The government has presented a new business initiative, suggesting to permanently increase the tax deduction for research and development (R&D) to 120 percent of companies’ expenses in the field. The proposal includes a limit of one billion Danish kroner and is expected to be fully phased in by 2028.
Minister of Taxation, Jeppe Bruus (Socialdemokratiet), stated at a press conference that the increased deduction is intended to make it more attractive for companies to invest in research and development. He highlighted green transition and the pharmaceutical industry as areas that will benefit from the proposal.
Currently, the deduction stands at 108 percent of R&D expenses, but has previously been at 130 percent. Several business organizations have wished for the deduction to be raised back to 130 percent. However, the government does not wish to accommodate this, causing disappointment among, among others, the CEO of the Confederation of Danish Industry (Dansk Industri), Lars Sandahl Sørensen. He does acknowledge the importance of making the deduction permanent, even though he believes that other countries offer better conditions.
The President of the Danish Society of Engineers (IDA), Laura Klitgaard, views the permanent research deduction at 120 percent positively and expects it to lead to increased investments in research and development. She emphasizes that the Danish economy and jobs are heavily reliant on companies that base their business on these areas.