Key takeaways
- A young innovative company can keep 80% of the payroll withholding tax withheld on the remuneration of its research staff, under article 275/3 of ITC 92.
- The status requires a company incorporated less than 10 years ago, small in size, and spending at least 15% of its total costs for the previous financial year on R&D.
- Unlike the general R&D exemption regime, no scientific degree is required for staff assigned to the project.
- Prior notification of the research project to BELSPO is mandatory before starting its execution, since the law of 17 June 2013.
- Losing the conditions during the year ends the exemption from the following month, which requires annual monitoring of the thresholds.
A young innovative company that employs researchers can durably reduce its R&D wage bill without waiting for a tax credit or a grant: it directly keeps 80% of the payroll withholding tax it withholds on that staff's remuneration, instead of paying it over to the Federal Public Service Finance. This mechanism, provided for in article 275/3 of the Income Tax Code 1992 (ITC 92), specifically targets recent, small companies that do not yet employ researchers holding the degrees required under the general R&D exemption regime.
Understanding the eligibility conditions, how the exemption is calculated and the BELSPO notification procedure helps avoid two common pitfalls: claiming the exemption without meeting all the cumulative conditions, or conversely letting a real tax advantage slip by through unfamiliarity with the scheme.
What a young innovative company means for tax purposes
The term "young innovative company" does not designate an administrative label issued by a region or an approval body. It is a tax qualification, defined in article 275/3, § 1, paragraph 3, 2°, of ITC 92, which opens a simplified route to the R&D payroll withholding tax exemption, without requiring the scientific degrees needed under the general regime.
That general regime, for its part, reserves the exemption for the remuneration of holders of a doctorate, master's or bachelor's degree in certain scientific and technical fields. A young company starting an R&D project with a smaller team, not necessarily holding those degrees, would remain excluded from this advantage without the specific regime for young innovative companies.
The cumulative conditions to qualify as a young innovative company
To apply the exemption under the specific regime, the company must cumulatively meet all of the following conditions at the close of each financial year for which it claims the advantage:
Cumulative conditions for a young innovative company
Age of the company
The company must have been incorporated less than 10 years before 1 January of the relevant taxable period.
Limited size
The company cannot exceed more than one of the following three thresholds: an average annual headcount of 50 workers, annual turnover excluding VAT, or balance sheet total, under the small company criteria of article 15 of the former Companies Code, as it stood before its amendment by the law of 18 December 2015.
R&D intensity
The company's research and development spending must represent at least 15% of its total costs for the previous taxable period.
No opportunistic restructuring
The company cannot result from a concentration, a restructuring or an extension of a pre-existing activity aimed at artificially capturing the advantage.
Real, notified research project
The company must carry out a basic research, industrial research or experimental development project or programme, notified to BELSPO before it begins.
These conditions are assessed at every taxable period, not just once when the company is formed. A company that exceeds the size thresholds, or whose share of R&D spending falls below 15%, loses the benefit of the specific regime for remuneration paid from the following month onward.
exemption rate
of the payroll withholding tax withheld, kept by the company
maximum age
since the company was incorporated
workers
average annual headcount not to exceed (among the small company thresholds)
minimum R&D intensity
of total costs for the previous financial year
Calculating the exemption and its effect on wage cost
The exemption applies only to the payroll withholding tax due on the remuneration of scientific staff assigned to the notified project: researchers, research technicians and R&D project managers. When a person devotes only part of their time to the project, the exemption applies only in proportion to the time actually spent on research or development, which requires documented tracking of that split (employment contract, timesheets, or any other supporting record).
In practice, the company keeps calculating and withholding the payroll withholding tax on the payslip as it would for any worker. It then pays over to the Federal Public Service Finance only 20% of the withholding tax retained on the eligible portion of remuneration, keeping the remaining 80%. This advantage adds to, rather than replaces, the normal deductibility of remuneration from the company's taxable result.
Prior notification to BELSPO
Since the law of 17 June 2013, the company can only apply the exemption after notifying its research project or programme to the Federal Science Policy Office (BELSPO), before starting its execution. This notification contains the identification of the company liable for the payroll withholding tax, a description of the project allowing its nature as basic research, industrial research or experimental development to be assessed, and its presumed start and end dates.
BELSPO does not issue a prior authorisation in the strict sense: the notification is a declaration that may later be reviewed by the tax authorities, in particular on the reality of the project and the effective assignment of the staff concerned. Keeping the project's supporting documents (technical description, timetable, breakdown of working time) remains essential in case of an audit.
Secure the R&D side of your company
Monsiegesocial supports Belgian SMEs and young companies on tax structuring, business domiciliation and company formation.
Young innovative company or general regime: which route to choose
A company eligible for both regimes has no reason to choose arbitrarily: the general R&D exemption regime (degree-holding staff) and the specific regime for young innovative companies serve different profiles and are not necessarily mutually exclusive for distinct staff within the same company.
| General R&D regime | Young innovative company | |
|---|---|---|
| Staff degree requirement | ||
| Company age condition | ||
| Company size condition | ||
| Minimum R&D spending threshold | ||
| Exemption rate | 80% | 80% |
| Prior notification to BELSPO |
An SME that hires an engineer without the degree required under the general regime, for instance, may still qualify for the exemption on that remuneration if it otherwise meets the young innovative company conditions. Conversely, a company older than 10 years that employs doctorate holders in science remains eligible only for the general regime, with no size condition.
Points of attention before claiming the exemption
The main risk is not initial eligibility, but maintaining it over time. The size and R&D intensity thresholds are checked every financial year, and a tax audit can cover several years of exemption already applied.
A research project that ends, a funding round that pushes the company past the 50-worker threshold, or a financial year where R&D spending falls below 15% of total costs: each of these events ends the exemption going forward, without, in principle, calling into question the amounts already kept for the financial years in which the conditions were met. Vigilance is therefore a matter of continuous monitoring, not a one-off check at the project's launch.
To go further
- Investment deduction in Belgium: another tax incentive available to companies that invest, notably in research and development
- Corporate income tax in Belgium: rate and calculation: understand how the payroll withholding tax exemption interacts with the company's taxable base
- Reduced corporate income tax rate in Belgium: the conditions for accessing the reduced rate, often relevant for the same innovative SMEs
