New applications for tax deductions for research and development projects in 2024 have been opened. The application deadline is October 21, 2023 at 24:00.
The aim is to strengthen research and development work and improve the competitive conditions of innovative companies by giving them the right to a tax deduction for the cost of innovative projects.
Applications must be submitted electronically. Access to the application system, the tax deduction manual, the with laws and regulations about the fund, etc., can be found on the Tax deductions for research and development page.
For the operating years 2020 and 2021, there were special temporary provisions in Act no. 152/2009, which were part of the increased support for innovative companies due to Covid-19 which Alþingi approved in May 2020. According to these provisions, the tax deduction amounted to 35% of eligible costs up to a maximum of ISK 1.1 billion. in the case of small and medium-sized enterprises, and 25% in the case of large enterprises.
These provisional provisions have been issued twice in 2022, so that after the second amendment, the maximum cost for calculating deductions from the imposed income tax in 2024 and 2025 (due to projects in 2023 and 2024) shall continue to be ISK 1.1 billion. (after a temporary reduction in 2022 to ISK 1 billion) of which up to ISK 200 million may be counted towards that amount. due to purchased research or development work according to Article 6 of the law.
The maximum tax deduction can therefore be up to ISK 385,000,000. for small and medium-sized companies and ISK 275,000,000. for large companies in 2024 and 2025 (due to projects implemented and applied for in 2023 and 2024).
When the maximum limit and reimbursement rates are determined, it is emphasized that it is necessary to look at the overall group and the ownership of the company that is applying and whether other companies within the same group also apply for tax deductions.
Internal Market, Industry, Entrepreneurship and SMEs
