forskningsfradrag

Forskningsfradrag is a tax incentive offered by several Nordic countries to encourage private investment in research and development. The mechanism typically allows businesses to deduct a portion of eligible research and development costs from their taxable income, thereby lowering the net tax payable. In practice, the incentive is intended to boost innovation, productivity, and competitiveness by reducing the after-tax cost of R&D.

What counts as eligible costs can include salaries of researchers and project staff, costs for external research services, materials and equipment used in R&D, overheads allocated to R&D activities, and sometimes depreciation or rental costs. Routine business expenses such as marketing or general administration are generally not eligible.

Eligibility criteria vary by country but generally require that the activity constitutes systematic, experimental development aimed at creating new or substantially improved products, processes, or software. Projects must be verifiable and properly documented, with time tracking and cost accounting for eligible personnel and subcontractors.

Claiming process and limits: The deduction is claimed when filing the annual tax return, using a designated form or schedule that separates R&D costs. There is usually a cap on eligible costs or a limit on the percentage of costs that can be deducted. Some regimes allow for refundable credits or carry-forward if the company is not yet profitable; others provide non-refundable deductions only.

Impact and critique: Forskningsfradrag aims to foster innovation and economic growth, but critics note complexity, risk of abuse, and uneven benefits across firms. Policymakers periodically adjust rates, eligibility, and administrative rules to improve effectiveness.