We're not talking about a tax credit at all though... We're talking about being able to deduct salaries paid.

A tax credit is usually an incentive, like if you spend 10k on solar panels you get to deduct the 10k and then the government might say "hey thanks for pushing renewable energy, deduct an extra 2k from your tax bill." That's a credit, which we're not discussing here.

> 0% tax credit for salaries

I don't think that's what's being discussed here. The question is whether salaries are (completely) expensed immediately (reducing profits) or whether they are (partly) capitalised (which will reduce profits later but not now).

In Sweden, salaries are 100% deductible. You pay company taxes on the profit you make. There is an option to capitalize some R&D expenses if you can show that they are directly responsible for a future asset that you can set a value on (like, a startup where all engineers work on a single product).

>European software companies don't go broke

They don't do that well either. Which is perhaps why the biggest ones are all American

>they have 0% tax credit for salaries

At least in some countries I know that's totally wrong, but depends what you mean by "credit". Salaries are expenses, are not counted in profit.

Ever heard of that small German company called SAP?

they're more the exception than the rule.

The biggest software companies (Facebook/Meta, Google/Alphabet, Microsoft, Apple) are all American.

You think European software companies count software engineering salary expenses as profit that they are taxed on?

No one is talking about tax credits.

The expense of salaries isn’t deductible against income.