The European Commission has opened an in-depth investigation into Belgium’s research and development scheme for innovative companies to establish if it is in line with EU rules on state aid. The Commission will examine in particular the terms on which a number of Belgian companies have benefited from tax relief.

In 2006 the Commission approved Belgium’s R&D scheme which exempted certain innovative companies (‘Young Innovative Companies’) from paying payroll tax on part of the remuneration paid to their scientific personnel. According to the Commission, Belgium pledged to incorporate into its national legislation the definitions of the types of research eligible for tax breaks under European rules on state aid for research, development and innovation.

However, the Commission subsequently found that Belgium had not introduced these definitions until 2013; seven years after the scheme began. According to the Commission, the aid granted appeared to have given certain companies an unfair advantage for seven years.