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Tax credit (LL § 8 X): Cash back for your R&D expenses
The tax credit (section 8 X of the Tax Act) is a special tax deduction for Danish startups and growing companies. It gives you up to 135% deduction on your expenses for research and development — and most importantly: the money is paid out as cash, even if you have no profit.
While the R&D deduction gives you a deduction on your corporate tax, the tax credit gives you a cash refund directly from the Danish Tax Agency. This makes it one of the most attractive schemes for startups with large R&D expenses but no income yet.
Example of calculation
How does it work? The tax credit works as a deduction on your corporate tax. If you have a profit, the deduction reduces your tax. If you have a loss, you get the remainder paid out in cash — up to 135% of your R&D expenses.
Comparison: R&D deduction vs. tax credit
Denmark has two important schemes to deduct your R&D expenses: the R&D deduction (Tax Code § 8 B) and the tax credit (Tax Code § 8 X). Here are the differences:
Comparison:
How do you choose? If you are a startup without a profit, the tax credit is the clear choice — you get cash back. If you have a profit, both schemes can be interesting. You can also combine them, but not on the same expenses.
Calculation method: How your deduction is calculated
The tax credit is calculated as 135% of your qualifying R&D expenses. This includes salary for your employees, expenses for external consultants and materials for your R&D projects.
Step-by-step calculation
What qualifies as R&D expenses? The tax credit includes the same expenses as the R&D deduction: salary for employees, expenses for external consultants, materials and equipment for your R&D projects. Check the full criteria in our R&D deduction guide.
Requirements for startups: Who can get the tax credit?
The tax credit is specially adapted for startups and growing companies. Here are the key requirements:
Startups vs. mature companies: The tax credit is particularly attractive for startups, as you get cash back even if you have a loss. Mature companies with a profit can also get it, but they often benefit more from the R&D deduction.
Application guide: How to apply
The application is done through your annual or monthly statement to the Danish Tax Agency. Here are the steps:
Step 1: Document your R&D expenses
Make sure all your R&D expenses are documented with receipts, timesheets, contracts and a description of how they qualify.
Step 2: Fill out your annual or monthly statement
When you fill out your annual statement, you must state your R&D expenses under "Research and development". Use the documented amounts and indicate that you wish to deduct the tax credit.
Step 3: Submit to the Danish Tax Agency
Submit your annual or monthly statement to the Danish Tax Agency. They will process the application and calculate your deduction.
Step 4: Receive refund
If you have a loss, the Danish Tax Agency will pay out your deduction as cash. This usually takes 4-6 weeks after submission.
When do you apply? You can apply for each year when you fill out your annual statement. The deadline is usually July 1 in the following year. For example: for 2026, you must submit your annual statement no later than July 1, 2027.
Documentation: What do you need to have documented?
To get the tax credit paid out, you must have documentation for your R&D expenses. Here are the most important documents:
Documents for the tax credit
What should be in the documentation? You must have documentation that your expenses are qualifying R&D. This includes:
Timesheets showing how many hours employees have spent on R&D projects. This must be documented with a project description showing how the work qualifies as R&D.
Contracts with external consultants showing how their work qualifies as R&D. This must be documented with a project description and receipts.
Receipts for materials and equipment that are necessary for the R&D projects. This must be documented with a project description showing how the materials and equipment are used in the project.
Payout and deadline: When do you get the money?
The tax credit is paid out after you have submitted your annual statement and the Danish Tax Agency has calculated your deduction. Here are the key deadlines:
Timeline for payout
What if you miss the deadline? If you submit your annual statement too late, you lose the right to the tax credit for that year. Make sure to submit on time — the deadline is usually July 1.
Combination with other programs: How do you get multiple grants?
The tax credit can be combined with other grants, e.g., Innobooster and SMV:Digital. This gives you an extra cash flow advantage — but there are rules.
Combination strategy: Tax credit + Innobooster
Rule: Not on the same expenses You cannot get grants for the same expenses twice. If you get Innobooster for 175,000 DKK, you can only get tax credit for the remaining 325,000 DKK in R&D expenses.
Common errors: What to avoid
Here are the most common mistakes startups make when applying for the tax credit — and how to avoid them.
You don't have documentation for your R&D expenses. This is the most common reason for rejection.
Solution: Make sure you have all documents in place BEFORE you submit your annual statement. This includes receipts, timesheets, contracts and a project description.
You submit your annual statement too late — and lose the right to the tax credit.
Solution: Set a reminder for July 1 each year. Make sure to submit on time — otherwise you lose the money.
You calculate the tax credit incorrectly — and don't get the correct refund.
Solution: Use our calculation guide or ask the Business Houses for help. Make sure to calculate the correct amount.
You don't have an active R&D project that meets the requirements. The tax credit requires such a project.
Solution: Start an R&D project that meets the requirements. Make sure it is systematic, creative and has technical uncertainty.
Frequently asked questions about tax credit
Tax credit gives 135% deduction and is paid out as cash, even if you have a loss. R&D deduction gives 110% deduction, but only if you have a profit. Tax credit is better for startups without profit.
Yes! That is one of the biggest advantages of the tax credit. Even if you have a loss, you get the money paid out in cash. This makes it one of the most attractive schemes for startups.
It depends on your R&D expenses. For every 100,000 DKK in R&D expenses, you get 135,000 DKK in deduction. With a tax rate of 22%, this gives a refund of ~29,700 DKK in cash.
Yes — but not on the same expenses. You could use Innobooster for 35% of your R&D expenses, and then get tax credit for the remaining 65%. This gives a powerful combination.
You must have receipts, timesheets, contracts and a project description showing how your expenses qualify as R&D. Make sure to have all documentation in place before you submit your annual statement.
Related guides
Innobooster application 2026: Complete guide
Requirements, template, budget and top 5 rejection reasons.
Read guide →R&D deduction for software companies: What qualifies — and what doesn't
The 5 criteria for R&D, the software trap and how to avoid paying too much in tax.
Read guide →The three-layer strategy: Grants + deductions + funds
How to combine all three layers for maximum value.
Read guide →Got tax credit? Find out now
Our free CVR scan matches your company against the tax credit requirements and shows if you qualify. It takes 2 minutes and gives you a clear answer.
Disclaimer: This guide is general guidance prepared by TilskudTjek. To get the tax credit, you must ensure that your R&D project meets the legal requirements. TilskudTjek is not affiliated with the Danish Tax Agency.