SWEDEN Trends and Developments Contributed by: Christoffer Dahl, Niclas Söderlund, Michel Weimer and Björn Mårtensson, XR Legal
Our hope is that the discarded rules are picked up again and implemented as of 1 January 2027. New Proposal to Stimulate R&D Investments A report to suggest new rules to stimulate research and development (R&D) investments in Sweden was released in February 2026. The report presents two alternative tax incentive proposals designed to stimu - late R&D investment by companies: a super-deduc - tion and a refundable tax credit. Both proposals are accompanied by legislative text, commentary and impact assessments. Since the two alternatives have different advantages and may benefit different types of companies, the inquiry does not recommend one over the other. Both incentives are intended to be available to all business operators and are designed to comply with EU law, including rules on freedom of establishment and state aid. The incentives are calculated based on R&D-related staff expenditure and will therefore pri - marily apply to entities that incur such costs, typically legal persons. Under both proposals, qualifying expenditures are lim - ited to salaries, fees, benefits and other remuneration for staff engaged in R&D work. The work must also be carried out within the EEA. Staff costs were selected as the basis for the incentives because they represent the largest component of R&D spending across sec - tors and company sizes. Limiting the base to staff expenditure would also simplify the rules, increase predictability and reduce administrative complexity. Expanding the base to include other costs such as equipment or external services would make the sys - tem more complex and increase its fiscal cost. Although the aim of the incentives is to stimulate R&D activity in Sweden, EU law prevents restricting eligibility to work performed exclusively in Sweden. The propos - als therefore limit qualifying work to activities carried out within the EEA, which is compatible with EU law while still enabling effective monitoring and control. The definition of R&D under both proposals would follow the definitions currently used in the Act on special allowances on employers’ social security contributions and payroll tax for individuals working
in research or development (2023:747). Aligning the definitions across the existing and proposed incen - tives is intended to make the rules easier and more predictable for companies conducting R&D. Under the super-deduction proposal, companies would be allowed an additional deduction equal to 200% of qualifying expenditures. Together with the ordinary deduction for salary costs, this would result in a total deduction equal to 300% of the relevant R&D staff costs. For companies subject to corporate income tax, this corresponds to tax relief of approxi - mately 41.2% of those costs. The super-deduction would be optional and claimed in the company’s income tax return. The proposal would require the introduction of a new provision in the Income Tax Act but no additional procedural rules. The alternative proposal is a refundable tax credit equal to 20% of qualifying expenditures. The credit would be applied after other tax reductions and off - set against income tax and certain other taxes. If the calculated credit exceeds the company’s tax liability, the remaining amount would be recorded as a credit balance and credited to the company’s tax account, from which it could be paid out. Both the tax credit and any payment would be tax-exempt. The refundable tax credit would also be optional and claimed in the income tax return. Implementing this proposal would require amendments to the Income Tax Act as well as new procedural provisions in the Tax Procedure Act (Sw: skatteförfarandelagen ). Finally, the report recommends that whichever incen - tive is implemented should be followed up and evalu - ated approximately two years after its introduction. Modernisation of Swedish Withholding Tax Legislation On 22 January 2026, the Swedish government resolved to appoint an inquiry tasked with drafting modern - ised legislation for withholding tax on dividends. This initiative is driven by the necessity to implement the FASTER Directive on withholding tax procedures and the recognition that the current Swedish framework – primarily, the “coupon tax” (Sw: kupongskatten ) – is
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