Taxpayers eligible for the innovation box may opt for a flat-rate calculation of the innovation box benefit in the year an intangible asset is created and in the two subsequent years. The 2027 Tax Plan expands this provision.
Innovation Box
Corporate income tax includes a special scheme for taxpayers who, through the WBSO, produce a qualifying intangible asset developed in-house. This scheme is called the Innovation Box. As a result of applying the Innovation Box, gains from a qualifying intangible asset developed in-house are effectively taxed at approximately 9%.
In practice, a customized agreement is often reached with the Tax Authority to determine the benefits derived from a qualifying intangible asset. An alternative to a customized agreement with the Tax Authority for determining the benefits derived from a qualifying intangible asset is to apply the flat-rate scheme.
Under the flat-rate scheme, the benefit derived from the intangible asset to which the Innovation Box applies is set at 25% of the profit before application of the Innovation Box, with a maximum of €25,000. On balance, the flat-rate scheme thus results in a maximum savings of over €4,000 per year. This flat-rate scheme can be applied in the year the intangible asset is generated and the two subsequent years.
Expansion of the flat-rate scheme
Currently, the flat rate is 25% of the profit before application of the innovation box, up to a maximum of €25,000. In the 2027 Tax Plan, this maximum will be increased to €100,000. On balance, the flat-rate amount will thus result in a maximum savings of over €16,500 per year. The other conditions remain unchanged.
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