“WBSO” and “RDA” tax concession schemes to be integrated
The Dutch Cabinet has established on the basis of a survey that the integration of the current “WBSO” and “RDA” regimes, which provide for tax relief by virtue of the Research and Development (Promotion) Act of the Netherlands and the Research & Development scheme, respectively, into a single Research & Development scheme would free up resources in the employer’s withholding tax sphere. The proposed integration is to be addressed in more detail in the government’s 2016 Tax Plan.
A frequently heard criticism of the RDA scheme in its current format is that it is not geared to innovative start-up businesses as these tend not (yet) to return a profit and are therefore in no position to benefit from the corporation tax relief which is the central plank of the RDA scheme.
The basic principles underpinning the “WBSO” and “RDA” tax concession schemes are to be levelled out. The new subsidy scheme will hinge on reduced payroll tax (rather than tax on profit) and will thus be accessible to more businesses as well as enabling the business community and the Tax and Customs Administration alike to cut red tape, for example by relieving businesses of the obligation to produce RDA rulings when filing their corporation tax returns.
It should become more straightforward for the Dutch Research & Development departments of foreign corporations to utilise the subsidy for their own purposes once the tax concession scheme has been redirected to the payroll tax sphere.