Innovation plays a crucial role in the success of startups and businesses in the modern era. The Netherlands, one of the top performers in innovation, has a range of R&D grant programs, including the WBSO (Research and Development Tax Incentive).
Grants and subsidies are meant to help tech companies bridge the funding gap for high-risk R&D projects that can extend the runway and accelerate growth.
As we look ahead to 2024, startups and businesses need to understand the critical updates and opportunities in the WBSO and R&D subsidy landscape.
In this article, we will dive into the three main takeaways impacting startups from the Prinsjesdag (Budget Day) announcements, providing insights to maximize your R&D potential.
The WBSO: A 2024 Overview
The WBSO, also known as the Research and Development Tax Incentive, is a generic innovation subsidy designed to incentivize companies to conduct R&D activities, both hardware and software, in the Netherlands. With its annual budget of approximately €1.3 billion, the WBSO is the most extensive and most generic Dutch R&D subsidy program.
The WBSO offers several benefits to companies engaged in R&D, including wage tax subsidies and reduced labour costs, thereby extending the runway of startups. By participating in the WBSO program, companies in 2024 can:
- Receive a subsidy of 32 per cent on the first €350,000 of R&D wage costs
- Get a subsidy of 40 per cent on the first €350,000 of R&D wage costs if they are a startup
- Enjoy a wage tax subsidy of 16 per cent on R&D wage costs above the threshold of €350,000
The Innovationbox: Profits from R&D investments
In addition to the WBSO, the Innovationbox provides another avenue for deriving benefits from R&D investments. As the State Secretary stated: “The Dutch innovation policy is aimed at broadly encouraging research and development. [..] The WBSO, together with the Innovationbox, forms the basis of the generic innovation policy”.
The Innovationbox offers an effective 9 per cent corporate income tax rate on innovation profits instead of the customary 19 per cent or 25.8 per cent, which incentivises companies to invest in R&D.
Takeaway 1: Stable support with increased budget
The Dutch government has committed to supporting R&D activities by keeping the WBSO benefits stable in 2024. Moreover, the budget for the WBSO has been increased by €17 million compared to 2023, ensuring a continued and predictable source of support for innovative companies.
Take away 2: The Innovationbox’s continued attraction for 2024
In 2024, the Innovationbox’s beneficial effective tax rate of only 9 per cent on innovation profits will remain. Since the general corporate tax rate on smaller profits has increased from 15 per cent to 19 per cent in 2023 and the threshold for smaller profits was lowered from €395,000 to €200,000, the Innovationbox will relatively be more attractive.
While these changes have resulted in slightly more payable corporate income tax, they also present an opportunity for companies to leverage the benefits of the Innovationbox in 2024.
Takeaway 3: Extended runway for Techleap Programme through 2026
The extension of the Techleap program until 2026 signifies a continued commitment to fostering the existing initiatives while placing a heightened focus on deep tech and data. Funded by the Netherlands’ Ministry of Economic Affairs and Climate Policy, Techleap, a non-profit organization, stands at the forefront of propelling the Dutch tech ecosystem forward.
Recently, Techleap announced a new leadership transition on several roles suitable for their new phase, and the automation and broadening of community activities are on the agenda.
Opportunity for maximising benefits
In conclusion, the insights from the Budget Day announcements underscore a robust framework supporting innovation and R&D efforts within the Netherlands. The key takeaways spotlight the benefits under the WBSO, the enduring appeal of the Innovation Box, and the extension of the Techleap program until 2026—all fostering a conducive landscape for startups.
As we approach the final quarter of 2023, it’s the right moment for tech companies to assess their eligibility and take full advantage of the benefits offered by the WBSO and Innovation Box, ensuring they are well-positioned to maximize their R&D potential and accelerate growth.