04/04/2025

Evaluation WBSO 2018-2022

Read the reportMeet the researchers

Is the R&D tax credit (WBSO) effective and efficient?

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Dialogic, together with SEO, evaluated to what extent the R&D tax credit (WBSO) contributed effectively and efficiently to the increase of R&D efforts by companies in the Netherlands, innovation, business performance, and the fiscal climate for high-quality economic activities in the Netherlands between 2018 and 2022.

Background

Since 1994, the Netherlands has had the WBSO as a fiscal incentive scheme for research and development in companies. WBSO stands for Research and Development Promotion Act, which was the basis of the scheme until 1995. Research and Development (R&D) refers to the subset of activities that the WBSO deals with, defined as 'technical scientific research' and the 'development of new technical products, production processes, and software'. The objectives of the WBSO are (1) to promote research and development (and thereby R&D efforts) by companies and (2) to enhance the climate for high-quality economic activities.

Main conclusions

  • The evaluation confirms that the target group reach of the WBSO remains adequate.
  • We conclude that the WBSO continues to be predominantly effective. The WBSO leads to higher R&D investments, by reducing user costs. The bang-for-the-buck (a measure of the relation between tax reduction and additional investments) amounts to €0.41 in terms of R&D in the period 2018-2022, according to our preferred estimate. However, the effectiveness of the WBSO as an incentive for additional R&D investments decreases over time.
  • In our opinion, the WBSO is an efficient basic facility for both highly and less innovative companies engaged in R&D.
  • The execution of the WBSO is micro-efficient. The implementation costs of RVO for the WBSO range from €17.5 to €20.1 million per year in the period 2018-2022, averaging 1.4% of the annual WBSO budget. This is significantly higher than that of the Innovation Box (0.12%), but can be explained by the WBSO carrying out much of the preparatory work for the Innovation Box (an R&D certificate is mandatory to qualify for the Innovation Box). Compared to grant schemes, the implementation costs of the WBSO are actually very low.
Based on the research, we provide the policymaker with the following policy options:
  • Explicitly state the objectives of the WBSO and potentially sharpen them.
  • Explore the possibility of adding an incremental element to the WBSO in the long term.
  • Reduce the growing gap between companies engaged in R&D and those utilizing the WBSO, while considering focusing the WBSO on more radical forms of innovation.
  • Eliminate the "pharma letter".
  • Explore options to address the challenges related to claiming tax credits.
  • Consider the evolution of the WBSO and its effectiveness in conjunction with the challenge of training and recruiting sufficient R&D talent.
  • Continue improving the practical implementation of the WBSO.
Finally, the research report provides some advice regarding future evaluations. The research report was sent to the Dutch House of Representatives on 3rd April. Read the Decision Note and the Government's response (in Dutch) here.