Eligible costs of the research allowance

Four types of cost are eligible for the research allowance (Forschungszulage): the R&D staff costs, the owner work of shareholders at 100 €/h, 70% of contract research within the EU/EEA and – for projects from 2026 – an overhead flat rate of 20% of the other eligible expenses. The sum of these expenses forms the assessment base, which is multiplied by the funding rate of 25% (for SMEs 35%). This overview sorts the cost types with the 2026 values; estimate your own order of magnitude in the research allowance calculator.

R&D staff costs – the main item

The largest share of the eligible costs is, as a rule, made up of the staff costs. What is recognised are the gross employer wages of the R&D staff – that is, gross salary plus the employer's social security contributions – and specifically on a pro rata basis for the time an employee actually spends on an eligible research and development project. Someone who works only 60% of their time on the R&D project has their wage counted only at 60%. In addition to the base salary, the components that can be applied include taxable supplements and the statutory employer contributions; what always matters is the link to the eligible research activity. Clean, project-based time recording is therefore the foundation of the application – it makes the R&D share per person traceable and, in case of doubt, is also the evidence towards the tax office. Which projects are eligible in the first place is clarified on the requirements page.

Owner work of shareholders

In small companies and startups in particular, the founders do the research themselves – often without a regular salary. So that this work does not slip through the cracks, the owner work of sole traders and shareholders is recognised at a flat hourly rate:

• 100 €/h for expenses from 2026 (previously 70 €/h, and 40 €/h before that).
• At most 2,080 hours per year – equivalent to roughly 40 hours per week.
• A contractual basis and proof of the research hours worked are required.

Contract research (external R&D)

If the research is awarded in whole or in part to an external company or institute, 70% of the fee paid is eligible – provided the contractor is based within the EU/EEA (value since 28 Mar 2024; previously 60%). The remaining 30% are treated as a non-eligible flat profit margin. The party entitled to claim is the client, not the service provider performing the work. You can find a fully worked example of this in the example calculation.

Overhead flat rate (only for projects from 2026)

New for projects starting from 2026 is the overhead flat rate: in addition to the expenses listed above, a flat 20% of the other eligible expenses incurred in the respective financial year can be applied – and that without individual proof. This reflects other overheads without having to assign every single receipt. Important: the flat rate is measured against the total other eligible expenses, not against the staff costs alone.

History of changes to the cost parameters

The eligible cost types have been expanded several times since the research allowance was introduced. What is decisive in each case is the point in time of the expenses or the project start – older expenses can only be activated retroactively at the values that applied at the time:

What is not eligible

Not every expense around product development counts. In particular, the following are generally excluded:

• pure routine work and further development without scientific-technical uncertainty,
• sales, marketing and market launch,
• series production and ongoing operations,
• the acquisition of assets – here, at most the pro rata depreciation (AfA) is relevant .

From costs to the amount of funding

The sum of the eligible expenses forms the assessment base, which is capped at €12M per financial year. This results in a maximum funding of €4,200,000 per year for SMEs (35%) or €3,000,000 at the standard rate (25%). How the rates and caps are composed in detail is shown on the Amount & funding rates page. Whether and to what extent your expenses are eligible is something we check without obligation in the free funding check.

This overview is general information and not tax or legal advice. The FZulG and the BSFZ certificate are decisive.

Frequently asked questions about the eligible costs

Which costs are eligible for the research allowance?

Four types of cost are eligible: the R&D staff costs (gross employer wages, pro rata for the research activity), the owner work of sole traders and shareholders at 100 €/h, 70% of the fee for contract research within the EU/EEA, and – for projects from 2026 – an overhead flat rate of 20% of the other eligible expenses.

Does the owner work of the shareholders count?

Yes. The owner work of sole traders and shareholders is recognised at a flat hourly rate of 100 €/h (value from 2026), capped at 2,080 hours per year (equivalent to roughly 40 hours per week). This also accounts for the working time of researching founders who draw no regular salary.

How much contract research is eligible?

70% of the fee paid to the contractor is eligible, provided the contractor is based within the EU/EEA (value since 28 Mar 2024; previously 60%). The remaining 30% are treated as a non-eligible flat profit margin.

What is the overhead flat rate?

For projects starting from 2026, a flat 20% of the other eligible expenses incurred in the respective financial year can additionally be applied – without individual proof. The flat rate reflects other overheads and increases the assessment base.