SkatteFUNN — R&D Tax Deduction Scheme

SkatteFUNN — R&D Tax Deduction

Provides Norwegian companies with tax based SkatteFUNN support for qualified technology spending and innovation process costs.

SkatteFUNN is Norway's statutory R&D tax deduction scheme, jointly administered by the Research Council of Norway (RCN), Innovation Norway, and the Norwegian Tax Administration (Skatteetaten). It provides a 19% tax deduction against approved R&D costs for any Norwegian company regardless of size or sector. The annual ceiling is NOK 25 million of a company's own R&D costs, which can be supplemented by up to NOK 25 million of contracted research from approved Norwegian research institutions, giving a maximum combined base of NOK 50 million per company per year. At a 19% rate, the maximum annual benefit is NOK 9.5 million. Personnel costs are subject to a rate cap of NOK 700 per hour and a maximum of 1,850 hours per person per year. Projects can run for up to three years. Applications for pre-approval are accepted on a rolling basis year-round through RCN's portal.

The scheme is open to all Norwegian-registered companies with qualifying R&D activity; non-profits, public agencies, and universities cannot apply directly. There are no sector restrictions and no minimum or maximum company size requirements. The 19% rate applies uniformly to both SMEs and large enterprises following the 2020 unification of the two former rate tiers. Companies in a tax-loss position — including early-stage start-ups with no taxable income — receive the credit as a direct cash refund from the Norwegian Tax Administration at the end of the fiscal year.

SkatteFUNN approval is independent of other RCN or Innovation Norway grants, and companies frequently combine the tax credit with direct project grants from those programmes. The application process requires RCN to approve the project's R&D content before it can be claimed; the approval is then used in the company's annual tax return. To win approval, applicants must demonstrate that the project represents genuine R&D under the OECD Frascati definition — systematic investigation with the goal of new knowledge — rather than routine development or product improvement.