New bill proposes changes to notification procedure for R&D projects/programs for R&D wage tax exemption

A draft bill submitted to the Belgian parliament on 19 September 2023 proposes some changes to the notification procedure for research and development (R&D) projects/programs in the context of the application of the wage withholding tax partial exemption for researchers (“the R&D wage tax exemption”).

The draft bill is designed to provide greater clarity and flexibility for companies wishing to claim the R&D wage tax exemption, while maintaining financial support for such projects. The three most significant proposed amendments are:

• A two-stage notification procedure for R&D projects/programs;

• The concept of an R&D centre; and

•  Reinforcement of the role of BELSPO.

The draft bill is subject to the parliamentary approval process and it is unclear when or even whether it will become law. If legislated, the amended procedure would take effect for all activities as from 1 January 2024. New R&D projects/programs that are pre-notified would be subject to the new notification procedure as from that date and would be required to be updated annually. For already notified projects/programs, the current regime would remain in effect until the company renews or updates the notification on or after 1 January 2024.

Two-stage notification procedure for R&D projects/programs

The current initial “upfront” notification requirement would be maintained. The notification would be adjusted so that the benefit could be claimed as from the month during which the notification was made. This would overcome the very strict position of the Court of Cassation in its January 2023 ruling that the relevant R&D project/program must be notified to BELSPO prior to the effective start date of the R&D project/program for the exemption to apply, which was reflected in administrative guidance, in the form of Circular 2023/C/49, published by the Belgian tax authorities on 27 April 2023.

A second “post factum” notification would be required after the end of the year, containing the following information:

• Identification of the different projects with a short description of the project’s goal;

• Reference to the notified program (where applicable);

• Qualification as fundamental research, industrial research, or experimental development with a short description of the characteristics resulting in this qualification;

• List of the employees who have been working on the project; and

• Start date and expected or actual end date of the project.

Concept of an R&D centre

The bill introduces criteria for the recognition of research centres within enterprises, which would be exempt from the upfront notification, but not from the post factum notification requirement.

An R&D centre should include at least 50 full-time equivalents (FTEs) or a minimum of five FTEs if that represents at least 10% of the total workforce, and conduct R&D activities as main activity.

The recognition would be valid for five years and the procedure for recognition would be defined in a royal decree.

Reinforcement of the role of BELSPO

BELSPO would remain the competent authority to validate the nature of the activities and the degrees that are eligible for the benefit.

A royal decree would further clarify the exact procedure to obtain binding advice from BELSPO in order to avoid any misunderstandings over the status of the advice given.