Under Dutch fiscal law it is the employer who acts as a receiver for the income tax of his employees. The employer pays the employee a net wage and he then pays to the State the difference between the gross and net income, i.e. tax and other contributions. The new law allows certain companies to retain a part of its employees income tax. This applies only to companies and research institutes that employ research personnel working on research and development projects for a company on a contract basis. Instead of paying the full income tax of its R&D personnel to the State, the company is now free to keep a part of these tax revenues to which the State was entitled. However the company can only do so after it has obtained prior approval for this operation. In order to get this approval it has to demonstrate the R&D nature of the work, being either basic industrial research, applied research or development. This measure results in a maximum intensity of 16 % calculated on the basis of the total R&D project costs. Usually the Commission allows aid intensities up to 50 % for basic industrial research and 25 % for applied research and development. So the current aid intensities in this scheme are acceptable under the Commission's policy towards R&D state aids. The Commission consides that this new measure is in line with the move from direct support for R&D to indirect support suggested in the White Paper on Growth, Competitiveness and Employment.