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Increased relief on social security for research and development (R&D-relief) from 1 April 2020

Increased relief on social security for R&D

Proposed bill on adjusted rules for R&D has been submitted to the Swedish Parliament.

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Johnny Ekström

Skatterådgivare personbeskattning

KPMG i Sverige

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The Swedish Government has submitted a bill for increasing the relief of social security fees for employees working in the area of research and development, the so called R&D-relief, to the Swedish Parliament (Riksdagen).

The bill indicates that the current R&D-relief is increased by lowering the social security contributions for people working in the area of research and development. The relief for the total contribution is proposed to be doubled from 10 to 20 per cent. Simultaneously, the cap on the relief is increased from SEK 230,000 to SEK 450,000 per month. The changes are proposed to come into force on 1 April 2020 and will be applied on remuneration paid out after 31 March 2020.

KPMG comment

Increasing the level of relief will benefit companies of all sizes who are working in the area of research and development. Currently small and medium sized enterprises tend to have insufficient experience in how to fulfill the quality requirements in the documentation required by the Swedish Tax Agency to show that the work performed is meeting the requirements for the R&D-relief.

One of the requirements is that the development in progress must be systematic and “qualified” work. The aim must be to use the results of the research for developing new products, services or new production processes or, in the alternative, to improve existing processes.

If the documentation is insufficient, the Swedish Tax Agency will qualify the development/research as ordinary product development, the implication being that either it is not based on research, or the results of which will not lead to significant improvement. This in turn will lead to loss of the relief.

Currently there is lack of legal guidance and no case precedent available. However, every company working in the area of research and development has equal right to the relief.

We have experience with these questions and you are welcome to contact us for help on meeting the requirements necessary for the R&D-relief.

Read more:
The article in Swedish

Johnny Ekström
+46 8 723 96 70
johnny.ekstrom@kpmg.se

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