The R&D Tax Credit at a Glance: Funding Rates 2026
The amount of the R&D Tax Credit (Forschungszulage) is determined by three factors: the funding rate (depending on company size), the maximum assessment basis, and the actual eligible R&D costs incurred. The following table provides an overview of the current conditions:
| Company Size | Funding Rate | Max. Assessment Basis | Max. R&D Tax Credit |
|---|---|---|---|
| SME (from FY 2024) | 35 % | EUR 12,000,000 | EUR 4,200,000 |
| Large enterprise (from FY 2024) | 25 % | EUR 12,000,000 | EUR 3,000,000 |
| All companies (FY 2020–2023) | 25 % | EUR 4,000,000 | EUR 1,000,000 |
The R&D Tax Credit is set as a tax credit (Steuergutschrift) – it is directly offset against income tax or corporate tax. If the R&D Tax Credit exceeds the tax liability, the difference is paid out to the company. The R&D Tax Credit is thus one of the few government subsidies that provides a direct liquidity effect even in cases of loss or low profit.
What Qualifies as an SME?
The increased funding rate of 35% is exclusively available to companies that meet the EU definition for small and medium-sized enterprises. The criteria must be met cumulatively:
| Criterion | Threshold |
|---|---|
| Number of employees | fewer than 250 employees |
| Annual turnover | maximal 50 Mio. € oder |
| Annual balance sheet total | maximal 43 Mio. € |
The employee count must be strictly met; for turnover and balance sheet total, it is sufficient if one of the two criteria is fulfilled.
Consider Affiliated Companies (Verbundene Unternehmen)
When assessing the SME criteria, affiliated companies (within the meaning of EU Recommendation 2003/361/EC) are included. A company is considered affiliated if another company holds the majority of voting rights or exercises a dominant influence. In this case, employee numbers, turnover, and balance sheet totals of all affiliated companies are aggregated.
Partner Enterprises (Partnerunternehmen)
If another company holds between 25% and 50% of the shares, it is considered a partner enterprise. In this case, the key figures are added proportionally (in proportion to the shareholding). This rule is particularly relevant for companies with venture capital investors or strategic participations.
Assessment Basis (Bemessungsgrundlage) in Detail
The assessment basis determines which R&D costs the funding rate is applied to. The higher the claimable assessment basis, the higher the R&D Tax Credit. The following cost categories are eligible:
Personnel Costs (Personalkosten)
By far the largest item in the assessment basis is the personnel costs of R&D employees. These include gross salaries and wages plus employer social security contributions. The decisive factor is the proportion of working time spent on eligible R&D projects. If an engineer spends 70% of their time on R&D projects, 70% of their total costs are included in the assessment basis.
Detailed information on calculation can be found on our page R&D Tax Credit Personnel Costs.
Contract Research (Auftragsforschung) – 70% Rule
If your company outsources R&D services to external contractors (e.g., universities, research institutes, or other companies), 70% of the contract fee can be included in the assessment basis. The contractor cannot claim their own R&D Tax Credit for the same costs – the entitlement lies with the commissioning party.
Own Contributions by Sole Proprietors (Eigenleistungen)
Sole proprietors and partners of partnerships who are personally active in research can claim EUR 100 per hour as own contributions. A maximum of 40 hours per week can be claimed, corresponding to an annual assessment basis of up to EUR 208,000.
Overhead Flat Rate (Gemeinkostenpauschale) – 20% from 2026
From fiscal year 2026, companies can apply an overhead flat rate of 20% on personnel costs and own contributions. This flat rate covers indirect R&D costs such as laboratory rents, consumable materials, and IT infrastructure. The overhead flat rate significantly increases the assessment basis and makes the R&D Tax Credit even more attractive from 2026 onwards.
Calculation Examples by Company Size
The following three examples illustrate how much R&D Tax Credit companies of different sizes can receive in fiscal year 2026. All examples include the 20% overhead flat rate.
Historical Development of Maximum Amounts
Since the introduction of the Forschungszulagengesetz in 2020, funding conditions have been gradually improved. The following overview shows the key milestones:
| Period | Funding Rate | Max. Assessment Basis | Max. R&D Tax Credit | Neuerung |
|---|---|---|---|---|
| 2020–2023 | 25 % (einheitlich) | EUR 4M | EUR 1,000,000 | Introduction of the FZulG |
| 2024–2025 | 25 % / 35 % KMU | EUR 12M | 4.200.000 € (KMU) | Growth Opportunities Act: SME bonus + tripled assessment base |
| Ab 2026 | 25 % / 35 % KMU | EUR 12M + 20% overhead | EUR 4,200,000 (SME)+ | Overhead flat rate of 20% on personnel costs |
The development shows a clear trend: the legislator has continuously expanded and enhanced the R&D Tax Credit since its introduction. In particular, the tripling of the assessment basis and the SME bonus have massively increased the funding amount. With the overhead flat rate from 2026, the assessment basis is further expanded.
How to Maximize Your R&D Tax Credit
Many companies do not fully utilize their funding potential. The following strategies ensure you receive the maximum R&D Tax Credit:
Identify All R&D Projects
Many companies underestimate the scope of their eligible activities. In addition to obvious development projects, process optimizations, prototype development, material testing, and software development can also be eligible – as long as a technical uncertainty is overcome. A systematic analysis of all business activities often uncovers additional eligible projects.
Include Contract Research (Auftragsforschung)
External R&D costs are frequently overlooked. If you commission research from universities, Fraunhofer institutes, or other contractors, 70% of these costs can increase your assessment basis. Review all external service contracts for R&D components.
Claim Own Contributions (Eigenleistungen)
Managing directors and shareholders who are personally involved in research can claim their own contributions at EUR 100/hour. At full-time research, this amounts to up to EUR 208,000 additional assessment basis per person per year.
Apply Retroactively
Haven't applied for the R&D Tax Credit in previous years? Make up for it now. For fiscal years 2020 to 2025, you can still apply retroactively in most cases. Over several years, the funding amount quickly reaches six figures. More information: Retroactive R&D Tax Credit Claims.