Leyton is an international consulting firm that helps businesses leverage financial incentives to accelerate their growth and achieve long-lasting performance.
Leyton is an international consulting firm that helps businesses leverage financial incentives to accelerate their growth and achieve long-lasting performance.
This article emphasizes the necessity of thorough preparation, both in terms of financial and technical justifications, to substantiate R&D claims. Many companies mistakenly assume that receiving the funds implies automatic approval, only to face challenges during audits when the burden of proof falls on them. Taking benefit of the relief is using public money. Hence it is normal that Skatteverket is auditing companies that are claiming to ensure that public money is used as defined in the purpose of the law regarding R&D tax relief.
To claim R&D tax relief, companies must meet specific financial and working time criteria. Financial justification involves assessing the eligibility of the employees involved in the R&D activities. However, it is equally important to ensure that employees meet the working time criteria. Employees engaged in R&D must spend at least 50% of their working time on qualifying R&D activities, with a minimum of 15 hours per month dedicated to such tasks. Proper tracking and documentation of employees’ time allocation on a monthly basis are vital to demonstrate compliance during audits.
Beyond financial justifications, companies must carefully evaluate the technical aspects of their projects to determine if they meet the definition of R&D as outlined by the law. This involves, among other things, assessing whether the project aims to achieve scientific or technological advancements, involves systematic investigation and experimentation, and resolves technical uncertainties. Companies must have a clear understanding of the law’s criteria to ensure that their projects align with them.
Moreover, maintaining comprehensive technical documentation is crucial for substantiating R&D claims during an audit. For example, this includes project plans, progress reports, design documents, test results, research report and any other relevant evidence demonstrating the performance of R&D activities. Proper documentation not only helps companies assess their own eligibility but also acts as a robust defense during audits, ensuring compliance with Skatteverket’s requirements.
While companies may receive R&D tax relief funds, audits can reveal deficiencies in their claims. During these audits, the burden of proof lies with the companies, who must demonstrate that they have met the eligibility criteria as defined by the law. The absence of proper documentation or misinterpretation of the law’s requirements can lead to complications, potentially resulting in the repayment of funds and additional penalties.
The importance of adequate preparation and documentation cannot be overstated for companies seeking R&D tax relief in Sweden. By thoroughly assessing financial justifications and diligently tracking employees’ working time, companies can meet the prerequisites for claiming the relief. Additionally, carefully evaluating the technical aspects of projects, aligning them with the law’s criteria, and maintaining comprehensive documentation will greatly assist during audits.
In this journey, Leyton offers invaluable support to companies, guiding them through the complexities of the R&D tax relief process. Our experienced professionals help companies assess the eligibility of their projects, ensure compliance with the law’s criteria, and provide guidance on the necessary documentation to substantiate your claim.
