Belgium - Federal Government Agreement 2025-2029: Innovation and taxation

The agreement envisages measures to improve the overall business environment, through attractive stock market taxation, reduced hidden burdens in various compulsory acts, support for start-ups and the preservation of our internationally recognised regimes that encourage investment in research and development.

Outside of maintaining existing measures for innovation and new technologies, the new government promises to focus on strengthening our R&D and innovation assets through a number of specific measures.

Expat regime

Belgium must be competitive in the war for talent to ensure excellence in research, innovation and maximum support for our knowledge economy. Besides speeding up procedures on highly skilled student migration, the expat regime (for researchers, among others) will also undergo a face-lift in order to bring (or keep) international talent to Belgium:

• The tax-free allowance under the expat regime rises from 30% to 35%;
• The ceiling of this benefit, currently at €90,000, disappears; and
  
• The minimum gross remuneration will be reduced from €75,000€ to €70,000.

Investment deduction

The new government aims to make the carry-over of the unused portion of the investment deduction unlimited in time and without restrictions. This would apply to all forms of investment deduction.

However, climate-friendly innovations enjoy special attention in the government agreement. The “green” investment deduction will become simpler and more accessible, especially for investments in energy transition. In the environment list, the restriction on European funding for CCS-CCU investments will be removed. Also, the government plans to harmonise the rates for the increased investment deduction for the energy, mobility and environment lists to 40%.

The technology deduction (formerly known as the investment deduction for R&D), it will no longer be required to obtain a regional attestation.

R&D Depreciation

R&D investments get an (additional) accelerated depreciation option. R&D investments could already enjoy accelerated depreciation, i.e. over three years.

For large enterprises, a temporary system will be added and 40% of the purchase value can be depreciated in the first year. For SMEs, the possibility of degressive depreciation will be reinstated.

R&D Payroll tax exemption

The (partial) payroll tax exemption for R&D employees has been the subject of principle discussions with the tax administration for some time. Therefore, the government is committed to clarifying the current scheme and making qualitative improvements to ensure maximum legal certainty, efficiency, budgetary monitoring and stability.

These discussions largely resulted from the disagreement or opposing views between BELSPO, the competent federal administration on R&D, and the tax administration. For this reason, a covenant between the two administrations will be concluded as soon as possible with clear criteria on how to cooperate, guaranteeing loyalty between the administrations and maximising legal certainty for the taxpayer.

With a view to further improving this measure, companies will have the opportunity to be recognised as a research centre, giving them certainty about a long-term stable fiscal legal framework, with a lighter administrative burden. Outlines on this were already drawn in the previous legislature in cooperation with sector organisations and will probably serve as starting basis.

There will also be a reform of the scope of the payroll tax exemption for research at universities, colleges, university hospitals and scientific research funds. 

Finally, the new government promises to clarify the scope of the payroll tax exemption for R&D within recognised scientific institutions, with objective criteria and transparent rules.

Government marketing

The Fiscal Department for foreign Investments will transform in the Investments Department that will inform domestic and foreign companies about the tax support measures that exist for companies investing in Belgium, including those in favour of research and development.

Inter-federal cooperation

MAKE 2030 is an inter-federal plan to combat de-industrialisation and, together with the sectors concerned, regularly evaluate Belgium's competitiveness. For this competitiveness, preferential tax regimes are a strategic component. Therefore, this plan aims to adapt and simplify the systems to provide better support to SMEs and academic centres and to focus resources on strategic sectors and economic development.

However, considering the division of competences, it is necessary for the government to work with the regions to synchronise research and innovation support as much as possible. Federal support on innovation, research and development should therefore be coordinated as much as possible in consultation with the regions.

Evaluation of support measures

The above planned measures highlight that research and development plays a crucial role and is the driving force behind technological progress, productivity improvement and the creation of high-quality jobs.  However, to ensure that output improves without eroding research and development benefits, the government will conduct a spending review.