SkatteFUNN R&D Tax Deduction

SkatteFUNN R&D Tax Deduction

Funds Norwegian companies with deductions that return support when innovation costs exceed tax obligations.

SkatteFUNN is Norway's statutory R&D tax deduction scheme, open to all Norwegian companies with Norwegian tax liability regardless of sector or company size. The scheme enables companies to deduct 19% of eligible R&D project costs directly from their tax bill, reducing the effective cost of qualifying research and development activity. The annual cost-base ceiling is NOK 25 million per project or company, yielding a maximum annual benefit of NOK 4.75 million. For companies without sufficient taxable income, the deduction converts to a direct cash refund paid in the year following the income year in which the R&D costs were incurred — a feature that makes SkatteFUNN accessible to pre-revenue and loss-making companies.

Eligibility requires that R&D projects be pre-approved by the Research Council of Norway (Forskningsrådet), which operates the SkatteFUNN secretariat. Pre-approval must be obtained before the end of the income year in which costs are incurred. Approved projects may run for up to three years. Skatteetaten (the Norwegian Tax Administration) then processes the actual deduction or refund when the company submits its annual tax return via Altinn by the May 31 deadline. An independent auditor must sign off on project accounts, and companies are required to maintain separate project accounting and timesheets throughout the project period.

SkatteFUNN is cumulative with other state-aid schemes such as Innovation Norway grants, but total state aid across all sources must remain within EU/EEA ceilings; excess aid must be reduced in the project's final year. Innovation Norway plays an advisory role in helping companies navigate SkatteFUNN applications but does not control project approval — that authority rests exclusively with the Research Council of Norway. The scheme is sector-agnostic and has historically supported manufacturing, software, biotech, and cleantech R&D across Norwegian industry.