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The Dutch wage tax subsidy for qualifying R&D work in the Netherlands (WBSO).

The WBSO is a tax incentive scheme on which companies conducting qualifying research and development (R&D) activities can be eligible for the compensation of partial wage costs and other costs and expenses relating to such R&D activities. The facility is based on the Act for stimulating R & D activities, or “Wet bevordering speur en ontwikkelingswerk,” abbreviated “WBSO.” in Dutch.  

How to apply for the WBSO compensation

A company that wants to apply for the WBSO compensation for a particular R & D project has to do so with the Netherlands Enterprise Agency (“RVO”). 

The application must be filed digitally in a format prescribed by the RVO.  

A timely filed application that meets the imposed conditions for the WBSO application will be reviewed by the RVO.

The R &D projects must be clearly described in the application, emphasizing the technical aspects of the projected development or research activities. The forecasted hours spent on the R & D and possibly costs and expenses associated with the R & D must be specified and substantiated.    

The WBSO application has no limitation concerning the number of projects. 

RVO will list the projects and related costs and review expenditures against all relevant laws and regulations. It will also review the project proposals and assess the knowledge and skill level within the applying company.

The decision of the RVO is laid down in a Decree, also referred to as the WBSO statement. The statutory term for processing a WBSO application and issuing a WBSO statement is three calendar months after the start of the period to which the application relates if the company opted for the lumpsum for costs and expenses. If the company opts to reimburse actual costs and expenses, this term becomes eight weeks longer.

The corresponding tax credits cannot be utilized until the WBSO statement is received.

When to apply for the WBSO statement?

It is only possible to apply for WBSO for future work.

In the first application for a project, a realistic estimate must be made for each project of the time required and any costs and expenses up to and including 31 December. During the year, the company can submit a new request for new R&D projects in the event of a change in the content of an existing R&D project, if there are going to be other costs and expenses incurred than applied for, or if significantly more hours, costs and expenses are going to be incurred.

The deadlines for filing the WBSO applications are contained in the so-called WBSO calendar, but in practice, most applications are filed at the beginning of December of the preceding year. During the year, applications can be filed up to and including 30 September.  

The amount of the WBSO compensation

The WBSO compensation is a reduced payroll tax (wage tax, including the national social insurance contributions) relating to the acknowledged R&D hours.

This reduction (in 2023) is:

  • 32% of the first € 350,000 of the R&D base, and
  • 16% of the excess.

The R&D base consists of the acknowledged R&D wages plus the acknowledged costs and expenses. There is no maximum for the R&D base over which the R&D withholding credit is calculated. The percentages can be changed annually, but generally, this does not affect already issued WBSO statements.

The reduction is a credit for the employer and does not affect the actual withholdings from employees’ salaries. 

Conditions to be met for the WBSO compensation 

Several conditions must be met for the WBSO compensation.

The primary conditions are:

  1. It must concern qualifying R & D projects relating to developing new software, a (tangible) product or production process, or technical-scientific research.
  2. The R&D project must be situated within the European Union.
  3. A systematic approach to R&D activities is required.  
  4. The applying company is subject to Dutch income tax and or payroll taxes.
  5. The R&D activities have not yet taken place.
  6. The applying company withholds Dutch wage tax and national insurance contributions owing to the employees performing the R&D work.
  7. The company applying for it is not a public knowledge institution.

Qualifying R&D projects

The WBSO can be applied for R&D work with either development projects or technical-scientific research.

The development projects should meet the following conditions:

  1. Developed products or production processes must be physical and tangible.
  2. Software is eligible.
  3. The development must be technically new for the company, and the projected R&D work exceeds the existing technical knowledge and skills due to extraordinary risks or uncertainties concerning the success of the development.
  4. Execution of the particular technical project problems is expected and must be solved by the company and its employees.
  5. A proposed solution through the projected R & D work for the envisaged problem should be described in the WBSO application.

Technical-scientific research should meet the following conditions:  

  1. The research must be scientific and focused on explaining a phenomenon that is unavailable based on generally accessible knowledge or the knowledge available at the company.
  2. The company expects to develop new theoretical or practical knowledge through research.
  3. The research must be technical and relate to physics, chemistry, biotechnology, production technology, or information and communication technology.
  4. The research design must be known and described in the WBSO application.
  5. The WBSO application should contain specific research questions that need to generate new knowledge beyond collecting, observing, and recording data or the interdependence between data.
  6. The examination should not be routine.

Conditions for costs and expenses

If the applicant is a company with employees, the WBSO compensation can relate to the partial reimbursement of wage costs and other allocable costs and expenses.

Expenses are newly manufactured assets purchased to perform R&D and costs of all other things paid for concerning performing R&D, including materials or work outsourced to third parties.

The company will have to provide a detailed description of the R&D activities in the WBSO application and record the actual hours, costs, and expenses, including its progress in R&D administration.

The company applying for the WBSO credit can provide a calculation with projected actual costs and expenses or claim a fixed amount per accepted R&D hour.

For claiming the projected actual cost and expenses, the following conditions must be met:

  1. The company has employees.
  2. The costs and, or expenses are directly attributable to R&D.
  3. The costs are exclusively subservient to R&D and must be 100% attributable to the R&D activities.
  4. The expenses should be partially subservient to R&D, as substantiated by a calculation that shows which part of the expenditure is intended for R&D activities.
  5.  Special conditions apply to the pharmaceutical industry.

Shifting of hours and costs/ expenses between awarded projects

Shift hours, costs, and expenses between acknowledged R&D projects are allowed to a certain extent. 

The shifting of R&D hours between the acknowledged projects within an application and utilizing unrealized R&D hours from earlier project applications. Also, costs and expenses requested and granted in an R & D statement may, within certain limitations, be shifted between projects, and unrealized amounts of costs and expenses may be carried forward to be utilized in later projects.

R&D administration and control

The company must keep records of the actual WBSO activities, properly recording the nature, content, progress (project administration), and scope (time administration) of its R&D activities.

In the first application, the company must choose between compensation for actual costs and expenses or a lump sum. If the company opts for the lumpsum, separate records of actual costs and expenses are unnecessary.

The R & D administration must comply with various conditions and contain particular data in a standardized format.

The RVO will monitor the correct execution of facilitated projects or research. This can be done through an administrative review of the R & D administration or an inspection visit to the company.

Usually, within three months after the calendar year to which the WBSO statement relates, the company must file a report about actual R&D hours and the actual costs and expenses incurred. RVO has the authority to issue a revised WBSO or even completely withdraw the previous WBSO statement if the current R&D or research does not adhere to the projections in the WBSO application, or the budgeted hours, cost or expenses do significantly from the projected amounts in the WBSO application. The RVO has the authority to raise penalties.  

What can we do for you? 

We deal with Dutch and foreign companies who are considering applying for the WBSO regularly and assist them with the assessment of the feasibility of the WBSO regime, the preparation and filing of the application for the WBSO, and provide support about the ongoing administration and reporting requirements related to it. 

If you are interested in our services, contact us via e-mail or our office in Rotterdam at +31 (10) 2010466 or Amsterdam at + 31 (20) 5709440.