Reduced employer contributions for commercial research

Skills supply

As of January 1, 2014, employers can get a reduction in the employer's contribution for employees working on research and development (R&D) for commercial purposes.

Who can make the deduction?

Employers may make the deduction for employees engaged in systematic and qualified research or development for commercial purposes for at least 75% of working time and 15 hours per month. Actual working time is defined as the time actually worked by the employee and thus does not include absences due to vacation, flexitime, sickness, parental leave or other reasons. This applies both to the time spent on research or development work and to the total time worked.

The employee must have reached the age of 26 but not 65 when the year begins. The type of employment does not matter, nor does it matter whether they have worked in Sweden or any other country.
Examples of jobs that may qualify for deductions are researchers and qualified product developers. Technical or medical experts who use their knowledge and experience to perform tasks as part of research or development activities may also be covered.

Employers who are self-employed or partners in a partnership cannot deduct their own contributions on the basis of their own research.

What is systematic and qualified research and development?

Employers can only deduct systematic and qualified research or development. You can read below what is meant by this, whether it concerns goods or services and whether it concerns engineering, science, medicine or any other field of research.

  • Research is defined as systematic and skilled work to generate new knowledge for commercial purposes.
  • Development refers to the systematic and skilled use of research results for commercial purposes to develop new goods, services or production processes or to significantly improve existing ones.
  • Substantial improvement means making a change that leads to a significant improvement in, for example, quality, use, design, manufacture or supply. In addition, the development work must be a direct consequence of a research result. Ordinary product development is not covered.
  • Systematic work means investigating, implementing or following up facts according to a certain method (plan).
  • The term 'qualified' means that the work must have a real research or development content, i.e. the support must be limited to actual or direct work on research or development. Various support and ancillary functions are therefore not included.

All of the listed criteria for either research or development must be met for each employee for whom the employer makes deductions.

When assessing the right to deduction, the Tax Agency also takes into account the employee's duties and the wider context in which the work is carried out. Context means, for example, the research or development project in which the person is working, regardless of whether it is run by the employer or a client.

How much can the employer deduct?

Employers may deduct up to 10% of the employee's salary, but never more than SEK 230,000 per month for all employees combined (equivalent to SEK 2.76 million per year). A deduction may not be "saved" to another month, for example by making no deduction in January or two in February.
Employers are also never allowed to deduct more than they can pay the old-age pension contribution, which is 10.21% of the contribution base.

Groups of companies

If the employer is part of a group, the maximum amount applies to the whole group. However, as much as possible of it should be made by the parent company. The rest may be made by the subsidiaries in the order decided by the parent company.

Tax-free remuneration according to the Research Tax Board

The Researchers' Tax Board may have decided that 25% of the remuneration of a foreign expert, researcher or other key person should be tax-free. In that case, the employer's contribution is calculated on 75% of the salary. Otherwise, the conditions are the same. Please note that the Board's decision also applies to categories other than researchers.

Holidays and illness

Normally, the research allowance is not affected by a month of leave due to illness, vacation, parental leave or leave of absence. However, the condition is that the person has worked under the conditions for the deduction during the four months immediately preceding the leave.

If the person is on leave for more than one month, a deduction may be made for the first month if the other conditions are met.

The Swedish Tax Agency's website contains calculation examples and more detailed advice on how the research deduction is to be reported in the employer's tax return, etc.