Denmark Tax Agency Clarifies Corporate Income Tax Deduction for R&D Expenses

The Danish Customs and Tax Administration May 15 posted online National Tax Court Decision No. SKM2025.270.LSR, clarifying the conditions for classifying product development expenses as R&D expenses. The taxpayer, a clothing manufacturer, claimed a deduction for R&D expenses incurred to develop a knitting concept. The Tax Agency denied the deductions, finding that the expenses didn’t qualify for the increased deduction as expenses for experimental and research activities, and the taxpayer appealed. On appeal, the National Tax Court found that: 1) the increased deduction for R&D expenses primarily applies to costs incurred to produce new or significantly improved materials, products, processes, ...