Laws and regulations that affect SkatteFUNN projects
SkatteFUNN is regulated by the regulations for SkatteFUNN (Taxation Act §16-40). In addition, the state support rules and the Tax ABC provide important guidelines. How you combine different instruments and government funding affects whether you can receive support and how much will be paid out to you.
State support
As a general rule, it is prohibited to allocate support to enterprises, because this would have a distorting effect on competition. This applies regardless of the form of organisation, regardless of whether you make a profit, etc. However, there are many exceptions to the prohibition, and these are set out in the state support rules. The support from SkatteFUNN is considered state support and is granted on the basis of Article 25 of the EU Block Exemption Regulation.
The regulations contain provisions on the types of activities that can be supported, the costs of these activities that can be covered in whole or in part, and what is the maximum degree of support for the various activities.
Combine SkatteFUNN with other support schemes
It is possible to combine SkatteFUNN with other support schemes.
There are limits to the proportion of funding an R&D project can receive from the public sector. If the amount of support exceeds the permitted share, the support from SkatteFUNN can either be reduced or cancelled completely.
It is important in which order you apply for the various support schemes. We recommend applying for grants from other support schemes first, and possibly SkatteFUNN later. Read more about incentive effect and combination of policy instruments.
Funds received from other support schemes are reported via the tax return on the same thematic form that is used to report expenses in the SkatteFUNN project. Reductions in tax/payments via the tax settlement are reduced based on the information provided here.
Calculate tax deductions
Through SkatteFUNN, companies can deduct the expenses for the R&D activities in an approved project and receive a refund of 19 per cent of the project costs as a tax deduction through the tax settlement.
What the companies end up receiving in tax deductions through the tax settlement may depend on how the company and the project are defined based on ESA's state support rules. The R&D category, the size of the company and whether you have other public funding have an impact on the amount of support you receive. We assess the research content of the project, and classify the activities as "industrial research" or "experimental development" when approved in accordance with current regulations.
The limits of state aid
If the total degree of aid exceeds the permitted limits of maximum SkatteFUNN support in combination with other support schemes, the tax deduction will be reduced so that the total is within the regulations, cf. section 16-40-6 (7) of the regulations to section 16-40 of the Taxation Act of 26 March 1999. You must document this through the tax return.
The assessment of whether the project exceeds the limits for total public support is assessed for the entire project period as a whole.
| Small companies |
Medium-sized companies |
Large companies |
||||
| General |
Cooperation |
General |
Cooperation |
General |
Cooperation |
|
| Industrial research | 70 % | 80 % | 60 % | 75 % | 50 % | 65 % |
| Experimental development | 45 % | 60 % | 35 % | 50 % | 25 % | 40 % |
Company size
Small businesses
Small businesses have fewer than 50 employees and an annual turnover or balance sheet that does not exceed 10 million euros.
Medium-sized businesses
Medium-sized enterprises have fewer than 250 employees and an annual turnover that does not exceed 50 million euros or balance sheet that does not exceed 43 million euros.
The size category the enterprise is placed in also depends on ownership and connection to other enterprises as described in section 16-40-5 of the Regulations to section 16-40 of the Taxation Act of 26 March 1999. In the context of SkatteFUNN, a company will be regarded as a large company if it has 250 employees or more together with the owner company, or if the company's turnover exceeds 50 million euros in total.
Cooperation
The limit of degree of public support for the project is increased in the case of cooperation and publication of results in accordance with EU rules if one of the following conditions is met:
- The project includes actual cooperation
- between undertakings where at least one is a SME, or is carried out in at least two Member States or in a Member State and a State party to the EEA Agreement, and no undertaking alone accounts for more than 70 % of the eligible costs, or
- between an undertaking and one or more research and knowledge dissemination organisations, where the latter alone bear at least 10% of the eligible costs and have the right to publish their own research results;
- The results of the project are widely disseminated through conferences publications, open data sources or free or open source software. For the purposes of applying the above-mentioned paragraphs 1 and 2, subcontractors shall not be regarded as genuine cooperation.
Project support
Other support schemes that fall under the rules are support for R&D projects through financial assistance from public instruments (the Research Council of Norway, Innovation Norway, municipal/county municipal business funds, etc.), support from the EU and differentiated employer's national insurance contributions. Public support that is not linked to a R&D project is normally excluded from these calculations.
Conversion of the tax deduction
The Tax Administration's Tax ABC states how the tax deduction must be converted to gross support in order to make the correct assessments of support limits: The limits for state aid are calculated according to the EU rules gross (before tax). When aid is granted in the form of a tax deduction, this entails net support since the tax deduction is not considered taxable business income. The tax deduction must therefore be converted to a gross amount. For non-personal taxpayers who have a tax rate of 22 %, this is done by dividing the tax deduction by 0.78. For taxpayers whose tax rate is higher than 22 %, the relevant tax rate must be used as a basis for the conversion.
Where a reduction of the tax deduction is required to come within the limits for state aid, the new gross value of the tax deduction must then be recalculated to the net amount to see how much the actual tax deduction will be.
Combination of SkatteFUNN and Industrial PhD
With regard to the doctoral work included in the project, only those activities that are intended to contribute to new knowledge or new skills of direct relevance to the applicant company's new goods, services or production processes are included in the SkatteFUNN approval. This means, for example, that activities related to teaching and learning in connection with the doctoral degree cannot be included in the basis for SkatteFUNN.
The deduction basis for SkatteFUNN is based on the actual costs incurred by the company in the project. This means that the cost calculation for the PhD candidate's hours in the SkatteFUNN project is done in the same way as for other employees – i.e. an hourly rate of 1.2 per thousand of annual salary (max. NOK 700 per hour).
It must also be given an account of what other public support is received in the SkatteFUNN project. In the case of support through the Industrial PhD, a calculation must be made so that what is entered under other public support corresponds to the activities approved in the SkatteFUNN project and any other costs in the SkatteFUNN project that overlap with the doctoral work.
Read more about the Industrial PhD scheme.
Messages at time of print 17 August 2024, 11:20 CEST