|Dutch Innovation box 5% rate
The favourable tax treatment on intangible income has been introduced in 2007 and is an optional system. The Dutch company must have a patent from which it derives net earnings. The patent itself can be Dutch, European or foreign but it must have been developed by the Dutch corporation which bears the corresponding risks. The net earnings derived from self-developed intangible assets - patented intellectual property - is taxed at a corporate tax rate of 10 per cent. The amount of net earnings (royalties or profits from the sale of the patent) that can benefit from the reduced rate in the patent box is capped at four times the total amount of R&D development costs of all intangible assets allocated in the box. Note also that profits earned by using the patent are included in the patent box if the patent has contributed for at least 30 per cent to these profits. Recently, the patent box has been extended to include also certain limited revenues obtained from innovative activities, without the creation of a patent. In that case, a R&D declaration is required to be eligible.
In the Tax Plan 2010 the patent box has being turned into an innovation box, as practice learned that the patent box was not very efficient and too complicated. The basic rules of the patent box remain the same. It is still optional and a Dutch company still needs to obtain a patent or R&D declaration for IP that is self-developed or has been developed for the Dutch company which bears the corresponding risks. All applicable ceilings - e.g. the cap at four times the total amount of R&D development costs and the applicable limitations with respect to the revenues obtained from innovative activities related to a R&D declaration - are withdrawn. In addition, the reduced rate has been further lowered to 5 per cent on qualifying income from R&D.