The exemption from paying the “R&D” withholding tax is extended to holders of Bachelor degrees
Companies active in research and development (“R&D”) are, under certain conditions, exempted from paying to the tax services part of the withholding tax that they retain from the salary of their “researchers engaged in projects or programmes of research or development” (CIR, art. 275³).
Previously, this (partial) exemption was only for researchers who held a doctorate or a Master’s diploma.
Since 1 January 2018, Bachelor degrees can also be a source of exemption.
Only Bachelor degrees in the fields of science, included in the list of diplomas listed in Article 275³, § 2 of the CIR are covered, however.
With regard to the French-speaking community, expressly referred to are:
• Transition Bachelor degrees or equivalent in the fields of science, engineering science, agricultural science and biological engineering, medical science, veterinary science, biomedical science and pharmaceuticals, the art of building and town planning (architects), industrial science and agricultural industrial science; and,
• Professional Bachelor degrees or equivalent in the paramedical and technical fields, limited to courses which are primarily biotechnical, industrial science, technology, nautical science and development of computing products.
In addition, specific limitations have been introduced to the detriment of Bachelor graduates, supposedly “performing research support tasks.”
On one hand, the exemption is equal to 40% of the amount of the payroll tax. By analogy to the Master degree holders, this percentage will nevertheless be increased to 80% from 1 January 2020.
On the other hand, the law limits the total amount of the exemption granted to Bachelor degree holders to 25% (or 50% for small companies, as defined in Article 15 of the Company Code) of the total amount of the exemption granted to researchers who hold a Master’s degree.
Let us take an example. A company employs three researchers who hold Master degrees and two researchers who hold Bachelor degrees. Each month, the company retains 900 EUR of withholding tax from the remuneration of the three Masters (making 2 700 EUR in total). For this category of researcher, the company will be exempted from paying the Treasury 2 160 EUR (80% x 2,700 EUR). For the Bachelor graduates, the exemption will be capped at 540 EUR (or 1 080 EUR if the company is a small company).