17 May How to deal with (tax) subsidies for Fintech and a deadline for filing comes in sight
Fintech companies have great opportunities to use tax subsidies for their innovation. Since Fintech companies are at the forefront of innovation, the government is happy to provide certain tax benefits to aid the developments. The most accessible and well known tax subsidies are the so called WBSO and the Innovatiebox.
WBSO
The WBSO provides a tax deduction for personal income tax or, more commonly, reduces the payable wage tax for employees on the payroll. This subsidy is maximized to 40% of the R&D wage costs. Developers who are not on the payroll of the company do not qualify for the WBSO. A request for application of the WBSO has to be filed at the RVO. The RVO will determine if the activities, as stated in the request, are eligible and to what amount. Please note that the WBSO has to be applied before (part of the) the actual innovations take place.
From WBSO to Innovatiebox
The WBSO or self-developed patents provide an entry ticket to the Innovatiebox. The Innovatiebox gives a special effective tax rate of just 5% corporate income tax on profits attributable to innovation, instead of the regular rate of 20-25%. In other words, a reduced tax rate and better yet, no Panama routes are involved. For the practical application of the Innovatiebox and to determine which percentage of the total profit can be attributed to R&D, a multi-year agreement with the Dutch tax authorities can be made.
Tax considerations such as personal holding companies
The WBSO and Innovatiebox are tax subsidies, therefore knowledge of the tax and legal framework of the company and the way the development is organized is important. For example, the most common remuneration of owners is via a management fee of their personal holding. The WBSO could be applied at the level of the personal holding, however this could complicate the application of the Innovatiebox at the level of the operating company at a later stage.
Reminder
As a reminder and last but not least, a deadline for filing of the WBSO for the second half of the year is approaching on May 31. For more information, please check on the website of the RVO here or contact your advisor.
If you have any questions regarding susidy, please contact Arthur Hendriks, owner FUND IT Consultancy, subsidy specialist & tax lawyer
