Forskningsavdrag, Sweden’s R&D tax incentive: documenting corporate knowledge and know-how

Good documentation of R&D work can be the key to a successful claim for Sweden’s tax incentive Forskningsavdrag (FoU-avdrag). However, this is not the only reason to assess whether your record-keeping is as rigorous as it could be. Find out more about documenting R&D in the tech sector.

Forskningsavdrag is Sweden’s research and development (R&D) tax incentive and provides a reduction of social security contributions paid by the company of up to SEK 1 225 652 per month. The ability to properly document the work carried out, particularly in the complex and rapidly-evolving technology sector, is key to a successful claim.

However, software engineering as an industry is suffering from a lack of documentation of work completed in the field. This is seen within a wide range of companies from gaming studios, through fintech, to in-house software departments. Finding relevant information after-the-fact can be difficult, and valuable knowledge to support future R&D and innovative work is often lacking.

Beyond providing evidence in support of Forskningsavdrag, software engineering documentation is essential for building corporate knowledge and know-how.

Quality documentation

Studies and analyses carried out on software engineering in Germany and the UK in particular, have shown that the hottest tool in the box is quality documentation. It’s a fast-moving field, but structured progress sometimes appears to take the back seat to initiatives that focus on achieving sales or completing a project rapidly, at the expense of quality.

For instance, firms in the sector are constantly onboarding and offboarding personnel. And when employees leave the business, the knowledge and know-how they’ve developed walk out the door with them. This means that documentation is vital for keeping that knowledge in-house – be it for avoiding pitfalls or securing continuity. Quality documentation lets the next runners in the relay take up the torch without missing a beat.

Documentation methodologies

Various methodologies exist to help structure the design and analysis of work, as the above-noted studies illustrate. And while those methodologies are not new, the techniques they discuss remain effective, as documenting R&D work in software engineering is still rare today.

Among other things, these studies discuss research techniques for achieving project objectives and ways to develop assumptions. But most importantly, they focus on defining a standardized method for documenting software development experience.

Documenting knowledge or know-how does not directly address the documentation requirements for a specific program, such as Forskningsavdrag, but rather creates a catalogue of areas of documentation that can answer questions like those asked to determine if there are qualifying activities within the scope of the incentive.

Reports are written primarily to describe the different stages of a project. If done effectively, portions of them can be extracted later on to support tax incentives such as Forskningsavdrag.

In a nutshell...

Using effective and structured documentation methodologies not only supports your R&D work in connection with a claim for Forskningsavdrag, it also shows that your company:

• is credible and experienced
• provides accountability for its experts and managers
• has a mature software development process