New tax incentive for research and development

Background

On 13 August 2026, the Swedish Government submitted a draft bill concerning a new Swedish tax incentive for research and development (R&D) in the form of an increased cost deduction (super-deduction). With this tax incentive, Sweden would be among the OECD countries offering the highest level of subsidy for R&D.  
 

Increased cost allowance as a supplementary tax incentive for R&D

In a legislative proposal from January 2026 two different proposals for supplementary tax incentives for research and development were suggested; an increased cost deduction and a refundable tax credit. In the draft bill, however, the Government has decided to proceed with the proposal that companies should be able to claim higher deductions for costs associated with staff working on R&D (increased cost deduction). It is proposed that the additional deduction should amount to 200 per cent of eligible staff costs (i.e. 300 per cent in total). 

There are several reasons why the Government has chosen to proceed with the increased cost deduction rather than a refundable tax credit. The Government considers that it is easier to apply and implement the increased cost deduction within the framework of existing tax rules. Other advantages highlighted are that it is easier to monitor, that it reduces the risk of abuse and fraud, that there is an advantage in the link between a company’s profit and the deduction and that it better complements the existing deduction on employers’ contributions for staff working in R&D (the "R&D research tax credit” rules).

One challenge in ensuring that tax incentives have a real impact on businesses is how the incentive interacts with the rules on supplementary tax. Supplementary tax is a global minimum tax of 15 per cent that applies to large multinational groups (with annual revenue exceeding 750 million euros) under the OECD’s model rules for global minimum taxation. If a group’s effective tax rate in a particular country is lower than 15 per cent, the group must pay supplementary tax to reach this minimum level. Example: A company with an effective tax rate of 20 percent applies the new R&D tax credit and ends with a rate of 12 percent. Without specific exemptions, the top-up tax would upraise the tax rate to 15 percent, which means that the tax credit does not have desired the effect. 

The Government notes that since the report on a new tax incentive for research and development was presented in January, a new regulatory framework for additional tax has been introduced. The new framework provides for relief in the calculation of supplementary tax for ‘qualified tax incentives’, which resolves the problem that incentives cannot be fully utilised when they reduce the effective tax rate to below 15 percent. It is the Government’s assessment that the increased cost deduction, as set out in the draft bill submitted to the Council on Legislation, constitutes such a qualifying tax incentive that entitles the taxpayer to relief when calculating the additional tax. This means that companies utilising the increased cost deduction can realise the full benefit of the deduction without risking that the additional tax will neutralise the advantages. However, this relief applies only up to a certain ceiling, which means that companies with very extensive R&D investments or low effective tax rate may derive only limited benefit from the deduction, even though it is classified as a qualified incentive.

The definition of R&D in the new tax incentive is to be the same as that applied under the current R&D research tax credit, and the Government refers to this exiting regulatory framework when assessing whether the criteria are met. One difference from the existing regulations, however, is that eligible personnel costs refer to remuneration and benefits for work carried out by persons engaged in R&D within the EEA, without any direct link to the payment of Swedish employer’s social security contributions, whereas under the existing R&D research tax credit regulations, the work must form the basis for Swedish social security contributions.
 

Deloitte’s comment

We view the Government’s decision to proceed with the proposal for a further tax incentive for research and development very positively. The link between innovation and economic growth is clear, and an incentive aimed at increasing Swedish corporate investment in research and development is therefore important and of great significance for Sweden’s international competitiveness and long-term socio-economic development.

The Government is proceeding with the proposal for an increased cost deduction. In light of the new regulations on supplementary tax, an increased cost deduction appears to be a natural and sensible choice. The increased cost deduction was also advocated by the majority of consultation bodies, and it means that Sweden would become one of the OECD countries with the highest level of subsidies for research and development. At the same time, the link to profit means that companies in the start-up phase or with deficits spanning several years risk being wholly or partly excluded from the support in favor of already established and profitable companies, which does not necessarily reward the most innovative firms. A refundable tax credit would have benefited these companies more effectively, although the existing research tax credit may partially compensate for this. 

Both the increased cost deduction and the new regulations for the research tax credit, which were presented in June, are proposed to be implemented on 1 January 2027. The fact that this is an election year creates some uncertainty regarding the ongoing legislative process. It is to be seen whether the proposals will form part of the forthcoming autumn budget and how these proposals will be prioritized in the event of a change of government. 

If you have any questions or require assistance regarding the application of tax incentives or in preparing for forthcoming regulations, please do not hesitate to contact us.