Dutch innovation box

Further to the approval by the European Code of Conduct Group, the OECD has now also concluded that the Dutch Innovation Box does not produce any harmful tax competition. Since July 2016 the OECD Forum on Harmful Tax Practices has been investigating 125 preferential tax regimes in various countries. In its report after 12 months of evaluation, the Forum concluded that the Innovation Box regimes of 11 countries, including the Netherlands, did not produce any harmful tax competition.

The approval relates to the version of the Innovation Box that (for the most part) was introduced as of January 1, 2017, and was included in the 2017 Tax Plan. These confirmations from the European Code of Conduct Group and the OECD Forum on Harmful Tax Practices that the Dutch Innovation Box is internationally acceptable, do not make any statement about potential EU State aid. In 2014 the European Commission announced that as part of its State aid investigation into the ruling practices of EU Member States it would also investigate preferential regimes for income from patents and innovation. In light of the above approvals, it seems likely that, for the purposes of this State aid investigation, the Dutch Innovation Box regime, as such, will no longer be regarded a priority for EU State aid.

However, the European Commission is expected to continue to monitor the possible presence of prohibited State aid in individual cases. This could, for example, occur if a tax ruling with the Dutch tax authorities grants a benefit to the taxpayer based on an overly broad application of legislation and regulations.


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