R&D Tax Credit Personnel Costs –
How to Calculate Your Assessment Basis

The assessment basis of the R&D tax credit is based on the personnel costs of employees deployed in eligible R&D projects. However, not every salary component is automatically eligible. Section 3(3) FZulG defines eligible expenses as the “wages granted to the employee” – but what exactly falls under this?

What counts

• Gross wages and salaries: The regular gross salary is the central component. This also includes contractually fixed allowances (e.g., shift premiums, function allowances).
• Employer social security contributions: Health, pension, care and unemployment insurance – these contributions are fully included in eligible personnel costs and significantly increase the assessment basis (approx. 20% surcharge on gross salary).
• Contractually agreed special payments: 13th salary, holiday pay and Christmas bonuses, provided they are agreed in the employment or collective agreement.

What does not count

• Benefits in kind (Sachbezüge): Company cars, job tickets, meal subsidies and other non-cash benefits are not considered.
• Performance bonuses beyond base salary: Variable compensation tied to individual target achievement is considered ineligible.
• Severance payments (Abfindungen): One-time payments upon termination of employment are not eligible personnel costs.
• Company pension scheme (betriebliche Altersvorsorge, bAV): The tax treatment of bAV in the context of the R&D tax credit is disputed. The tax authorities tend not to recognize employer contributions to bAV as eligible. In practice, we recommend treating this position conservatively.

In practice, only few employees work 100% on R&D projects. Development engineers also provide customer support, scientists give presentations, software developers maintain legacy systems. Only the share of working time that actually relates to eligible R&D projects is eligible.

Time tracking: The gold standard

Project-based time tracking is the safest method to prove the R&D share. Employees document daily or weekly how much working time is spent on which projects. The time tracking should be GoBD-compliant – meaning recorded promptly, immutable and traceable. Digital tools such as Clockify, Toggl or internal ERP systems are well suited.

Flat-rate estimation: Possible, but risky

Alternatively, the R&D share can be determined through a plausible estimate. For example, based on job descriptions, project plans or organizational charts, it may be estimated that an employee spends approximately 60% of their time on R&D. This method is permissible but carries a higher risk during tax office audits.

Using a concrete example, we show how the assessment basis is calculated from the personnel costs of a mid-sized company. Assume a company has 5 employees who work on R&D projects to varying degrees:

R&D tax credit calculation:

• Non-SME (25%): EUR 298,200 x 25% = EUR 74,550 R&D tax credit
• SME (35%): EUR 298,200 x 35% = EUR 104,370 R&D tax credit

This example shows: Even with only 5 employees with different R&D shares, a significant funding amount results. With larger teams, the amount scales accordingly.

The Growth Opportunities Act (Wachstumschancengesetz) introduced a significant innovation: From fiscal year 2026, companies can apply a flat-rate overhead surcharge of 20% on their eligible personnel costs. This allowance is intended to cover the indirect costs of R&D activities – office space, IT infrastructure, consumables, laboratory equipment, and other overheads that were previously not eligible.

The overhead allowance is automatically added to the sum of eligible personnel costs. Separate proof of actual overhead costs is not required – it is a pure flat rate.

Important: The overhead allowance applies only from fiscal year 2026. For retroactive applications for the years 2020 to 2025, only the pure personnel costs (gross wages plus employer social security contributions) can be used as the assessment basis.

In practice, questions frequently arise about certain forms of employment. Here we clarify the most important special cases:

GmbH managing directors (Geschäftsführer)

An employed GmbH managing director can be eligible if their R&D activity is contractually regulated. The managing director contract or a supplementary agreement should specifically describe the R&D share (e.g., “The managing director devotes 40% of their working time to the management and execution of R&D projects”). The proportional remuneration is then considered as eligible personnel costs.

Part-time employees

Part-time employees are considered proportionally. The assessment basis is calculated from the actual gross salary multiplied by the R&D share of working time.

Temporary workers (Leiharbeiter)

For temporary workers, the hirer can proportionally claim the actual costs paid (remuneration to the staffing agency) as personnel costs. The relevant costs are those incurred by the hiring company – not the temporary worker’s salary.

Working students (Werkstudenten)

Yes, working students are eligible. Their remuneration (gross salary plus employer social security contributions) is considered proportionally based on the R&D share of their activities.

Mini-jobbers (EUR 520 basis)

Yes, mini-jobbers are also eligible. The remuneration including flat-rate employer social security contributions is considered proportionally.

Sole proprietors and shareholders who actively research and develop can also claim their own work as an assessment basis – although special rules apply.

The EUR 40 flat rate

For sole proprietors and shareholder-managing directors without salary (e.g., in partnerships), a flat-rate assessment basis of EUR 100 per working hour applies. This flat rate is multiplied by the actual R&D hours worked, up to a maximum of 40 hours per week.

Calculation example: A sole proprietor researches 20 hours per week on the further development of their product. Over a year (46 working weeks) this results in:

• 20 hours x 46 weeks x EUR 40 = EUR 36,800 assessment basis
• x 35% (SME rate) = EUR 12,880 R&D tax credit

The own contribution flat rate can be claimed in addition to employee personnel costs. More details can be found in our guide to own contributions for the R&D tax credit.