Funding and performance of R&D in the Netherlands

R&D in the Netherlands is performed by various types of organisation and funded from several sources. In 2021, €19.7 billion was spent on R&D in this country. The business sector is both the largest funder and the largest exporter of scientific research. In addition to companies, government is an important source of funding. In addition, Dutch researchers receive money from abroad (e.g. European research programmes) and other parties, such as private non-profit organisations. Researchers carry out their research within companies, institutes of higher education and other research institutions, such as the NWO institutes or the RIVM.

The table below shows who funded R&D in the Netherlands in 2021, the amount they spent and what type of organisation performed the R&D. 

R&D spending in the Netherlands by sector of performance and source of funding, 2021, in millions of euros

Funding of R&D

Funding for R&D in the Netherlands comes from a range of sources: central government, companies, other domestic sources and other non-domestic sources.

Companies

Companies fund around half of all academic research and development work (R&D) in the Netherlands. Commercial funding focuses mainly on R&D within the company itself and within the company’s own sector (this accounts for 80 to 85% of funding). Dutch companies also fund research performed by universities and research institutions. Finally, they also fund R&D in other countries, spending €2.9 billion, according to Statistics Netherlands’ 2020 figures.

Central government

Central government funds about a third of R&D in the Netherlands. Government funding of academic research takes place in several ways.

1. Direct government funding
This takes the form of:

• Fixed financial contributions to institutions (known as institutional or basic funding). The government also funds research through intermediary organisations such as the Netherlands Organisation for Scientific Research (NWO: instruments), the Royal Netherlands Academy of Arts and Sciences (KNAW) and the Netherlands Enterprise Agency (RVO: grants & funding);
• Funding for research performed by its own knowledge institutes, such as the Ministry of Security and Justice’s Research and Documentation Centre (WODC) and the Ministry of Infrastructure and the Environment’s Mobility Policy Institute (KiM);
• Direct funding for policy-oriented research (project or programme funding).

2. Tax incentives
In addition to direct funding for R&D, there is indirect, fiscal support for R&D and innovation. This fiscal support makes it more attractive for companies to invest in R&D and innovation, for example through tax deductions. This is an important instrument within the government's innovation policy, but it is also used to stimulate R&D. This instrument has gained in importance since the Rutte government made the switch from specific financing (via programmes and subsidies) to generic tax support of innovation.

Tax incentives are governed by the Research and Development (Promotion) Act (Wet Bevordering Speur- en Ontwikkelingswerk, (WBSO), ]), a scheme for companies whereby the Dutch government compensates companies for a proportion of the costs of research and development work. The scheme provided €769 million in incentives in 2015. The Netherlands Enterprise Agency administers the scheme on behalf of the government. It consists of three facilities:

• Compensation for a proportion of the wage costs associated with research and development work in the form of a reduction in the salaries tax and social insurance contributions payable;
• An R&D allowance for self-employed people;
• An extra allowance for start-ups

Since 2012 a new tax instrument has been introduced in addition to the WBSO scheme. Known as the Research & Development Allowance (RDA), it is intended for R&D costs other than those associated with employees (which are covered by the WBSO scheme). In other words, for R&D investments and R&D running costs. The RDA scheme was worth €238 million in 2015. As of 2016, the WBSO and RDA have been merged (see the Letter to the House of Representatives of July 7th, 2015). Together, the two schemes provided €1.182 million in incentives in 2019.
 

Funds

Some R&D in the Netherlands is financed by private non-profit funds. The health funds contribute the most to scientific research. The Netherlands has several of these funds, which focus on specific disorders or groups of disorders. Their annual reports show that in 2021 they funded €192 million in research. The two biggest funds are the cancer research charity KWF and the Dutch Heart Foundation. Nineteen of the funds have joined forces in the SGF (Samenwerkende Gezondheidsfondsen).

Non-domestic

Besides funding from Dutch sources, research in the Netherlands also receives funding from foreign companies and from European Union research programmes, particularly the Framework Programmes. Foreign companies have become an increasingly important source of funding for Dutch R&D, growing from €497 million in 1996 to €2,223 million in 2016. Non-domestic funding comes from:

• Foreign companies, which mainly fund research by Dutch companies;
• The European Union’s research programmes, particularly its Framework Programmes. The Seventh Framework programme (FP7) ran from 2007 to 2013 and had a total budget of over €50 billion. Dutch researchers received €3.4 billion of this over that period, representing 7.4% of the total. Horizon 2020, the successor to FP7, runs from 2014 to 2020 and has a total budget of over €70 billion.

The data publications on the EU framework programmes show developments in the position of the Netherlands in the framework programmes and the  share of funding of the EU framework programmes in relation to government funding of R&D in the Netherlands.

Developments in R&D funding in the Netherlands

The figure below shows the relative proportions of funding from different sources. Dutch companies fund around half the R&D performed in the Netherlands. The amount paid for by the government has risen from almost €3 billion in 2001 to  €5.9 billion in 2021. The proportion of non-domestic funding has fluctuated between 10 and 13% since 1997.

R&D performance

R&D expenditure has risen steadily, from €5,041 million in 1990 to €19,752 million in 2021. The sharp rises in R&D spending by companies in 2011 and 2013 can be explained by changes in the data collection by Statistics Netherlands. For more information see the end of this factsheet or the notes under the following figure.

Industry conducted the major share of R&D in 2021, at 66%; this is followed by higher education at 29% and research institutions at 5%.