Summary
Business and industry representatives in Sweden have recommended that the government adopt an enhanced cost deduction scheme for research and development wage costs instead of a refundable tax credit. They argue the deduction - structured as an extra 200% write-off on qualifying R&D wages - provides greater tax relief and would make Sweden more attractive for R&D investment.
Consultation context
Sweden's Ministry of Finance began a consultation in March to gather views on two possible R&D income tax incentives. Officials presented two alternatives: an increased cost deduction and a refundable tax credit equivalent to 20% of the wage base. In response, the Swedish Business and Industry Tax Delegation and other industry groups have submitted their preference for the deduction model.
The delegation emphasized that the cost deduction route would deliver larger tax relief to firms and could be a material factor in companies' location decisions for research and development activities. Under the proposal supported by business groups, employers would be able to apply an additional 200% deduction to qualifying R&D wage costs.
Industry reaction
TechSverige, representing Sweden's technology sector, said the enhanced deduction would make Sweden more competitive versus other countries' R&D incentives. "That alone creates attractiveness for R&D investments in Sweden, which in the long term strengthens us as a knowledge nation," the authors wrote.
Other industry bodies reflected similar views, noting that the cost deduction is simpler to implement administratively and that simplicity would support efforts to attract new businesses and investment into Sweden.
What remains uncertain
The consultation process is ongoing and the government has not announced which incentive it will adopt. Industry groups have presented their preference, but the final policy decision and legislative design remain to be determined.
The debate centers on trade-offs between the relative sizes of tax relief, administrative complexity, and the potential to influence firms' location choices for R&D work.
Conclusion
Business representatives in Sweden are united behind a cost deduction-based R&D incentive, arguing that a 200% deduction on qualifying wage costs would produce stronger relief, be easier to administer, and enhance Sweden's appeal for R&D activity compared with a 20% refundable wage credit. The Ministry of Finance consultation will determine which option, if any, is implemented.