As of 1 January 2010, companies can benefit from an effective tax rate of only 5% for income from intangible assets created by the Dutch taxpayer (per that date the already existing Patent Box regime introduced in 2007 was reformed into the Innovation Box) . Patented intangible assets as well as intangible assets that have been created by the taxpayer and for which the R&D tax credit (“WBSO”) was received may qualify for the innovation box. In practice this means that technological innovations qualify. The innovation box however does not apply to marketing intangibles such as trademarks and logos.
The lower tax rate of 5% is claimed in the corporate income tax return filed by the taxpayer. The low tax rate is actually an exemption of 80% of the profits that can be allocated to the innovation box. By applying the general Dutch corporate income tax rate of 25% this gives an effective rate of approximately 5% . Costs made with the development of the intangible assets and losses on the exploitation of the intangible assets can still be deducted against the general tax rate of 25% . The effective rate applies to profits exceeding the development costs and losses incurred.
There is no cap on the amount of profits that can be allocated to the innovation box, however, a taxpayer should be able to substantiate that the profit is related to the qualifying intangible assets. It is generally advised to agree upon the method used with the Dutch tax authorities in advance. The Dutch tax authorities are accustomed to do so upon request.
The innovation box does not apply to intangible assets in respect of which a patent was obtained if the asset was already in existence before 1 January 2007. Furthermore, the innovation box does not apply to intangible assets in respect of which an R&D statement was obtained if the asset was already in existence before 1 January 2008.
Situations whereby the, period between an application for a patent and the granting of the patent is unusually long are also covered. Subject to certain conditions, profits that are attributable to the relevant patented asset may, during the period from the year in which the patent was applied for up to the year preceding the year in which the patent was granted, also be brought within the scope of the innovation box.