The Law of 28 March 2022 introduced a limitation of the basis for calculating the R&D tax credit insofar as it includes capitalized salary expenses for which a partial exemption from withholding tax for researchers has been claimed. This restriction applies to financial years ending on or after 1 April 2022.
In response to a parliamentary question, the Minister of Finance clarified the new regime (QP n° 1427 from P. De Roover dated 30 March 2023).
Uncertainty remained as to the application of the limitation in case of a “spread” tax credit (on the tax value of depreciations). The Minister confirms that, for the purposes of calculating the spread tax credit, the tax value of depreciations relating to investments made before the law came into force does not need to be adjusted. On the other hand, for investments relating to taxable periods ending on or after 1 April 2022, the correction of the withholding tax exemption for researchers should be spread over the depreciation period.
This can be illustrated as follows:
- Example 1 :
- R&D costs for the year ended 31/12/2021: €67,500
- Exemption from withholding tax for researchers for the year 2021: €14,000
- R&D capitalization (on a gross basis) for 2021: €67,500
- Amortization over 3 years: €22,500/year (in principle, however, amortization should be applied pro rata temporis)
- R&D tax credit spread over the years 2021, 2022 and 2023 on an annual basis of 22,500 €.
The new limitation does not apply to depreciations in 2022 and 2023, as the investment was made in 2021 (before the law came into force).
- Example 2:
- R&D costs for the year ended 31/12/2022: €67,500
- Exemption from withholding tax for researchers for 2022: €14,000
- R&D capitalization (on a gross basis) for 2021: €67,500
- Amortization over 3 years: €22,500/year (in principle, however, amortization should be applied pro rata temporis)
- R&D tax credit spread over the years 2022, 2023 and 2024 on an annual basis of €22,500 – (€14,000/3) = €17,833