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The Swedish Government has taken significant steps to expand and enhance R&D tax incentives with a new suite of legislative proposals.
Swedish version here
In brief
- A new R&D super-deduction would allow an additional 200% deduction for corporate income tax purposes.
- The existing R&D tax relief would be broadened and simplified, including wider R&D definitions, cap indexation and removal of the 15-hour rule.
- The proposals are intended to come into effect in January 2027, and aim to strengthen Sweden’s competitiveness as a research nation and encourage greater R&D investment.
On 13 August 2026, the Swedish Government submitted a legislative proposal for a new R&D tax incentive for review by the Council on Legislation. This proposal represents the culmination of a multi-year inquiry into Swedish R&D tax incentives and would, starting in 2027, implement an additional 200% “super-deduction” against taxable income to supplement the existing R&D tax relief available today. This model was chosen over the alternative option presented by the inquiry, a refundable tax credit, for reasons of cost and complexity.
In order to simplify implementation, the new super-deduction will largely share the same cost basis as the existing R&D deduction from social security fees. This means that the incentive will apply only to direct employee remuneration, including salaries, fees and benefits, and will not cover purchased R&D services, external consultants or other non-payroll R&D expenses. The super-deduction will likewise leverage the same technical eligibility criteria as the current incentive, including shared definitions of research and development, allowing the two incentives to operate within a common framework.
Unlike the existing R&D tax relief, which is capped at a benefit of SEK 3 million per month, the super-deduction will have no ceiling. For companies in a tax loss position, the deduction will generate an increased tax loss that can be carried forward, allowing the tax benefit to be utilized once profitability is reached. The intention is that the super-deduction will therefore target larger and more profitable companies, as a supplement to the existing incentive which provides immediate liquidity.
The proposed super-deduction is expected to count as a Qualified Tax Incentive (QTI) under new rules adopted by the OECD as part of its Pillar Two Side-by-Side package. Rather than simply lowering taxable profit, a QTI counts towards the tax a group is treated as having paid when its effective tax rate is measured against the global 15% minimum. Multinationals claiming the super-deduction will therefore be able to reduce the top-up tax they would otherwise owe in Sweden.
Expansion of the existing regime
This latest proposal is additional to, and dependent upon, other pending legislative proposals that seek to streamline and strengthen the existing social security-based R&D incentive. Chiefly, another proposal, reviewed by the Council on Legislation on 17 June 2026, aims to substantially streamline the shared framework of R&D eligibility criteria by:
- Simplifying and clarifying the definitions of “research” and “development”.
- Removing the requirement that qualifying employees work more than 15 hours per month of R&D activities.
- Allowing the Swedish Tax Agency to consult with other authorities for support with technical assessment of R&D.
A third legislative proposal has been presented for public consultation, which would index the monthly cap of the existing R&D deduction to the Income Base Amount (IBA), rather than keeping it fixed at SEK 3 million.
All three sets of legislative changes are proposed to enter into force on 1 January 2027.
How EY teams can help you
EY teams can help you navigate Sweden’s R&D tax incentive landscape as it continues to evolve. With an engineering-led approach, driven by experienced engineers and scientists, we can understand your R&D activities and effectively articulate eligibility under the current and proposed rules. We provide support throughout the technical and financial claim process, from initial feasibility through to implementation and potential tax authority inquiry. Please do not hesitate to contact our team for a consultation to discuss current R&D incentive opportunities or how the proposed changes may affect your business.
Authors:
- Marcel Sikkema – Partner – Quantitative Services – +46 73 340 77 82
- Jiayi Yang – Senior Manager – Quantitative Services – +46 70 956 73 90
- Dylan Treisman – Manager – Quantitative Services – +46 70 293 54 75
Summary
The Swedish Government has proposed a significant expansion of Sweden’s R&D tax incentive framework. A new super-deduction would allow an additional 200 percent deduction for corporate income tax purposes, while parallel reforms would broaden and simplify the existing social security-based R&D tax relief. Together, the proposals are intended to strengthen Sweden’s competitiveness as a research nation, encourage greater R&D investment and enhance the attractiveness of conducting R&D activities in Sweden.
