The Finnish Ministry of Finance has launched a public consultation on draft legislation that provides for a new tax incentive for R&D activities. The new incentive is a combined deduction for R&D activities, including a general additional deduction based on the amount of R&D expenses incurred plus an additional deduction based on the increase in R&D expenses compared to the previous year. The additional deductions would apply for salary and service expenses related to a taxpayer's own R&D activities.

The general additional deduction would be equal to 50% of salary and service expenses for R&D activities, with a maximum deduction cap of EUR 500,000 per year and a minimum of EUR 5,000. The additional deduction for increases in R&D expenses would be equal to 35% of the increase in R&D expenses as compared to the previous year, with a maximum deduction cap of EUR 500,000 per year but with no minimum. Further, the maximum basis for the 35% additional deduction would be limited to a 50% increase in R&D expenses as compared to the previous year.

The deadline for comments is 12 September 2022.