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Spotlight on Corporate Income Tax The ‘Innovation Income Deduction’ (IID) replaces the previous ‘Patent Income Deduction’ (PID) and offers a broader scope. It took effect retrospectively from 1 July 2016. This deduction allows a tax deduction up to 85% of the net income from innovation in corporate income tax or non-resident income tax (companies). Whereas the PID was limited to patents, IID also considers other intellectual property (IP) rights, such as copyright-protected software and plant breeders’ rights. Additionally, under certain conditions, the sale of IP or services based on IP could be considered income for the purposes of IID.
Software, including derivatives or adaptations, is considered to be copyright-protected if it results from a research and development project or program within the meaning of art. 275 ITC (Income Tax Code), in particular the company withholding tax subsidy for knowledge workers. Copyright-protected software that has generated income before 1 July 2016 is excluded from the deduction for innovation income.
Charlotte Verwee
Senior Tax Consultant – Master in Tax
Jasper Van Hirtum
Senior Innovation Consultant – PhD in Mathematics
What are R&D Tax Credits and how can I benefit from them?
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