The Challenge of Defining R&D in a Regulated Sector
In medtech and biotech, innovation is complex by nature. It spans disciplines, from device design and clinical validation to regulatory strategy and software development. But when it comes to identifying which activities actually qualify as research and development under the Swedish R&D tax incentive, many companies struggle – not with the work itself, but with understanding and clearly presenting how new knowledge is being generated and used.
At Leyton Sverige, we regularly support medtech and biotech companies navigating this process. One of the most common challenges we observe is that even highly competent teams lack a shared understanding of what constitutes eligible R&D. This leads to underreported activities, inconsistent documentation, and missed opportunities to capture value from work that, in principle, might qualify.
New Knowledge Must Be the Goal – and the Driver
The core issue often comes down to one simple but critical misunderstanding: It’s not enough that a task feels technical or innovative. To qualify, the work must generate new knowledge at the sector level, not just within the company. This knowledge must also be decisive for the development of the product or solution – not a byproduct or supporting activity. In other words, the R&D must involve uncertainty and exploration that directly shapes the development path forward.
Not All Regulated Work Qualifies as R&D
This is particularly relevant in medtech, where teams are working under strict regulatory frameworks such as the EU Medical Device Regulation (MDR) or IVDR. While compiling documents like Design History Files (DHF), Risk Management Files, or Clinical Evaluation Plans (CEP), many assume the associated work automatically qualifies as R&D. In reality, much of this documentation is part of compliance and does not meet the requirement of generating new sector knowledge – unless it is tied to truly novel design or performance development under technical uncertainty.
“New” Must Be Proven, Not Just Claimed
Moreover, it is not sufficient to simply claim that something is new. The Swedish Tax Agency (Skatteverket) requires companies to compare their product or technology to existing solutions on the market. Whether the innovation is entirely new or represents a significant improvement over current alternatives, this comparison must be clearly documented. Minor refinements, such as small UI updates, bug fixes, or tweaks to existing protocols, are not eligible.
Documentation as a Strategic Lever
These requirements highlight the importance of having a well-defined, consistent approach to documentation. Too often, documentation is treated as an afterthought or an administrative burden. But when approached strategically, it becomes a powerful asset. It provides traceability, clarity, and narrative, not only for tax purposes but also for regulatory audits, internal knowledge transfer, CE marking readiness, and due diligence. In our experience, the companies that benefit most from the R&D tax incentive are not necessarily those doing the most R&D, but those who are best at capturing and communicating it.
Building Better Habits: Practical Recommendations
To improve alignment and readiness, we recommend building better habits around documentation and internal awareness:
- Clarify eligibility definitions early in the development process, and ensure that all relevant teams (engineering, clinical, regulatory, software, and quality) share the same understanding.
- Capture decision points, iterations, and reasoning, not just outcomes. Demonstrating why a particular solution was pursued is often just as important as what was done.
- Use tools and workflows that support real-time documentation to avoid relying on reconstructions months later.
- Educate staff on the eligibility criteria, especially the requirement that knowledge must be new to the sector and directly influence product development.
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