Innovation income deduction: tightening of conditions for patents

Last week, the Minister of Finance presented his tax reform project.  Among the measures proposed is an adjustment of the eligibility conditions for the innovation income deduction (IID or IP box) for patents.

Contrary to what has been written in the press and relayed on social networks, the proposed change does not concern the innovation income deduction applicable to innovative computer programs protected by copyright.  Therefore, there is no question of requiring the patenting of innovative software in order to benefit from the innovation income deduction.

What is being proposed to change with respect to patents?

Currently, the innovation income deduction can be applied when a company owns or licenses a Belgian patent.  The Minister of Finance proposes to reinforce this condition by requiring, as of 2024, that the patent be a European patent.

Belgian patents are granted regardless of the outcome of the examination of the patentability conditions of the technology.  European patents are granted only after a real validation of the conditions of novelty, inventiveness and industrial applicability.

Obtaining a European patent offers the Minister more guarantees that the innovation income deduction will be applied correctly.

The Ruling Commission had in fact observed for some time that applicants were requesting a ruling on the innovation income deduction for Belgian patents that had no real value or for technologies that did not result from real R&D work.

The Minister’s proposal is therefore to require a European patent as of January 1, 2024.  It is regrettable that this change is not accompanied by a transitional rule for patents obtained earlier.  A company that has been satisfied with a Belgian patent, for example because its market is purely local, would suddenly lose the right to apply the deduction without having the possibility of proving that it could have obtained a European patent.

Special rule for SME companies

For SME companies, a Belgian patent will remain eligible if it contains a positive opinion on industrial applicability and majority positive opinions on the other patent requirements (inventive step and novelty).

If the measure is adopted as is, SME companies will therefore have to check carefully the Belgian patents obtained to ensure that they are still eligible.

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