On 27 April 2023, the Federal Public Service (FPS) Finance published a new circular letter tightening the rules for obtaining partial wage withholding tax exemption for research and development (R&D) beginning 1 August 2023. The stricter interpretation is the result of a judgement by the Belgian Supreme Court at the beginning of this year.

Belgian Supreme Court

Companies engaged in R&D can benefit from a partial exemption to pass on to the Treasury a portion of the withholding tax on the salaries of certain researchers. This exemption means that up to 80% of the wage withholding tax does not have to be passed on, if a number of conditions are met. For example, the employee must have a qualifying degree and the employee must be working on R&D projects or programs.

Since 2014, the company has to report these projects and/or programs ‘upfront’ to the Federal Science Policy (Belspo). Due to a lack of clarity in the law, it was uncertain what should be understood with ‘upfront’:

  • Prior to the start of the project or program;
  • Prior to the period for which the exemption is applied.

FPS Finance has followed the second position for many years. This meant, therefore, that the exemption could be applied as from the month in which the project or program was notified to Belspo, regardless of whether the project had already started. The exemption could also be applied for a project or program that had started, but there was no retroactive effect for the period prior to the notification.

The Belgian Supreme Court took a different position in two judgements on 6 January 2023. The Court stated that the notification must be made before the start date of the project or program. The Court therefore follows the first and much stricter position.

FPS Finance Circular Letter

Although FPS Finance followed the second position for many years, a recent circular letter sought alignment with the Supreme Court's stricter case law. According to the circular letter, starting 1 August, the notification to Belspo must be made before the project start date. A transitional regime is provided until 1 August.

Based on this circular letter, the following projects and programs are still eligible for the exemption:

  • Ongoing research or development projects or programs notified prior to the start of the research or development projects or programs;
  • Ongoing research or development projects or programs that were notified before 1 August 2023 although the project or program has already started. These notifications therefore remain valid for the purpose of this exemption, even if they occurred after the start date of the research or development projects or programs.


For ongoing research or development projects or programs that have not yet been notified, companies can still perform the notification until 1 August 2023. The exemption is then possible for the remaining term (from the notification).

Based on this circular, the following situations are no longer eligible for the exemption:

  • research or development projects or programs that are ongoing on 1 August 2023 and that have not yet been notified at that date;
  • research or development projects or programs initiated as of 1 August 2023 that have not been notified prior to the start of the project/program.

Time to examine internal procedures

This new position by the FPS Finance changes the rules of the game that have been in place for many years. This interpretation of the ‘upfront’ character of the notification not only puts additional time pressure and administrative burdens on companies, but, most importantly, risks increasing the costs of R&D projects if the start date is not closely monitored.

Fortunately, a transitional (albeit short) period has been provided allowing companies to adapt their internal procedures to this new position. Companies should therefore align their internal procedures with this new position by 1 August 2023.

As a company, do you use the R&D exemption? If so, be sure to check that the projects and/or programs have been notified to Belspo and that all legal information is included in the notification(s). We recommend analyzing and updating the notified projects and programs before 1 August 2023, and reviewing internal procedures, taking into account this new interpretation.

Please do not hesitate to contact our specialized KPMG team with any questions.