Where Your Development Budget Actually Goes

For many innovative companies in the Netherlands, the WBSO (Wet Bevordering Speur- en Ontwikkelingswerk)
is a key incentive that lowers the cost of developing new technology. But one important reality often gets overlooked:

Not all development work is R&D.

Understanding where your development budget actually goes helps companies structure projects more efficiently both technically and financially.

Let’s break it down.

Understanding the WBSO Benefit

The WBSO is a Dutch tax credit that reduces wage tax for employees performing research and development work. This effectively lowers the cost of innovation projects for companies building new technology.

Example Scenario

Consider a BV with:

• 2 R&D engineers
• 2,000 approved WBSO hours for the year
• RVO calculated hourly wage: €30

Total R&D wage base:

2,000 hours × €30 = €60,000

Approximate WBSO benefit:

36% × €60,000 ≈ €21,600 tax reduction

This means the government effectively covers a significant portion of experimental development costs. However, this only applies to qualifying R&D activities.

The Reality

In most real projects, the distribution of work looks roughly like this:

1. Experimental R&D

This is the core of WBSO that includes:

• Designing a new algorithm
• Solving technical bottlenecks
• Creating experimental architectures
• Developing proof-of-concept systems

These activities involve technical uncertainty, which is exactly what the WBSO scheme is designed to support.

2. Implementation & Development

This category is where most development hours actually go. Typical activities include:

• Implementing features
• Building APIs
• UI development
• Integrating systems
• Writing production-ready code

While these tasks are essential, many of them do not qualify as WBSO, because they involve integrations rather than solving new technical challenges.

3. Maintenance & Optimization

Examples include:

• Bug fixing
• Performance tuning
• Infrastructure maintenance
• Routine refactoring

These are critical to software quality but generally fall outside the scope of WBSO unless it opens a technically new solutions.

How Companies Handle the Non-R&D Work

Because a large portion of development falls outside WBSO eligibility, many companies adopt hybrid delivery models. Common strategies include:

• Hiring remote engineers
• Working with freelancers
• Partnering with managed development teams

These approaches allow companies to keep core R&D internal while scaling the rest of the development work efficiently.

1. Remote Employees

Remote employees work as part of your internal team but from different locations.

Advantages

• Integrated into company processes
• Long-term knowledge retention
• Lower hiring constraints globally

Challenges

• Requires internal management
• Time zone coordination
• Onboarding overhead

Remote employees still need the same project leadership and coordination as in-house teams.

2. Freelancers

Freelancers are often used for short-term or specialized tasks.

Advantages

• Flexible hiring
• Fast onboarding
• Pay only for work delivered

Challenges

• Limited long-term commitment
• Availability varies
• Knowledge continuity can be difficult

Freelancers work best when companies need specific expertise for a limited duration.

3. Managed Development Teams (Outsourcing)

Many companies eventually move toward outsourced development teams.

In this model, a provider manages the engineering team while the client focuses on product direction.

Advantages

• Access to experienced engineers globally
• Lower recruitment and operational overhead
• Faster scaling of development capacity

For companies with strong product leadership internally, this model often becomes the most scalable option.