BMF Circular on the Research Allowance: What Applies in 2026

What the BMF circular is

The Research Allowance Act (FZulG) regulates Germany's R&D tax incentive in just a few pages. The practical questions that decide whether a claim succeeds are answered by the BMF circular: an administrative circular from the Federal Ministry of Finance that commits all tax offices to a uniform interpretation. The version in force dates from 7 February 2023 (BStBl 2023 I S. 364); a full revision went out as a draft on 16 October 2025 and has not been published in final form, so on everything lawmakers have changed since, the circular is a step behind.

Formally it binds only the administration, not companies or courts. In practice it is the yardstick your tax office reaches for when it assesses the research allowance, and aligning your claim with it saves you queries and cuts.

The key contents at a glance

Eligible wage costs

The core of the assessment basis is the project-attributable wages of the employees involved, including the tax-free employer social-security contributions. The circular specifies which wage components count and how they reach the project: through the hours actually worked on the certified project.

Only the share of a developer's salary that verifiably relates to the certified project is eligible, not automatically the full amount.

Time tracking: the most common stumbling block

The circular requires verifiable records of project-related working hours. Contemporaneous time sheets, or a time-tracking system with a project reference, hold up; a retrospective flat estimate ("about 60 percent of their time") rarely does.

In practice, BSFZ certification rarely fails over time tracking; the assessment at the tax office regularly does. Setting the documentation up cleanly on day one, instead of reconstructing it two years later, protects the full claim. How the allowance then lands in the tax return is covered in our piece on the research allowance in the corporate income tax return.

Own work by sole proprietors and shareholders

For sole proprietors and working shareholders, the FZulG recognises own hours at a fixed hourly rate, EUR 100 for activities from 2026 onwards, capped at 40 hours a week. The circular governs the evidence and the state-aid classification of this share; more on that, including the de-minimis question, in our article on de-minimis and undertakings in difficulty.

Contract research

For commissioned research, the principal claims the allowance, not the contractor. A fixed share of the fee counts: 70 percent for contracts awarded after 27 March 2024, and 60 percent for anything awarded before that, so the date of the award decides, not the date the project started. The contractor's place of management has to sit in the EU, or in an EEA state that grants administrative assistance along the lines of the EU rules. The circular sharpens the line between genuine contract research and the mere purchase of standard services. Details in our article on the research allowance for contract research.

Depreciation and investments

Since the Wachstumschancengesetz (the Growth Opportunities Act), depreciation on movable assets used in the project can be included for newer projects. That extension postdates the circular in force, so the attribution rule comes from the Act itself and only the draft revision spells it out: what counts is the depreciation share falling on the project and on the funding period.

Affiliated companies and groups

The cap on the assessment basis applies to the affiliated companies together, not per legal entity. The circular describes how affiliation is determined and how the cap is divided. For a group with several developing entities, that is a planning question worth settling before the financial year rather than after it.

BSFZ certificate and BMF circular: two levels, one claim

The research allowance procedure runs in two stages, each with its own rulebook:

• The BSFZ examines the technical side: is the project novel, risky and methodically planned? Its yardstick is the FZulG itself and the Frascati criteria.
• The tax office then assesses the allowance on a separate research allowance application, filed in Mein ELSTER once the financial year has ended. Its yardstick is the BMF circular: which costs, which evidence, which caps.

A strong application treats both levels as one from the start: the project description for the BSFZ and the cost documentation for the tax office have to describe the same project, in the same terms.

What this means for your 2026 claim

The legal framework has never been better: up to 35 percent for SMEs, an assessment basis of up to EUR 12 million per financial year, and the 20 percent overhead flat rate for projects starting in 2026. That brings up to 42 percent of direct R&D costs back, up to EUR 4.2 million a year, credited against your tax and paid out where it exceeds the tax due.

The flip side is closer scrutiny as the amounts grow. What tax offices examine hardest in 2026 is time tracking, project attribution and contract-research agreements, precisely the ground the BMF circular covers.

Conclusion

The BMF circular is not required reading for founders, but its content decides the size of the payout. Knowing the documentation requirements and building them into the project from the start secures the full claim; ignoring them means giving money away at assessment. And where the circular has fallen behind the law, the FZulG itself is the fallback.

We handle both: the BSFZ-grade project description and BMF-compliant cost documentation, success-based and end to end. A free initial check shows what is realistic in your case.