Last week, the new government has made a budget proposition for 2023 to increase the R&D tax relief cap from 1.2 M SEK to 3M SEK. This is encouraging news for companies because they can include more employees involved in their R&D projects, particularly for companies with large R&D departments, with the aim to have a direct impact on the employment of new R&D employees. This is because the new capped amount allows companies to involve more R&D employees in these projects, and as such, will positively impact the R&D investment and employment of new R&D staff within a company.
The R&D tax relief was first introduced in year 2014, to help companies to finance their innovation and to stimulate employment in the R&D sector. The relief has been reinforced several times since the law was passed, to be more generous to the innovative companies and to help them to invest in R&D. The capped amount increased from 230 000 SEK to around 1.2M SEK per month, and the working time criteria was decreased from 75% to 50%.
Today, with an average salary of 40 000 SEK per month for a R&D employee, the R&D scheme allows a company to benefit from the relief for around 150 employees, who are working at least 50% of their total time on qualifying R&D projects. As such, this new proposition could increase the number of eligible R&D employees to around 350.
As mentioned in the 2022 budget proposition, the Moderates´ intentions have been made clear regarding the R&D tax relief;
“The moderates want to see more research investments without political interference, then it is better to invest in research deductions for all companies rather than research grants where authorities choose who gets to share in the funding”.[1]
The R&D tax relief is a great scheme to help companies to finance their R&D projects, but it is important to emphasize that some changes have to be made regarding its practical application, especially if it is to be used to its full capacity.
With this new budget proposition, the government is sending a strong positive signal in favour of both the R&D scheme and the benefit of using it to boost the innovation power in Sweden. Therefore, we now hope that they will also make some equally positive changes to overcome the difficulties encountered by many companies during the application process.
[1] https://www.riksdagen.se/sv/dokument-lagar/dokument/motion/okad-trygghet-och-fler-som-arbetar—moderaternas_H9024040/html