Looking to innovate? The government will back you financially.
- KVK Redactie
- 5 Jun 2023
- Edited 24 Nov 2022
- 3 min
- Managing and growing
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 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 a 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. You should also use the organisational (in Dutch) to find out whether you are eligible to apply for the WBSO, and how this might pay off for you.
Lower profit tax with the innovation box
If you are launching innovative new products in the market based on your own R&D, you may, in some cases, be able to use the innovation box. This scheme is of interest only to companies liable for corporate tax, such as Dutch BVs (private limited companies). The innovation box reduces corporate tax for profits from innovative activities. For this, an effective tax rate of 9% has been applied. The Dutch tax authorities are responsible for implementing the innovation box.[Einde van tekstterugloop]If you would like to use the innovation box, you require an R&D declaration and, in some cases, a patent. You can check the website of the tax (in Dutch) to find out how it works and how the innovation box can benefit your business.
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 want to apply under the scheme 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:
Research and development in conjunction with other businesses ( in Dutch). 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 (in Dutch).
Read more about the MIT (in Dutch) and how to apply for it.
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 . This will reduce your income tax or corporate tax. Check the Energy (in Dutch) if your investment entitles you to this.
Sometimes you can benefit from making investments in order to reduce harmful environmental impacts. Investments included on the Environmental (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/Vamil (in Dutch) also applies 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 (in Dutch).
WBSO for process innovation
The WBSO scheme (see above) can also reduce the costs for process innovation. The publication ‘Procesinnovatie - Belastingvoordeel voor innovatieve ondernemers’ (‘Process innovation: Tax Benefit for Innovative Business (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 (in Dutch).