Can software development qualify for R&D tax relief in Sweden?
Yes—it absolutely can! You don’t need a white lab coat or a microscope to qualify for the R&D tax deduction, forskningavdraget. The Swedish R&D tax relief scheme is designed to support a wide spectrum of innovation-driven activities—from advanced engineering and physical product development to cutting-edge digital solutions.
In recent years, there’s been a noticeable rise in interest around software-based R&D, as companies continue to push boundaries in AI, cloud infrastructure, cybersecurity, and scalable digital platforms. As these projects grow more complex and technically demanding, the Swedish Tax Agency has increasingly recognized software development as a legitimate and valuable form of R&D.
So whether you’re building AI-powered analytics, designing scalable cloud infrastructure, or resolving performance bottlenecks in a high-load backend system, your work may qualify, provided it meets the legal and technical criteria.
Software and R&D: Where Do We Draw the Line?
When it comes to drawing the line between routine development and R&D, software is an area that often raises questions. While such projects may be eligible in principle, the challenge lies in the details. Many software initiatives blend innovative elements with routine development tasks, making it difficult to clearly separate qualifying R&D activities from standard engineering work. This complexity is amplified by the nature of software development itself, which typically follows an engineering-oriented cycle of building, testing, and iterating—as opposed to the more linear, hypothesis-driven methodology commonly found in scientific research.
Understanding where innovation ends and regular development begins isnʼt always obvious—especially when the same team is doing both.
That’s Where We Come In
At Leyton, we work closely with software teams to assess their projects and pinpoint the technically eligible components. We help companies articulate the core R&D aspects— such as the experimental methods used, the technical challenges encountered, and the knowledge advancements achieved—so that their claims are accurate, optimized, and compliant.
What Makes Software Projects Qualify as R&D?
To qualify under Swedenʼs R&D tax reliefscheme, a software project must be grounded in systematic research and development R&D. This means that the activities undertaken should involve a structured, methodical process aimed at generating new knowledge or applying existing knowledge in new ways. Eligible projects are those where the development team encounters technical challenges, meaning unexpected issues that cannot be resolved through standard practices or established solutions. Crucially, the project must be either based on existing research or actively producing new improvements and advancements that contribute to technological progress.
Moreover, to reach the threshold, the outcome of the work must be a significant improvement to existing technologies or result in the creation of a new product, process, or system. This improvement should not be superficial; it must push the boundaries of what is currently known or achievable in the field. Lastly, the work must be carried out with a commercial purpose; that is, the intent to use or market the innovation.
In 2026, a reformation of R&D tax relief law will come into effect, creating better opportunities for software development companies to benefit from the scheme.
The updated legislation recognizes that development activities are central to solving scientific or technological problems in new and innovative ways. Importantly, it acknowledges that not all progress stems from highly structured methods; non-systematic approaches, including trial-and-error experimentation, can also lead to significant advancements. This change opens the door for smaller companies to take part in the Swedish R&D tax relief.
A key feature of the new law is the clear distinction it draws between research and development. In fields like computer science, this is particularly relevant, as projects often range from pure research—such as foundational work in AI or algorithm design—to applied development, focused on improving products, systems, or services. By embracing this full spectrum, the regulation ensures that a wider array of software and digital innovation projects will be recognized as eligible for R&D tax relief.
At Leyton, we are actively monitoring and interpreting these regulatory changes to help our clients stay ahead. Our team continuously follows updates on the new law to ensure that businesses are well-prepared to maximize their future claims—while remaining fully compliant.
👉 This article provides more insight into the proposed changes
Examples of software activities that may qualify as R&D
To better understand how software development can qualify as R&D, here are some real-world examples from various subfields of computer science
- Artificial Intelligence & Machine Learning: Developing new algorithms, improving model performance, or addressing training challenges with complex datasets.
- Cloud Computing: Creating scalable, secure, and high-performance cloud architectures or optimizing resource management across distributed systems.
- Cybersecurity: Designing new encryption protocols or intrusion detection systems, or addressing security vulnerabilities in emerging technologies.
- Big Data & Data Engineering: Building advanced data processing pipelines, developing real-time analytics systems, or solving data consistency issues at scale.
- Natural Language Processing (NLP): Creating language models for low-resource languages, improving semantic understanding, or reducing model bias.
- Computing: Solving latency, memory, or computation trade-offs in decentralized environments with limited connectivity.
Curious if Your Software Project Qualifies?
If your team is pushing boundaries, solving complex technical problems, or building what’s never been built before, there’s a good chance your work includes eligible R&D.
