Tax incentive for research and development (R&D)
Since 1 January 2023, companies have been eligible for a tax incentive related to R&D activities, allowing for an additional tax deduction of up to €1,000,000. The incentive comprises two components:
General additional deduction: 50% of wage costs and purchased services directly related to R&D activities. The minimum deduction is €5,000, and the maximum is €500,000 per tax year.
Extra additional deduction: 45% of the year-on-year increase in wage costs and purchased services related to R&D activities. There is no minimum threshold, and the maximum is €500,000 per tax year.
To claim the combined deduction, the company must conduct R&D activities that are related to its business. R&D refers to creative and systematic work aimed at generating new knowledge or applying existing knowledge—for example, developing a new product or service, or significantly improving an existing solution. Routine development or the adoption of well-known innovations, techniques, or systems does not qualify. Importantly, the deduction is not contingent on the success of the activity.
The deduction is claimed on the tax return, and the company must include a free-form description of the R&D activities and how the eligibility criteria are met.
Eligible R&D Expenses
Qualifying expenses include:
The company’s costs
Purchased services provided by external personnel
Other expenses, such as material purchases or rental payments of premises, are excluded. The work on which the salary is based must be directly related to R&D. Tasks such as sales, marketing, or IT support—even if they serve R&D—do not qualify. The allocation of working time and salaries to R&D must be reliably demonstrable, for example through time tracking records.
How we can help
We offer end-to-end support for claiming the combined deduction:
Identifying R&D projects and conducting a preliminary eligibility assessment—flexibly by phone or in person.
Structuring activities outside formal projects so they can be defined for deduction purposes, if needed.
Collecting data via our secure web-based tool*, enabling smooth collaboration.
Preparing or reviewing the description to be attached to the tax return.
Determining and calculating eligible costs and assisting with the tax return if required.
Considering special rules, such as public financial support, group contributions, or corporate reorganisations.
Assessing the applicability of incentives in other Nordic countries and supporting their utilisation through our global expert network.
*Data Point Collector is a web-based SaaS platform created by PwC Switzerland. It simplifies the processes of data collection, aggregation, and processing.. A questionnaire related to the combined additional deduction is embedded in the tool for use during the engagement.
Why choose PwC
It is advisable to assess the nature of R&D activities and eligibility for the deduction well in advance of filing the tax return. Identifying qualifying activities and costs can be challenging, and in our experience, companies often have more eligible activity than initially assumed.
A thorough assessment from the outset can help avoid information requests from the Finnish Tax Administration, negative decisions, and potential tax increases. To manage risks and secure the benefit, partnering with an experienced advisor is recommended.
We have extensive experience in assessing and documenting R&D projects across industries. Our specialists ensure a smooth process and support your company at every stage.
Need help with your R&D project?
Contact our tax specialists
