On 26 July 2018, the Belgian tax authorities published frequently asked questions (FAQ) on the application of the innovation income deduction (IID) regime, which replaced the previous patent income deduction.
Under the IID regime, qualifying taxpayers may deduct 85% of qualifying net innovation income from the company’s taxable base.. The main highlights of the FAQ are: The intellectual property (IP) for which the IID will be applied must be booked as an immaterial fixed asset on the company’s balance sheet. R&D expenses that are not directly related to the IP right may not be deducted from the gross innovation income. This includes interest expenses, building costs, as well as any other costs not directly related to the IP.
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