The new patent deduction in Belgium, introduced in April 2007, is Belgium's response to the tax incentives for patents in other countries such as Ireland and the Netherlands. Under the patent deduction, Belgian companies (and Belgian branches of foreign companies) may deduct 80% of their gross patent income from the tax base. This article describes the main features of the new regime, including qualifying taxpayers and qualifying patents, the patent income that qualifies for the 80% deduction, how the deduction is calculated, and the transfer pricing aspects.