Extension of wage tax exemption for R&D activities in Belgium

Belgium has established a wide range of tax incentives for companies which are engaged in Life Sciences and in the wider Research & Development (R&D) industry. One of these measures is the “partial wage tax exemption for researchers”.

As a general rule, for any employee, Belgian employers withhold wage tax on employee salaries which constitutes a prepayment of the personal tax liability of the employee. Until the end of 2017, this wage tax exemption for researchers who are employed in the R&D projects and programmes was exclusively reserved to researchers with a qualifying Master degree or PhD (doctoral degree) in specific domains such as applied sciences, medical science, veterinary medical science and civil engineering. This partial exemption amounts to 80% of the wage tax.

Since January 1, 2018, this partial wage tax exemption for researchers has been extended, under the same conditions, to researchers having a bachelor's degree in specific domains such as biotech, industrial sciences, technology and computer science. For the financial years 2018 and 2019, this partial exemption for the bachelor's degree will amount to 40% of the wage tax. This exemption rate will increase to 80% as of the financial year 2020.

This partial exemption of the wage tax for researchers having a bachelor's degree will, however, be capped at 25% of the total amount of the partial exemption of wage tax granted for researchers having a master's degree or a PhD. This limit of 25% will be doubled for SME’s.

This new exemption offers a unique opportunity for Belgian R&D companies to take on extra staff while having supplementary resources to invest in R&D projects and programmes.