Looking to innovate? The government will back you financially

If you are developing innovative products, are involved in process innovation in your business, or looking to improve sustainability, it is useful to know that the government promotes innovation in SMEs through grants, subsidies, and tax regulations. Under these grants and schemes, you will be refunded a portion of your expenses, or receive a tax credit.

The government funds innovation through various schemes for research and development, innovative products, process innovation, and energy and environmental investments. Find out what your business is eligible for. 

Lower R&D costs under the WBSO 

If you or your employees are investing time in research and development (R&D), the Wet Bevordering Speur- en ontwikkelingswerk(Research and Development (Promotion) Act, WBSO) could be of interest to you. This law provides for the option to reduce your wage costs related to research and development. If you are a business owner for income tax purposes and spend a minimum of 500 hours on research and development work per year, you can deduct a set annual amount from your taxable income. You can also apply for a reduction in payroll tax for employees involved in innovation under the WBSO, provided you are implementing innovative new technologies for your business. This will be assessed by the Rijksdienst voor Ondernemend Nederland (Netherlands Enterprise Agency, RVO). If your application is approved, you will receive an R&D declaration. Use the organisational tool (in Dutch) to find out whether you are eligible to apply for the WBSO, and how it might pay off for you. 

Lower profit tax with the innovation box 

Are you launching innovative new products in the market based on your own R&D? You may be able to use the innovation box. Only companies liable for corporate tax, such as Dutch bvs (private limited companies), can use this scheme. The innovation box reduces corporate tax for profits from innovative activities. For this, an effective tax rate of 9% is applied. The Netherlands Tax Administration (Belastingdienst) is responsible for implementing the innovation box. If you would like to use the innovation box, you need an R&D declaration and, in some cases, a patent.

If you want to talk to someone about applying the innovation box, you can find contact details on the website of the Tax Administration (in Dutch). 

SME Innovation Incentive (Regional and Top Sectors) (MIT scheme) 

If you are an SME owner and would like to take on innovation projects together with partners, and you are required to invest in research and development but have trouble financing your plans, the MIT scheme may be just what you need. You may also apply if you operate in any of the top sectors and are looking for money to research the feasibility of a particular innovation or conduct research together with other business owners. 

There are three options for grants and subsidies: 

  • Investigate the feasibility  of a new product. You might do this through a market survey, competition analysis, or technical experiment. 

  • Research and development in conjunction with other businesses (R&D partnership). This might include an investigation or experiment aimed at new product development. You can take advantage of this scheme with a minimum of one other business owner.

  • If you are hiring the services of a third party, such as a research or educational institution, you can request a knowledge voucher. 

The MIT scheme is allotted a certain sum by the Dutch government each year. You can apply as long as this sum has not expired. Read more about the MIT scheme and how to apply for it. 

Process innovation 

If you would like to innovate or improve your business processes by acquiring new business assets, the schemes described below may be of interest to you in addition to the WBSO scheme. 

Energy-Saving Investment Credit (Energie-investeringsaftrek, EIA) 

If you invest in specific energy-efficient business assets and sustainable energy, you can deduct a portion of the investment costs from your taxable profit under the EIA scheme. This will reduce your income tax or corporate tax. Check the Energy List (in Dutch) if your investment entitles you to this. 

Environmental investments 

Sometimes you can benefit from making investments in order to reduce harmful environmental impacts. Investments included on the Environmental List (in Dutch) result in an additional deduction on the Environmental Investment Credit (MIA), or you may be able to write off more quickly (random write-off of environmental investments/Vamil). This will reduce your income tax or corporate tax. The MIA scheme  and the VAMIL scheme also apply to other environmental measures in the industrial sector, agriculture, and the transport industry. 

Business owners must comply with a number of different climate rules. Check which ones apply to your business and whether you can use any of the schemes

WBSO for process innovation 

The WBSO scheme can also reduce the costs for process innovation. The publication ‘Procesinnovatie - Belastingvoordeel voor innovatieve ondernemers’(Process innovation: Tax Benefit for Innovative Business Owners, in Dutch) contains a number of compelling examples of process innovations that received financial support under the WBSO. 

If you would like to learn more about the various grants and schemes available, check out the options