The Skattefunn R&D scheme

Skattefunn is one of the most used — and most misunderstood — support schemes in Norway. Where Innovation Norway hands out competitive funding, Skattefunn works completely differently: it is a rights-based tax scheme. If you understand the mechanism, it can become a predictable part of financing your development work.

What Skattefunn actually is

Skattefunn gives companies a tax deduction for costs related to research and development (R&D). Put simply: if you run an approved development project, you get part of the R&D costs back through your tax settlement. If the company has little or no tax to pay — as many startups do — the deduction is in practice paid out as an amount, so companies running at a loss also benefit from the scheme.

The important distinction from an ordinary grant is that Skattefunn is rights-based. If the project meets the requirements, you are entitled to the deduction — it is not a competition where a case officer ranks you against others. That makes the scheme predictable, which is rare and valuable in the startup world. Many combine Skattefunn with other sources — for example a grant from Innovation Norway for the same development work — but be aware that the same costs cannot be covered twice through different public schemes. So keep the project account tidy from the start.

Who can apply, and what counts as R&D

In principle any tax-liable business in Norway can apply, regardless of size and sector. The key lies in what counts as research and development. R&D in the Skattefunn sense is about generating new knowledge or new skills in order to develop new or better goods, services or production processes.

The decisive word is new. Building a perfectly ordinary web shop with known technology is not R&D. Developing a new algorithm, a new material or a solution where the outcome is genuinely uncertain and requires systematic experimentation may be. A good test is whether you face real technological or knowledge-based uncertainty that you cannot simply google your way out of.

The Research Council and the Tax Administration

Two public bodies share the job, and it is easy to confuse them:

• The Research Council assesses and approves that your project really is R&D. You send the application to them, and they decide whether the project qualifies.
• The Tax Administration handles the deduction itself. Once the project is approved and the year is over, you enter the actual R&D costs in your tax return, and an auditor often has to certify them.

In other words: the Research Council confirms that this is research; the Tax Administration makes sure you get the financial benefit. You deal with both, but at different times.

Documentation and reporting

Skattefunn demands tidiness. From day one you must be able to document what has been done, by whom and with how many hours. In practice that means:

• A project account that separates R&D costs from ordinary operations.
• Timesheets for everyone working on the project, kept continuously — not reconstructed at the end of the year.
• An annual report to the Research Council on progress and results.

This is where many stumble: not on the idea itself, but on missing documentation. If you log hours and receipts as you go, Skattefunn is a manageable scheme. Current rates, hour limits and cost ceilings change from year to year and can be found at skattefunn.no and skatteetaten.no.

A realistic example

A small team in Ålesund is developing software to predict maintenance needs at fish-farming facilities. The core — a predictive model that nobody has built for exactly this use — involves real uncertainty. They apply to the Research Council, get the project approved as R&D, and log their hours carefully through the year. At the tax settlement they get part of the development costs back. The ordinary tasks, such as setting up the website and selling the product, they keep out of the project account, because that is not R&D.

Do this now

Write half a page answering one question: what is the concrete technical or knowledge-based uncertainty in your project? If you can articulate what you do not know in advance and must find out through systematic work, you have the core of a Skattefunn application. Then read the criteria at skattefunn.no before going further.