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Blog | That's bad luck, tax break is no more! | EP&C Patent Attorneys

Investing in honest communicationIn just a short period of time, I have spoken to several board members of companies that have suffered a financial setback. Their companies are extremely profitable and are all just as innovative as they have been in previous years. They have all nevertheless been confronted with the phasing out of their Innovation Box regime, as a result of which they now have to pay considerably more tax. I regularly hear them mention figures with more than six noughts. That is serious money! 

It has nothing to do with a lack of willingness on the part of the Tax and Customs Administration. These companies simply no longer satisfy the 'double entrance ticket' requirement that currently applies to somewhat bigger companies.

Double entrance ticket?

Nowadays, if you are a bigger company and want to qualify for the Innovation Box, the innovations no longer only need to have taken place under the WBSO (Wet Bevordering Speur- en Ontwikkelingswerk - Research and Development (Promotion) Act) you also need to apply for a patent on them. The first entrance ticket, the WBSO, is required to guarantee that the R&D activity took place in the Netherlands. The second entrance ticket, the patent, is required to guarantee that it is an actual innovation. Not just one within the company itself, but one that is considered to be novel and inventive worldwide.

In my opinion the double entrance ticket requirement is justified, as it encourages making inventions for which you can obtain an exclusive patent right for a period of twenty years. This can help companies take and maintain a leading position in the world.

Is it hard to obtain a patent?

In practice it appears that many companies set very high standards for themselves when it comes to whether or not to apply for a patent. This is often due to 'hindsight': once you have become aware of an invention, it all too often seems obvious and therefore too simple for a patent.

The invention then quite incorrectly appears to be less inventive than it actually is. You have just got to come up with the idea. If the invention is really that obvious, surely someone else would have come up with the idea before. Fortunately patent examiners are well aware of this. With a clearly written patent application the honest story will result in a solid patent and a deserved tribute to the inventor(s).

My new year tip

So: it might not be your favourite pastime to get involved in legal and tax affairs. The knowledge that you could possibly save thousands, or possibly even hundreds of thousands of euros, and at the same time develop an exclusive right, will hopefully be enough of an incentive for you to take a closer look at your innovations.