Innovation box

Definition

The innovation box is a scheme within corporate income tax (vpb) under which profit attributable to innovative activities is taxed at a reduced rate of 9%, instead of the regular corporate tax rate. Where the WBSO lowers wage costs during the development of an innovation, the innovation box applies once that innovation starts generating profit — together, the two schemes cover the entire life cycle of an R&D project. To apply the innovation box, you need an entry ticket: for most SMEs, that is an S&O declaration (WBSO) for the intangible asset in which the innovation is embodied. Larger companies often need an additional ticket alongside the S&O declaration, such as a patent. The WBSO is therefore valuable not only in its own right but also as the key to the innovation box. Because determining which share of profit is attributable to the innovation is complex, this is usually established together with an accountant or tax adviser, often in consultation with the Tax Administration. The innovation box is particularly relevant for companies with profitable products or software that stem from their own qualifying R&D work. Without a valid S&O declaration as a basis, access to the innovation box is not possible for most companies.

Frequently asked questions

What is the innovation box?

The innovation box is a corporate-tax scheme under which profit from innovative activities is taxed at a reduced rate of 9%, instead of the regular corporate tax rate.

Do you need an S&O declaration for the innovation box?

For most SMEs, an S&O declaration (WBSO) is the entry ticket to the innovation box; larger companies often need an additional ticket, such as a patent.

What is the difference between the WBSO and the innovation box?

The WBSO lowers your wage costs while developing an innovation, while the innovation box lowers the tax on the profit you later earn from that innovation.