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PR(02)21: The EFTA Surveillance Authority clears a new Norwegian aid scheme related to tax deduction for expenses of research and development


The EFTA Surveillance Authority decided today not to raise objections to a new Norwegian aid scheme: Tax deduction for expenses of research and development (R&D) (“Skatteloven § 16-40 Skattefradrag for kostnader til forskning og utvikling (FOU-fradrag)”).

The aid scheme is a new scheme, proposed by the Norwegian Government in the Fiscal Budget for 2002. The scheme will replace the aid scheme Research and Development (R&D)-projects in enterprises (“FUNN-ordningen”), which was approved by the Authority by decision of 25 July 2001 (Dec. No. 249/01/COL). The overall objective of the scheme is basically to stimulate small and medium sized enterprises to increase their efforts regarding R&D. The annual loss in tax revenue is estimated to be approximately NOK 510 million (some EUR 70 million). The scheme will be administered by the Research Council of Norway and the Ministry of Finance.

Tax deductions for expenses of research and development involve State Aid within the meaning of the EEA Agreement. The aid scheme implies a tax deduction of 18 per cent of the costs related to approved R&D projects and limited to expenses not exceeding NOK 4 million (EUR 550 000) if it is an internal R&D project. If the costs are related to the purchase of R&D services from R&D institutions, the limit is NOK 8 million (EUR 1.1 million). Enterprises that meet the criteria for being a small and medium-sized enterprise in the meaning of Chapter 10 of the Authority’s State Aid Guidelines are entitled to a tax deduction of 20 per cent. The scheme as such complies with the Authority’s State Aid Guidelines[1].

The Authority has therefore concluded that aid in the form of tax deduction for expenses of research and development qualify for exemption under Article 61(3)(c) of the EEA Agreement, as aid aimed at facilitating the development of certain economic activities without adversely affecting trading conditions to an extent contrary to the common interest.

For further information, please contact Mr. Amund Utne on tel. +32 2 286 18 50 or Mrs. Alexandra Antoniadis on tel. +32 2 286 18 52.

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[1] Procedural and Substantive Rules in the Field of State Aid (State Aid Guidelines), adopted and issued by the EFTA Surveillance Authority on 19 January 1994. Published in Official Journal L 231, 03.09.1994. The Guidelines were last amended 26 July 2002 (not yet published).

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