WBSO: Creating an innovative, competitive and enterprising economy. Innovation pays in the Netherlands
Innovation, knowledge and entrepreneurship are considered to be important for stimulating the economy and addressing social issues. A wide range of programs designed to support innovation and research has been established in the Netherlands. One of the largest incentives budgets is reserved for an innovation incentive granted under the Research and Development (Promotion) Act (Wet bevordering speur- en ontwikkelingswerk – WBSO).
WBSO: a payroll tax reduction via the WBSO
The WBSO is intended to stimulate R&D activities of companies located in the Netherlands. The incentive is essentially a payroll tax ruling concerning employees involved in R&D, reducing payroll tax for the employer.
Employers engaged in R&D activities are entitled to a payroll tax reduction via the WBSO. The tax deducted from the employee’s salary is not affected, and payroll tax is treated as having been paid in full. The reduction amounts to 32 percent (for innovative starters 40 percent) of the relevant payroll costs relating to R&D, up to a maximum of EUR 350,000, and 16 percent for any excess. Development of products, production processes and/or software, executed by employees within the EU, is eligible for the WBSO reduction.
In addition to wage costs, other R&D related costs and expenses associated with R&D can be submitted for the WBSO incentive as well. Eligible costs and expenses can involve amongst others: all (raw) materials of prototypes developed for R&D-testing but also R&D-equipment needed for R&D-activities funded by WBSO.
WBSO and Digital Infrastructure
For datacenters a number of different types of R&D can lead to application of WBSO, including, but not limited to:
As regards software development we like to add the following. Companies that develop technically new software can apply for the WBSO. The R&D is mainly characterized by an iterative character. Actually solving technical problems and demonstrating new information technology working principles are applicable activities for the WBSO. In practice this consists out of actual programming of new algorithms, engines, libraries and new software components using a formal programming language like Java, C#, Scala etc.. In case of software development it should be made clear that it is likely that software related technical difficulties will be solved by the employees/programmers on the payroll of the applicant.
A software development project has to meet the following criteria to be applicable for the WBSO:
Your WBSO incentive also provides an entry ticket for the innovation box, which we will address in our next blog.
David Paul Doornbos, Plus Projects +31703012420, firstname.lastname@example.org
Willem Jan Paardekooper, KPMG Meijburg & Co, +31889091471, email@example.com