What is the WBSO?
The Research and Development (Promotion) Act (WBSO) has encouraged Dutch entrepreneurs to invest more in research and development since 1994. How? By offering tax benefits through a tax incentive scheme.
If the WBSO is granted to your company, you pay less wage tax and national insurance contributions. Through this tax scheme, you reduce labour costs, material costs and other R&D-related expenses by offsetting these costs against your payroll tax return. Material costs can include, for example, the costs of prototypes and machinery.
The WBSO therefore essentially works as a subsidy on labour costs and other expenses directly related to R&D activities. In 2024, the WBSO benefit can amount to as much as 40% for start-ups or 32% for non-start-ups.
Good to know: in WBSO terminology, R&D hours are referred to as S&O hours (research and development hours).
The WBSO process
How does the WBSO process work? In short:
- You develop your project so that it is ready for the WBSO application.
- You submit the WBSO application.
- The Netherlands Enterprise Agency (RVO) assesses your application positively.
- You start the project after submitting the application.
- You keep records of the activities carried out and the hours worked.
- You offset the benefit in your tax returns.
- Every year, no later than March, you submit the WBSO realisation figures for the previous year to the RVO.
- The RVO checks whether your records are correct, whether you are entitled to the benefit received and settles any differences.
What does the RVO want to know for a WBSO application?
The better defined your project is, the easier the WBSO application will be. Among other things, the RVO asks for:
- Practical information, such as the project duration and the number of S&O employees.
- What you are going to develop.
- Why this development is technically new to your organisation.
- Which technical bottlenecks you expect.
- How you intend to solve these technical bottlenecks.
- The number of hours per project.
- In the case of technical-scientific research: the research design.
- In the case of software projects: the programming languages and tools used.
When are you eligible for the WBSO?
You must meet several conditions if you want to apply, or have someone apply, for the WBSO. The main conditions are:
- You develop a technically new product, production process or new software yourself, or you conduct technical-scientific research.
- You have not yet started the project.
- You carry out the project within the EU.
- You have a concrete project plan.
- You are considered an entrepreneur by the Dutch Tax and Customs Administration and pay income tax or wage tax.
You submit your WBSO application to the Netherlands Enterprise Agency (RVO). They assess your project.
Benefits of the WBSO
Access to the Innovation Box
If you qualify for the WBSO, you can also benefit from the Innovation Box. Under the Innovation Box, profits from innovations are taxed at a lower rate. This means you pay less corporate income tax. In other words: even more tax benefits!
To gain access to the benefits of the Innovation Box, you must first demonstrate that you qualify for the WBSO. The WBSO and the Innovation Box are therefore linked.
Stronger competitive position
The WBSO does not impose any requirements regarding company size. This means that SMEs and self-employed entrepreneurs can also qualify for this tax scheme. The WBSO makes it more feasible for smaller businesses to invest in innovation. As a result, start-ups and SMEs can compete with larger companies.
This scheme has an impact on businesses in every sector. Think of innovations in the technical and medical sectors, or innovations relating to sustainable energy, industry, ICT and more.
Strengthening the research and innovation climate in the Netherlands
A broader benefit is that the WBSO strengthens the Netherlands’ national position in research and innovation. The scheme encourages R&D activities, positions the Netherlands as a leader in technological innovation and attracts talent and investment. This, in turn, benefits the Dutch economy.
What to pay attention to when applying for the WBSO
Do you want to submit a successful WBSO application? Pay attention to these pitfalls when submitting your application and during the R&D project.
Meet the innovation criteria
Demonstrate that your project meets the WBSO criteria. Make sure it is clear that your project focuses on developing technically new products, processes or software. In addition, your project must involve technological innovation rather than minor improvements or routine activities. And very importantly: your innovation must be technical in nature. Commercial or organisational innovations do not qualify.
Start on time and meet the deadline
Submit your WBSO application before the deadline has passed. That may sound obvious, but we often see companies submitting their own WBSO applications underestimate how much work is involved in completing the application. It is therefore important to have all documentation ready on time. The application itself may not take very long, but beforehand you need, for example, a well-defined project and an estimate of the number of S&O hours you expect to spend.
Be accurate in recording hours and costs
Has your application been approved? Then your project can begin. Throughout the entire project period, make sure you keep accurate records, including time records and an overview of costs. The RVO wants to know exactly how much time and resources you have invested in your project. Inaccurate records may result in you having to repay part or even all of the tax benefit.
WBSO: kick-start your research
The WBSO reduces the financial risk for entrepreneurs with innovative ideas. It also serves as a springboard to the Innovation Box. Together, these two schemes encourage research and development in the Netherlands, reduce R&D costs and provide tax benefits on profits generated from innovations.
Why do we enjoy supporting clients with WBSO applications? Because the WBSO provides both a financial and a creative incentive. With this relatively accessible scheme, companies can explore new ideas and develop innovative solutions.