is well placed in this respect, with leading research institutions, technical expertise, digital infrastructure and an internationally oriented business community. That position cannot be taken for granted, however. Companies can also choose to make their future investments in other countries.

'Success in innovation is cumulative. Ecosystems take years to build, but can lose momentum far more quickly,' Boerrigter warns.

Europe makes competitiveness a main priority

Europe's innovation challenge is rising ever higher up the policy agenda. The Draghi report identified closing the innovation gap as a key priority for European competitiveness. With the Competitiveness Compass, the European Commission has developed this ambition further into an agenda for innovation, investment and removing barriers to growth.

European tax policy is also receiving more attention in the context of competitiveness. In June 2026, the European Commission presented the Tax Omnibus package, aimed at simplifying the European tax framework. One of the proposals concerns a common minimum standard for the tax treatment of R&D-related investment in tangible assets, including full and immediate expensing.

According to Boerrigter, this shows that innovation is gaining an increasingly prominent place in European economic policy.

Competition from other regions remains fierce. The United States combines federal and state-level incentives, while countries in Asia are investing heavily in areas such as semiconductors, artificial intelligence and advanced manufacturing.

According to Boerrigter, a competitive innovation climate therefore requires more than tax benefits alone. Strong universities, access to finance, good infrastructure and clear regulation matter just as much. Companies must also be able to trust that policy will remain sufficiently stable.

R&D projects often run for five, ten or even fifteen years. If the tax conditions change significantly during such a project, this can affect investment decisions. Predictability is therefore an important part of an attractive business climate.

International expertise supports investment decisions

For internationally operating companies, it is becoming more important to compare tax incentives across different countries. Which schemes are available, what conditions must activities meet, and how much weight do the tax benefits carry in choosing a particular location?

Through the Forvis Mazars Global Innovation Incentives Hub, companies can compare R&D tax credits, grants and other innovation incentives in different countries. This helps them explore opportunities to expand existing R&D activities or establish new development centres.

Forvis Mazars Netherlands is part of the international Forvis Mazars network, which operates in more than 100 countries and territories. This allows Dutch specialists to work with colleagues abroad and combine their local tax expertise with insight into foreign schemes.

'Innovation has become a global decision-making process. Companies rarely look at one country in isolation any more. By combining local expertise with our international network and tools such as the Global Innovation Incentives Hub, we can help clients make well-informed decisions and seize opportunities in different countries,' says Boerrigter.

For companies that spread their R&D activities across several countries, this combination of Dutch expertise and international knowledge offers a practical advantage. It is not only about making use of tax benefits, but also about understanding the conditions and the consequences of investment decisions.

The Netherlands cannot stand still

The Netherlands holds strong positions in software development, high-tech manufacturing, engineering, life sciences, photonics and semiconductor technology. Maintaining those positions requires continued investment, as well as policy that companies can rely on for the long term.

According to Boerrigter, this places an important responsibility on both government and business. Governments set the framework, research institutions develop new knowledge, and companies translate it into commercial applications. Investors provide the necessary capital.

'The aim is not to minimise tax. The aim is to stimulate innovation that generates future jobs, productivity and economic value,' Boerrigter concludes.

As AI, deep tech and digital transformation reshape entire sectors, the ability to attract and retain high-value economic activity is becoming ever more important for Europe. R&D tax incentives can contribute to this, provided they form part of a broader and reliable innovation policy.

For Europe, then, the question is not only how attractive the existing schemes are, but also whether it can afford to fall behind countries that are investing heavily in innovation.