Netherlands: Drafted R&D Incentive Rules Benefit Startups

Current R&D incentives are grouped into three separate benefits - a reduction in labor costs (WBSO), a reduction in R&D expenses and a reduction in the effective corporate tax rate.

For startups, the reduction in R&D expenses can be of limited application because, currently, it entitles Dutch companies to deduct 60% of these expenses from its taxable income and, since most startups are in loss-making position, they can’t benefit. As a result, the incentive misses the mark. It fails to help the very companies that need it, those that have the greatest R&D spend and need the greatest support.
 
In order to assist startups, the Dutch government has proposed that the incentive will be integrated with the WBSO system so that it results in a reduced wage withholding tax and therefore will have a tax benefit to all companies whether or not they are in a loss making position or not.

It is anticipated that the changes will take effect at the beginning of 2016.