Innovation Income Deduction (Innovatieaftrek)
Belgium's nexus-conform IP regime: an 85% deduction of qualifying net innovation income, yielding an effective rate below 4% — one of the lowest in the EU. Covers patents and, notably for chip design, copyrighted software.
Key parameters
| Effective rate on qualifying IP income | ~3.75% 85% deduction against the 25% headline rate |
|---|---|
| Deduction | 85% of net qualifying innovation income |
| Nexus conformity | Yes — deduction scaled by the nexus ratio |
| Qualifying IP | Patents, SPCs, copyrighted software (incl. chip-design software), plant-breeder & orphan-drug rights |
| Tax-credit option | Since tax year 2025, unused IID can be converted into a non-refundable tax credit |
Eligibility
- HQ
- Any headquarters country
- Local presence
- Local tax presence required (branch is sufficient) A branch office (Zweigniederlassung/permanent establishment) of your existing company is enough — you do not need to form a new legal entity such as a GmbH or BV.
- R&D substance
- Required
- Company size
- No size restriction
- Revenue
- Bounded above €750M (Pillar Two 15% floor)
- Models
- Fabless design, IP licensing, IDM, EDA / tools
- Sectors
- All
- Goals
- IP domiciliation; Additional design site in Europe
Nexus ratio limits the benefit to IP developed with own or outsourced-to-third-party R&D. For groups above €750M revenue, the effective benefit is bounded by the 15% GloBE floor.
Mechanism & application
Rule-based entitlement — Legal entitlement — self-assessment, no case-by-case funding decision.
Claimed in the corporate income tax return; documentation of nexus ratio and income allocation required. Advance ruling from the Ruling Commission is common practice.
Timeline: Immediate (tax filing); ruling 3–6 months
Legal basis & sources
- Legal basis
- Art. 205/1–205/4 CIR 92
- Source
- https://finances.belgium.be/en/enterprises/corporation-tax/tax-benefits/innovation-income-deduction
- Verification
- CIR 92 Art. 205/1 ff. (85% deduction → ~3.75%; tax-credit option since TY2025)
Changelog
-
1 Jan 2024
Option introduced to convert the innovation income deduction into a non-refundable tax credit (as of tax year 2025).
Source: Belgian corporate tax reform / BELSPO guidelines 2025