Research Allowance for Contract Research: Claim 70%

Why contract research makes the allowance so attractive

Not every company develops everything in-house. Whether specialised engineering firms, research institutes or software providers: commissioned research and development is eligible, and it is the principal who claims. That opens the research allowance to companies without a large internal R&D department.

Since the Growth Opportunities Act the lever has grown considerably: instead of the original 60 percent, 70 percent of the fee counts towards the assessment base for financial years from 2025. The 30 percent discount is a flat allowance for the contractor's profit and overhead share.

The requirements in detail

The principal files the claim

Funding goes to whoever commissions the research: you define the project, bear the economic risk and exploit the results. The provider cannot claim its own allowance for the same work. That prevents double funding and makes attribution unambiguous.

The project itself faces the same criteria as internal R&D: novel, systematic, technically risky. The BSFZ examines a commissioned project exactly like an internal one.

Contractor location: EU or EEA

The fee is only eligible if the contractor is established in an EU member state or the EEA. The development partner in Poland or Austria qualifies; the team in Switzerland, the UK or the US does not. If you are still choosing a provider, factor this in: on a six-figure contract the funding difference quickly reaches five figures.

Genuine R&D rather than standard services

The most frequent dispute is delineation: contract research means commissioning work with an uncertain outcome, for example developing a new algorithm, material or process. Not contract research are routine implementation, purchasing finished components, standard software customisation or certification services.

In practice, a contract that makes the research content explicit helps: objective, state of the art, technical risks, work packages. That makes certification easier for the BSFZ and assessment easier for the tax office; the requirements are bundled in the BMF circular on the research allowance.

Worked example: what a €500,000 commission returns

An SME commissions an EU engineering firm in 2026 to develop a new measurement process, contract value €500,000, with its own developers contributing €300,000 in personnel costs:

• Contract research: €500,000 × 70% = €350,000
• Internal personnel: €300,000
• Subtotal direct costs: €650,000
• Overhead flat rate (new project from 2026): + 20% = €780,000 assessment base
• Research allowance (SME, 35%): €273,000 paid out in cash

Effectively a good 34 percent of total project costs come back, year after year, for as long as development continues. How the amounts scale with team size and years is shown by the calculator in our guide.

Contract research in practice: a real case

What this looks like in real life is shown in our case study on the research allowance for contract research in metrology: a company had core development work carried out externally, the contracts were drafted research-ready, and the BSFZ certified the commissioned project in full. Mixed setups work too, for instance when an IT-security company had contract research fully recognised.

Typical mistakes and how to avoid them

• The provider applies instead of the principal: the claim sits with the principal, and the contract should reflect that.
• Contractor outside the EU/EEA: check before signing; sometimes solvable through the provider's group structure.
• A works contract without research language: if the contract only describes "delivery of a system", the BSFZ has nothing to certify. Research objective and risks belong in the statement of work.
• Basing the claim on the gross invoice: 70 percent of the fee counts, not 100 percent, and only then is the funding rate applied.
• Double funding with grants: costs already funded through ZIM or an EU programme must not go into the allowance as well.

Conclusion

Contract research opens the research allowance to companies that outsource development in whole or in part: 70 percent of the fee into the assessment base, combinable with internal personnel costs and, from 2026, with the overhead flat rate. What matters are the partner's EU/EEA establishment and a contract that makes the research visible.

We check free of charge and with no obligation whether your commissions qualify, and run the claim end to end, success-based.