The administration has changed its flexible position following the judgment of the Court of Cassation of 6 January 2023. According to the Court of Cassation, use may only be made of the partial exemption from withholding tax in the context of scientific research if Belspo has been notified of a research or development project or programme prior to its start date. The more flexible administrative position can still be applied until 31 July 2023.
Partial exemption from payment of withholding tax
In the context of scientific research, there is a partial exemption from payment of withholding tax for, among other things, researchers employed in research or development projects or programmes or for scientific staff employed by Young Innovative Companies in the context of research projects.
An essential condition for being able to benefit from the partial exemption is the notification of the projects or programmes to the Federal Public Service for Science Policy (hereinafter referred to as ‘Belspo’), stating:
1° the identification of the payer of the withholding tax
2° the description of the project or programme, demonstrating that its aim is fundamental research, industrial research or experimental development
3° the expected start date and the proposed end date of the project or programme.
Position of the Court of Cassation
In its judgement of 6 January 2023, the Court of Cassation ruled on the timing of notification of Belspo of projects and programmes. It states that this notification must take place prior to the start date of the project or programme.
Among other things, it derives its position from the law which states that when notifying Belspo of a project or programme, the expected start date must be stated.
Response from the tax administration
Hitherto, the administration interpreted the law more flexibly and allowed the application of the partial exemption from withholding tax from the month in which Belspo was notified of the project or programme, regardless of whether the project or programme had already started at the time of notification.
However, it has now decided via Circular 2023/C/49 to apply its current, less stringent position until 31 July 2023. The beneficiaries of this measure will thus be able to adapt their procedures to the new position of the Court of Cassation. Until that date, projects or programmes already in progress may be notified and, from the month of notification, use may be made of the partial exemption from payment of withholding tax.
From 1 August 2023, the administration will follow the more stringent position of the Court of Cassation. This means that when a project or programme is started without prior notification of Belspo, it will no longer be possible to benefit from the partial exemption from withholding tax for this specific project or programme.
What is changing?
From 1 August 2023, Belspo must be notified of research or development projects or programmes prior to the start date of the project or programme.
Without this prior notification, ongoing research or development projects or programmes will no longer be entitled to the exemption from withholding tax.