Research Allowance for Contract Research: Claim 70%

Why contract research makes the allowance so attractive

Not every company develops everything under its own roof, and none has to: commissioned research and development is eligible, and the principal is the one who claims it. Whether the work goes to a specialised engineering firm, a research institute or a software house, that opens the research allowance, the Forschungszulage of German tax law, to companies without a large internal R&D department.

The Wachstumschancengesetz (Growth Opportunities Act) increased the leverage considerably: 70 percent of the fee now counts towards the assessment basis, up from the 60 percent that applied before. The date that decides is the day the contract was awarded, not the year in which the project runs, and the cut-off is 27 March 2024. The remaining 30 percent is a flat deduction 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, carry the economic risk and exploit the results. The provider cannot claim an allowance of its own for the same work, which prevents double funding and keeps the attribution unambiguous.

The project itself meets the same criteria as internal R&D: novel, systematic, technically risky. The BSFZ, the body that certifies research projects for the allowance, examines a commissioned project exactly as it examines an internal one.

Contractor location: EU or EEA

The fee counts only if the contractor has its place of management in an EU member state or an EEA state that grants administrative assistance. A development partner in Poland or Austria qualifies, a team in Switzerland, the UK or the US does not. If you are still choosing a provider, weigh that in early: on a six-figure contract the difference in funding quickly runs into five figures.

Genuine R&D rather than standard services

The most frequent dispute is delineation. Contract research means commissioning work whose outcome is genuinely open, a new algorithm, a new material, a new process. Routine implementation, buying finished components, customising standard software or certification services are not contract research, however much effort they take.

In practice everything gets easier when the contract spells the research content out: objective, state of the art, technical risks, work packages. The BSFZ then has something to certify and the tax office something to assess, and the requirements are bundled in the BMF circular on the research allowance.

What a commission worth EUR 500,000 brings back

In 2026 an SME commissions an engineering firm in the EU to develop a new measurement process for EUR 500,000, while its own developers put EUR 300,000 of personnel cost into the same project:

• Contract research: EUR 500,000 × 70% = EUR 350,000
• Internal personnel: EUR 300,000
• Subtotal direct costs: EUR 650,000
• Overhead flat rate for a project starting in 2026: + 20% = EUR 780,000 assessment basis
• Research allowance (SME, 35%): EUR 273,000, first credited against the assessed tax, with any excess paid out

Roughly 34 percent of the total project cost comes back that way, year after year, for as long as the development runs. The calculator in our guide to the allowance shows how the amounts scale with team size and project years.

Contract research in a real project

Our case study on the research allowance for contract research in metrology shows what that looks like in practice: the company had its core development carried out externally, drafted the contracts research-ready from the start, and the BSFZ certified the commissioned project in full. Mixed setups work as well, as with the IT-security company whose contract research was fully recognised.

Where contract research claims go wrong

• The provider applies instead of the principal: the claim belongs to the client who ordered the work, and the contract should say so plainly.
• Contractor outside the EU/EEA: check this before you sign. Routing the order through a European subsidiary helps only if that entity has its place of management in the EU or EEA and carries out the research itself, because a fee passed on to a sub-contractor is not eligible.
• A works contract without research language: if the paperwork only promises "delivery of a system", the BSFZ has nothing to certify. The research objective and the technical risks belong in the statement of work.
• Basing the claim on the gross invoice: 70 percent of the fee counts, not 100 percent, and the funding rate applies only after that.
• Double funding with grants: cost that a ZIM grant or an EU programme already covers must not go into the allowance a second time.

The short version

Contract research opens the Forschungszulage to companies that outsource development in whole or in part: 70 percent of the fee goes into the assessment basis, it combines with internal personnel cost, and for projects starting in 2026 the overhead flat rate applies on top. Two things decide the case, the partner's place of management in the EU or EEA and a contract that makes the research visible.

Send us the contracts and we will tell you at no cost and with no obligation whether your commissions qualify; if they do, we run the claim from the statement of work to the tax office, on a success-fee basis.