Netherlands Extends Patent Box For Innovators

by Ulrika Lomas, LawAndTax-News.com, Brussels

24 August 2009

The Dutch government has announced that opportunities to use the 'patent box' scheme will be extended to benefit innovative entrepreneurs.

Under the changes, announced by State Secretary of Finance Jan Kees de Jager on August 20, entrepreneurs can deduct losses in the exploitation of patents from the taxable profits in full instead of partially.

"Innovative entrepreneurs are all-important to the Dutch economy,” de Jager said. “I wish to give permanent support with this measure to innovative companies that are in trouble as a result of the credit crunch.”

Companies that develop inventions or technical applications (so-called immaterial assets) and that have been granted patents for these can use the patent box. As a result, profits from these assets will be taxed at 10% instead of the normal Dutch corporate tax rate, which starts at 20.5% and rises to 25% depending on the level on income.

The amendments were published in the government gazette on August 21.

Introduced as part of changes to the corporate tax system in 2007, the patent box regime was designed to improve the taxation of income derived from intellectual property, including royalties. In January 2008, the patent box scheme was extended to include companies which had not been granted a patent, but which had incurred qualified research and development costs. This new provision was designed primarily to benefit small- and medium-sized companies.

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