Innovation Funding Incentives: Belgium

Belgium, strategically located at the heart of Europe, has developed a comprehensive and attractive framework of innovation funding incentives to stimulate research, development, and entrepreneurship. The country’s supportive business environment and favourable tax system, complemented by various grants and regional initiatives, aim to foster a dynamic innovation ecosystem. This report will detail the key funding mechanisms available across Belgium’s federal and regional levels, their objectives, and their collective impact on encouraging innovation and growth.

Key Funding Incentives

1 | Federal Tax Incentives for R&D

Belgium is recognised for its strong tax incentives that reduce the cost of R&D and innovation activities for companies of all sizes.

Partial Withholding Tax Exemption for Researchers: Companies employing R&D personnel (researchers, scientific workers, engineers) can benefit from an 80% exemption on Belgian payroll withholding taxes. This significantly reduces employment costs for qualified R&D staff, including a special tax regime for foreign researchers temporarily in Belgium.

R&D Investment Deduction/Tax Credit: Businesses investing in R&D and patents can claim either an “investment deduction” from their taxable base or an equivalent “R&D tax credit” that reduces corporate income tax due.

- The investment deduction allows for a deduction of 13.5% (one-off) or 20.5% (spread) of the acquisition value for patents and environmentally friendly R&D investments.

- The R&D tax credit is typically 25% of 13.5% of the acquisition value (one-shot) or 25% of 20.5% of amortisations (spread), offering a direct reduction of tax payable. Unused R&D tax credits can be carried forward and are automatically reimbursed after four years, providing a potential cash benefit.

Innovation Income Deduction: This allows companies to deduct 85% of the net income derived from legally protected intellectual property rights (e.g., patents, copyrighted software) resulting from their own R&D. This effectively reduces the corporate tax rate on such income to 3.75%.

2 | Regional Grants and Support Bodies

Innovation and R&D support is significantly decentralised in Belgium, with key agencies operating at the regional level (Flanders, Wallonia, and Brussels-Capital Region).

Flanders (VLAIO – Flemish Agency for Innovation & Entrepreneurship): VLAIO offers various subsidy measures to support businesses throughout the innovation process.

- R&D Subsidies: These include grants for R&D feasibility studies, research projects, and development projects, guiding innovative ideas from conception to market.

- Investment Subsidies: Financial support is available for companies investing in specific ecological technologies and for “Strategic Transformation Support” for internationally oriented companies undergoing highly innovative transformations.

Wallonia (Walloon Public Service for Economy, Employment and Research): Wallonia provides a range of grants and support for R&D and innovation.

- Technological Cheque: Supports consultancy and coaching services from approved research centres for technological development and innovation projects.

- Industrial Research & Experimental Development Grants: Offers grants for companies undertaking cutting-edge research (Industrial Research) or developing new technologies/improving processes (Experimental Development), with funding percentages varying by company size and partnership involvement.

- Innovation Partnerships: Significant funding is allocated to specific strategic areas, such as the €81 million “ATMP-Partenariat d’Innovation Technologique” for Advanced Therapy Medicinal Products, fostering collaboration between academia, research centres, and businesses.

Brussels-Capital Region (Innoviris): Innoviris is the public organisation funding and guiding R&D and innovation in Brussels.

- Project Funding: Co-finances research and innovation projects in companies, research centres, and non-profit organisations, focusing on urban challenges like mobility, health, and social inclusion .

- Innovation Vouchers: Provides up to €10,000 for companies to test ideas or conduct assessments with research centres.

- R&D Projects Programme: Offers subsidies for industrial research, experimental development, or process/organisational innovation, with funding rates depending on company size.

3 | European Union Funding Programmes

Belgian entities, like all EU Member States, can access a broad spectrum of EU-level funding.

Horizon Europe (EIC Accelerator, Pathfinder, Transition): These programmes provide substantial grants (e.g., up to €2.5 million for EIC Accelerator grants, plus equity investments up to €10 million) for high-risk, market-creating innovations and breakthrough research.

Digital Europe Programme & Innovation Fund: Support for projects in AI, cybersecurity, advanced digital skills, and climate-neutral solutions.

4 | Venture Capital Landscape

Belgium has one of Europe’s most active venture capital markets, with a notable increase in Series A funding rounds . Key VC firms include Capricorn Partners, Volta Ventures, Theodorus, Smartfin, and Astanor Ventures, investing across digital, healthtech, cleantech, biotech, and B2B SaaS. Public entities also play a role, with organisations like finance&invest.brussels supporting regional innovators. This robust VC landscape complements government incentives by providing crucial early-stage and growth capital.

Conclusion

Belgium’s multifaceted approach to innovation funding, encompassing generous federal tax incentives and targeted regional grants, creates a highly supportive environment for businesses engaged in R&D. The strong emphasis on tax relief for research expenditures, coupled with a diverse range of grant programmes tailored to various innovation stages and regional priorities, significantly de-risks innovative ventures. The active venture capital market further strengthens this ecosystem, positioning Belgium as a competitive and attractive hub for innovation and entrepreneurship in Europe.