EU launches investigation into Belgian R&D tax break scheme

BRUSSELS (Reuters) - The European Commission said on Wednesday it had opened an in-depth investigation to determine whether Belgium’s system of tax relief for companies related to research and development was in line with EU state aid rules.

The Commission in 2006 approved a scheme that allowed Belgium to grant young innovative companies exemption from paying payroll tax on the salaries of scientific staff.

Belgium had pledged to define the types of research eligible for such tax breaks, but had failed to do so until 2013, the Commission said.

The aid granted appeared to have given certain companies an unfair advantage for seven years, the Commission said.

“At this point in the investigation, Belgium has not provided sufficient information to dispel the Commission’s doubts,” the Commission said in a statement.

Belgium has a vibrant biotechnology sector, which has expanded in the past decade in part because of tax breaks covering patent income and research workers’ salaries.

A string of such biotech companies, such as Ablynx, Galapagos and ThromboGenics, are listed on the Brussels stock exchange.

Reporting By Philip Blenkinsop; Editing by Martin Santa