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Sweden: Proposal for enhanced relief, social security related to R&D

Sweden: Proposal for enhanced relief, social security

The Swedish government has proposed legislation relating to research and development (R&D) and specifically to provide enhanced relief relating to social security contributions for salary and wages paid to eligible employees involved in R&D projects.

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The bill proposes to increase the current level of R&D social security-related relief by lowering the social security contributions for those individuals working in the area of research and development. Under the proposal, relief for the total contribution would be doubled from 10% to 20%. Also, the cap on the relief would be increased from SEK 230,000 to SEK 450,000 per month.

The changes are proposed to be effective 1 April 2020, and would apply for remuneration paid after 31 March 2020.


KPMG observation

Increasing the level of relief would benefit companies of all sizes if involved in R&D activities. Currently, small and medium-sized enterprises tend to have insufficient experience in completing the documentation to show that the work performed is meeting the requirements for the current R&D relief. One of the requirements is that the development in progress must be systematic and “qualified” work. The aim of the R&D must be to use the results of the research for developing new products, services or new production processes or, alternatively, to improve existing processes. If the documentation is insufficient, the Swedish tax agency may determine the development or research is ordinary product development—the implication being that it is either not based on research, or the results of which will not lead to significant improvement. This in turn can result in a loss of the claimed relief. At present, there is lack of legal guidance, and no case precedent is available. However, companies involved in R&D activities need to consider claiming their rights to the social security relief measures.


For more information, contact a KPMG tax professional in Sweden:

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

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