Government aid for innovation. Reduction of withholding tax payment for scientific research and development

Transcription

1 Government aid for innovation Reduction of withholding tax payment for scientific research and development

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3 Contents Partial exemption of withholding tax payment for research and development 3 Exemption 4 Who is eligible for this exemption? 5 Academic staff 5 Collective research by recognised scientific institutions 5 Collaboration schemes with academic or recognised scientific institutions 5 Young Innovative Companies 5 Researchers with specific diplomas (Doctors, Civil Engineers or Masters) 5 What is the amount of the exemption? 7 Formalities 8 Our approach 10 Investigating whether your company employs staff who are eligible for this reduction. 10 Creating a file with the necessary statements of proof. 10 Claiming repayment of the withholding tax of previous revenue years. 10 Fiscal audit 10 Why SD Worx? 11 3

4 Partial exemption of withholding tax payment for research and development Exemption In 2006, Belgium introduced a special tax system for research and development in the private sector, with a partial exemption of the withholding tax payment. The purpose of this system is to strengthen the competitive position of our country for investments in research and development. This was achieved by granting aid directly towards the salary costs related to research and development in Belgium. The system for partial exemption of the withholding tax payment is very simple and efficient. It consists of not having to pay the Belgian Federal Public Service for Finances a part of the withholding tax which is normally deducted from salaries. This exemption provides financial aid that is available for your company immediately when they hire research and development employees. This brochure explains how we can help you benefit from this tax benefit. 4

5 Who is eligible for this exemption? Academic staff Universities and colleges that pay or grant remunerations to assistant researchers, and certain scientific funds that pay or grant remunerations to post-doctorate researchers. Collective research by recognised scientific institutions Recognised scientific institutions who pay or grant remunerations to assistant researchers or post-doctorate researchers. Collaboration schemes with academic or recognised scientific institutions Companies that pay or grant remunerations to researchers who perform research or development projects or programmes as part of collaboration schemes with universities, colleges, certain scientific funds or recognised scientific institutions. Young Innovative Companies Companies that can be categorised as Young Innovative Company (YIC) and which pay or grant remunerations to scientific staff who are hired as employee for this company. A YIC is a company that: performs research projects; is small, in accordance with article 15 of the Belgian Company Law; exists less than 10 years before 01/01 of the year when the exemption of withholding tax payment is granted; was not established as the result of a consolidation, restructuring, expansion of a former activity or an acquisition of such activities; has spent funds for research and development which amount to at least 15% of the total costs of the preceding taxable period. Researchers with specific diplomas (Doctors, Civil Engineers or Masters) This exemption applies for companies that pay or grant remunerations to researchers who are employed in research or development projects or programmes, and who have obtained one of the following diplomas: Doctor in applied sciences Doctor in exact sciences Doctor of (veterinary) medicine Doctor in pharmaceutical sciences Civil Engineer Masters 5

6 The following Master diplomas are eligible: It concerns Master diplomas or an equivalent diploma in the fields of study (or combination of fields of study) of: Flemish Community French-speaking Community Sciences Applied sciences Applied biological sciences Engineer Agricultural and biological engineer (Veterinary) medicine Pharmaceutical sciences Biomedical and pharmaceutical sciences Biomedical sciences Industrial sciences, technology and nautical sciences Industrial sciences, Industrial agricultural sciences Biotechnology Architecture Architecture and urbanism Product development The German-speaking Community does not issue any specific Master diplomas at the current time. 6

7 What is the amount of the exemption? The exemption percentages have changed regularly over the years. From 1 July 2013, the exemption amounts to 80% of the deducted withholding tax of all categories. In recent years, the following percentages applied for researchers with specific diplomas: 25% from 1 January 2006; 65% from 1 July 2008; 75% from 1 January Starting in 2014, the granted exemption will be subject to a prior application with the Federal Government Programme Department for Scientific Policy. Research and development projects or programmes that already exist on 31/12/2013 only need to comply with the application procedure from 01/01/2015. An example with figures Employee John Doe is employed as process development engineer. In this capacity, he is working on a project to improve the energy efficiency of the current production process. Mr Doe holds a diploma in civil electromechanical engineering. He receives a gross salary of 7,000 EUR/month, from which EUR NSSO contribution is deducted and 2, EUR withholding tax is deducted according to the normal scale. Mr Doe s employer will only need to pay EUR of the 2, EUR to the FPS Finance. He can keep the rest which means he enjoys an immediate financial aid amounting to 2, EUR. 7

8 Formalities An employer who wishes to benefit from this exemption must prepare a file with the necessary statements of proof and which is available for the FPS Finance. This file must contain the following information: the identity of the employer, stating the national number or the reference number as debtor of the withholding tax; for every employee: full identity; national number; dates of entering and leaving service as stated in the DIMONA declaration; the confirmation that an employment contract was concluded or an employment decision was made; the amount of the paid gross taxable remunerations; the amount of the withholding tax deducted from those remunerations and the detailed calculation of the withholding taxes. The projects or programmes are only eligible if the Federal Government Programme Department for Scientific Policy has been notified. This notification must contain all the following information: One-time notification: Identification of the company; Description of the project or the programme; Start date and the scheduled end date of the project or the programme. 8

9 AND: With regard to The proof that remunerations paid to assistant researchers by universities and colleges remunerations paid to post-doctorate researchers by the funds for scientific research FFWO/FFRS, FWO or FRS-FNRS remunerations paid to assistant researchers or post-doctorate researchers by the recognised scientific institutions remunerations paid by companies to researchers who are employed in research or development projects or programmes in the context of a collaboration agreement with universities, colleges or recognised scientific institutions remunerations paid to scientific staff employed in Young Innovative Companies remunerations paid by companies to researchers with specific diplomas (see 2 of art , WIB 92) and employed in research or development projects or programmes the employee in question is either an assistant researcher or post-doctorate researcher the employee in question is employed as researcher in research or development projects or programmes the employee in question is either a researcher, a research technician or an R&D project manager the employee in question, 1. is a researcher and holds the required diploma; 2. he is employed in research or development projects or programmes A company that wishes to apply the exemption can, from 01/01/2014, ask the PFOW whether the submitted projects or programmes fall within the scope of this law. If this is the case, the PFOW will give a binding recommendation for this request. 9

10 Our approach SD Worx payroll service applies the reduction to the payroll and creates the necessary declarations for the withholding tax. However, we can also assist you with: Investigating whether your company employs staff who are eligible for this reduction. Claiming repayment of the withholding tax of previous revenue years. We can investigate whether certain research or development projects or programmes are eligible for the reduction of withholding tax payment. Within the statutory period for claiming repayment of the withholding tax (5 years from 01/01 of the relevant revenue year), we can assist you with the preparation of a notice of opposition and a justification file. In addition, we can also investigate whether the employees who are working on this project are eligible for the reduction. We can ask the PFOW for a binding recommendation regarding the application of the exemption. Fiscal audit We can audit the exemption that you currently apply, in the light of a possible tax audit in the future. Creating a file with the necessary statements of proof. We can assist you with a tax audit in this respect. We can assist you when creating the registration file for the FPS of Scientific Policy. We can assist you when creating the file that you must have available as employer for the FPS Finance. 10

11 Why SD Worx? SD Worx, Belgium s largest HR consultancy firm, offers a full range of services in the field of staff employment. We offer top quality in all HR disciplines. We advise you on Staffing, Development, Performance, Compensation & Benefits, and Payroll. We provide all the legal advice you need and help you streamline your administration. Our Full-Circle view on Human Resources has its roots in the strong conviction that HR can make a measurable contribution to your organisation s results. Effective and efficient HR processes are key to achieving your goals, as is inspiring leadership. Your HR policy as a whole will only be successful if your leaders effectively integrate the policy and propagate it among their teams. In return, leaders must have input into HR policy and strategy. This combination of efficient HR processes and leadership will produce sustainable results for the organisation. Result Leadership HR processes Staffing Payroll Comp & Ben Performance Development Result = HR processes x Leadership Regardless of which HR process you want them to focus on, our 350 consultants always take their departure from the Full Circle view when offering you their knowledge and experience. They have an eye for the reciprocity between different HR processes and leadership. The Full Circle view underlies all training courses we offer, and is the cornerstone of our result-oriented consultancy. We offer you pragmatic solutions in the field of automation, and implement your in- and outsourcing policy. Our expertise relies on research and market surveys conducted by our research centre. Outsourcing Automation Consultancy Training Research 11

12 Want more information? You can always contact the SD Worx tax consultants. They are part of our consulting division. They all use proven methodologies and are supported by the know-how and experience of their 250 colleagues-consultants. This means they understand how all your HR processes are interrelated and they can propose solutions that contribute to your corporate objectives. Contact : taxconsulting@sdworx.com