Employment Tax
Belgium | Important updates regarding the notifications of your project(s) and/or program(s) to BELSPO
Summary
The R&D wage withholding tax partial exemption has undergone major changes since last year, but has also recently been indirectly impacted by a reorganization within BELSPO and the procedures specific to this entity.
Through this alert, we would like to briefly recall the actions that are incumbent on companies applying the R&D measure.
In detail
Reminder – New circular letter as from 1st August 2023
As from 1st August 2023 the Belspo notification must be submitted before the start of a project/program.
The consequences cannot be underestimated and vary depending on whether the project/program is already up and running or not. The new rules have been clarified by BELSPO through a public communication which can be found here: Belspo – R&D rules as of 01/08/2023 – FR version, Belspo – R&D rules as of 01/08/2023 – NL version.
The key aspects to be considered following this new circular may be summarized as follows:
● The R&D exemption can only be applied when the R&D project or program has been notified to BELSPO before it begins. In the past and in situations where the project or program would have been notified after the start of the project or program, a prorata of the R&D exemption could be applied as from the moment of the notification. As from 1st August, such prorata is no longer possible thus implying that it becomes crucial to notify any project or program before their respective start.
● In order to make sure that this requirement is fulfilled, our recommendation is to make sure to perform a notification of any new project or program which is expected to start in the coming weeks or months and for which the company expects to deploy employees on such a project or program. Given the fact there are no clear instructions about the notifications, we have noticed based on our experience due to recent audits that the authorities will most likely verify the potential timesheets, or any sort of time registration tool put in place by the company in order to check whether or not the company is compliant with the R&D rules. That being said, in order to avoid any debate on the question about the start of any project or program, it is recommended to notify any project or program before any employee starts to work on the project or program.
● In the past, it was a common practice to perform an update in the course of January of the year and additional update notifications during the year when it was required through the BELSPO portal, following recommendations provided by BELSPO. As of 1st August 2023, this recommendation is no longer applicable. The emphasis is now given to the approach which consists of considering a realistic start and end date given the fact that the previous methodology may be deemed as not realistic. Therefore, the recommended approach is to indicate a realistic end date and no longer indicate an end date which was usually set on 31st December of any given year (i.e. annual update).
● A separate copy of each notification should be kept (a print screen is recommended to be kept in case of a tax audit). Indeed, most likely tax authorities require proof of the exact notification date. Rather than simply adjusting existing notifications by overwriting existing data with new data, it is therefore recommended to keep a copy of each update at the time the updates occur (f.e. whenever a new project is added).
● For projects and programs prior to 1st August 2023: projects and programs that are ongoing and for which the notification had been correctly made prior to 1st August 2023 will still qualify for the exemption going forward, even if the notification was made after the R&D project/programme had started (i.e., the previous administrative interpretation stays intact here). Until 31st July 2023, it is highly recommended to proceed with any notification of projects or programs which have not yet been notified but which may have already started.
Updates provided by BELSPO
General comment
Following a general communication from BELSPO, it is expected that 1) an inventory of necessary adjustments to the software and 2) a start of the restructuring of BELSPO within the framework of the partial exemption from payment of the withholding tax for the R&D activities will happen in 2024.
The proposition is to set up two committees, i.e. an external and thematic expert committee in the third quarter of this year, and two A1-level officers, who will submit all the files to these committees. Please note that more information in this respect will follow later.
As this restructuring is currently in full process, it is not possible to schedule a meeting in the coming period with BELSPO until the new cell of BELSPO has officially been put in place, which of course could delay a number of requests which would have usually been raised to the attention of BELSPO.
Advisory application process for diplomas
Among the planned adjustments, one major adjustment concerns the advisory application regarding the application process for foreign degrees.
As a common practice, it is possible to ask BELSPO for advice regarding the validity of the project/program on the registration form. BELSPO then checks whether the diploma requirements have been met, and/or whether the registered research and/or development projects or programs aim at experimental development, fundamental or industrial research.
However, as the requests for the advice regarding the (foreign) diplomas accumulated a gigantic backlog, BELSPO decided to implement a new procedure in order to fasten the process. Indeed, the diversity of foreign diplomas and the lack of a link between approved diplomas and BELSPO’s notification tool entails additional administrative processing. Therefore, the advisory application process for diplomas will be modified.
Furthermore, they will strive to provide a clearer answer with a brief explanation of why the diploma was or was not approved.
Indeed, as from now, a recommendation is requested by mailing a completed Excel file along with the necessary attachments to fiscal@belspo.be. The details linked to this new procedure can be found under the BELSPO platform.
It is crucial to note that this new way of working will take priority over all existing emails with advice requests for diplomas that have not yet been answered. Therefore, it is possible to renew old applications with the new form.
List with qualifying degrees
A number of degrees which were reflected on the platform of the BELSPO were not in line with the legislation.
As a result, the platform is now reflecting this change and provides only one link to the correct list of the qualifying degrees, which can be found here:
● Adapted list – FR version
● Adapted list – NL version
Contact us
For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:
Anton Scornea
Senior Associate
Myriam Boudinar
Senior Manager
Maxime Deforche
Manager
Further information on Vialto Partners can be found here: www.vialtopartners.com
Vialto Partners (“Vialto”) refers to wholly owned subsidiaries of CD&R Galaxy UK OpCo Limited as well as the other members of the Vialto Partners global network. The information contained in this document is for general guidance on matters of interest only. Vialto is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. In no event will Vialto, its related entities, or the agents or employees thereof be liable to you or anyone else for any decision made or action taken in reliance on the information in this document or for any consequential, special or similar damages, even if advised of the possibility of such damages.
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Further information on Vialto Partners can be found here: www.vialtopartners.com
Vialto Partners (“Vialto”) refers to wholly owned subsidiaries of CD&R Galaxy UK OpCo Limited as well as the other members of the Vialto Partners global network. The information contained in this document is for general guidance on matters of interest only. Vialto is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. In no event will Vialto, its related entities, or the agents or employees thereof be liable to you or anyone else for any decision made or action taken in reliance on the information in this document or for any consequential, special or similar damages, even if advised of the possibility of such damages.
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