WBSO grant: tax benefit on your research and development work

The WBSO grant is available to SMEs, large multinationals and self-employed entrepreneurs who are based in the Netherlands and carry out research and development (R&D) work.

To qualify for the WBSO, the development must be technically new for your company and developed in-house. It is important that the developments are still to take place, as this grant scheme does not apply retroactively.

WBSO stands for the Research and Development Promotion Act (Wet Bevordering Speur- en Ontwikkelingswerk) and reimburses part of the costs of R&D projects. With it, the government rewards entrepreneurs who engage in innovation and take a financial risk in doing so. S&O is the Dutch term derived from the English R&D (research & development).

The budget increase amounts to a structural € 200 million per year, further expanding the opportunities for entrepreneurs.

Through the WBSO grant, entrepreneurs working on the development or improvement of a product, service or process may deduct 50% of wage costs and material costs from payroll or income tax. This is an increase compared with the previous deduction of 40% for starters, mainly intended to boost start-ups with innovative ideas.

In addition, the rate of the first bracket is 36%, and 50% for starters. The first bracket is also extended from € 380,000 to € 391,020. These adjustments particularly stimulate smaller investments, for which the WBSO is used most.

Material costs include, among other things, costs for prototypes, test set-ups, machines or laboratories. In practice, using the Research and Development Promotion Act for innovative projects quickly yields a company thousands to tens of thousands of euros.

Did you know that you can also gain a tax benefit through the Innovation Box scheme, and that it can often be combined with the WBSO? This means you pay less corporate income tax on the part of the profit that is directly attributable to innovative products, projects and services. For innovative projects there are also schemes such as MIT Feasibility (for mapping technical and economic risks) and MIT R&D Collaboration (specifically for partnerships). Our experts are up to date on all schemes and current developments and are happy to advise you!

The following types of projects qualify for the WBSO:

Development projects:

• Developing or improving physical products, production processes, or software;
• Developing prototypes or testing new products or processes;
• Developing technically new software or substantial improvements to existing software.

Technical-scientific research:

• Research aimed at acquiring new knowledge;
• Experimental or theoretical work intended to gain new insights;
• Research that may lead to new or improved materials, products, processes, systems or services.

Technical feasibility studies:

• Studies preceding R&D projects to assess the technical feasibility of the project.

Process and software development:

• Projects aimed at developing or improving production processes or software.

To qualify for the WBSO, applicants must meet the following conditions, among others:

• Research and development (R&D): The activities must qualify as R&D activities;
• Entrepreneur for income tax or corporate income tax: The applicant must be an entrepreneur for income tax or corporate income tax purposes in the Netherlands;
• R&D declaration: The applicant must apply for an R&D declaration (S&O-verklaring) from the RVO. This declaration is proof that the activities are eligible for the WBSO;
• Time records: The applicant must keep time records showing how much time has been spent on R&D work;
• Other records: In addition to the time records, records must also be kept of the other costs and expenses that qualify for the WBSO;
• Minimum R&D hours: A minimum number of R&D hours per year may apply in order to qualify for the scheme;
• Specific rules for the self-employed: Self-employed persons without staff (zzp’ers) must meet a minimum number of R&D hours to qualify for the WBSO;
• Starter benefit: Start-up companies may sometimes qualify for an additional benefit;
• Reporting obligation: After the end of the calendar year, the applicant must report how many R&D hours were actually worked and which costs and expenses were incurred.

The WBSO can be applied for throughout the year. When you submit an application, you can start from the following calendar month. An exception to this rule applies to the last 3 months of the year: for these months, the application must be submitted by 30 September at the latest in order to make use of the WBSO grant. In addition, the WBSO must be applied for again every year if there are ongoing or new projects.

After submitting an application, you may submit an update three times in the calendar year. Additional projects, hours or costs & expenses can then be added to the application.

Thanks to our 25 years of experience, we can optimise your grant process and take it almost entirely off your hands.

What kind of activities can you think of?

• Assessing whether your project qualifies for a grant;
• Writing (or reviewing) the grant application and submitting it to the RVO;
• Acting as contact person towards the RVO;
• Support in setting up the project records;
• Preparing you for RVO audits, or even attending them;
• Taking care of the interim financial reports and final accountability;