Deductions for research and development – SkatteFUNN

To receive tax deductions for research and development (R&D), you must submit information in the tax return. Use the card “Tax deduction for expenses relating to research and development”.   

Deductions are based on project accounts and timesheets. The auditor must sign before the deduction can be approved. .

The project accounts

You must keep separate accounts for the project, and the accounts must be kept continuously throughout the year. 

The project accounts must document calculated costs as well as actual costs..

• Calculated costs are costs that are in the approved application. 
• In the calculation of the SkatteFUNN deduction, you must enter your actual costs.  The standard calculation of salary costs must be entered into the project accounts, not the actual costs that are in the ordinary accounts. 

The distinction between costs in ordinary operations and research work

You must distinguish between the research costs and the ordinary costs of the ordinary operation. 

The following is considered costs

You can claim deductions for costs that are directly connected to the approved project. You’re responsible for checking that only the correct costs are included.

 

Costs before approval of the project 

You can include costs from before the time of approval in the year the project was approved. 

Personnel costs 

State the number of hours spent on the project. For own employees, there’s a cap on how many hours you can register for each employee, and this is a maximum of 1,850 hours per project per year. The hourly rate is limited to 1.2 per thousand of the worker's normal annual salary. This is the salary that’s agreed and actually paid, and it can be maximum NOK 700 per hour.

Procurement of R&D services

When purchasing R&D services from related parties, the maximum hourly rate is NOK 700 per hour.  

Deductions are only granted for purchases related to R&D services from enterprises domiciled within the EEA and countries that Norway has a tax treaty or an information exchange agreement with (regjeringen.no).

You must keep day to day timesheets for the project. These must show the date, number of hours and which sub-objectives the R&D participant worked on. The timesheets must be continuously signed by the project participant and the project manager, and at least every quarter. The timesheets may be signed electronically if you can prove that the signing was done by the project participant and the project manager. 

Unpaid work cannot be included in the deduction basis.  

There are very clear requirements for timesheets (forskningsradet.no) 

The project accounts must be signed by the auditor in Altinn, and this is a condition to receiving the SkatteFUNN deduction.  

The signature requirement applies regardless of whether you must have auditor approval for other parts of your accounts. 

There’s an upper threshold amount for how much you can receive in state aid, and this may mean that your SkatteFUNN deduction is lower. 

State aid could, among other things, be aid to projects from Innovation Norway, industrial development funds, several types of EU programmes and reduced employer's national insurance contributions.  

There are different limits to how much the maximum amount of state aid is. This may impact how much your tax deduction amounts to. 

If the total state aid to the project exceeds the highest total aid allowed, you must limit the R&D deduction in the final project year.

The laws and regulations on state aid are described at SkatteFUNN  (Forskningsrådet).

In order to be eligible for SkatteFUNN funding for projects, it is a prerequisite that the company is not considered an «enterprise in difficulty» at the time the Research Council approves the application.   

The assessment must be made on the basis of the most recently submitted annual accounts or interim balance sheet. The balance sheet date must be between the most recently submitted accounts and before the approval date for the project. 

The enterprise cannot be an “enterprise in difficulty” at either a company or a group level. The term «group» should be understood as it’s used in EEA legislation.