On 4 June 2025, the Federal Cabinet approved a draft law for an ‘immediate tax investment programme to strengthen Germany as a business location’. With the new investment law, the German government has also introduced significant improvements to tax incentives for research. From 2026, research-based companies will have significantly expanded opportunities to claim tax deductions for R&D expenditure. Here we provide an overview of the planned measures relating to the 'tax research allowance ('steuerliche Forschungszulage').
The most important points at a glance
The draft bill to strengthen Germany as a business location provides for the following tax research allowance:
Increase in the assessment basis to €12 million
The maximum eligible assessment basis will be raised from €10 million per year per group of companies to €12 million. This corresponds to a maximum research allowance of €3 million per year – and up to €4.2 million for SMEs.
Introduction of a flat rate for general and operating costs of 20%
From 2026, in addition to eligible personnel and contract costs, a flat rate of 20% can be applied for overheads. This new funding element is not only intended to be implemented with minimal bureaucracy, but also to lead to higher subsidies with little effort in practice.
These changes are to be applied to R&D projects starting on or after 1 January 2026.
Projects already underway or completed before this date will not benefit retroactively from the new regulations.
What does this mean for your company?
It is now important for companies to strategically plan projects starting in 2026 in order to make optimal use of the expanded funding opportunities. Technology-oriented companies that are already applying for research allowances or would like to do so in the future should incorporate the planned changes into their budget planning and project structure at an early stage.
Whether SMEs, medium-sized companies or technology leaders, companies with their own R&D activities benefit twice over: on the one hand, from greater investment scope thanks to higher funding volumes under the tax research allowance. On the other hand, from less bureaucracy thanks to the flat-rate regulation for common/operating costs.
Our support for you
EurA specialises in applying for and processing research allowances. With our many years of expertise, we provide companies with comprehensive support from project analysis and funding strategy to successful application. Secure your advantages early on – we will be happy to advise you.
Text: Birgit Miriam Hering
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The tax research allowance offers you the opportunity to claim funding, regardless of size and industry, as well as retroactively (project starts in 2020). As an engineer, I have already successfully supported numerous applications and am happy to make this experience available. You can use this opportunity to advance the development and research of innovations and reduce your economic investment. We support you in benefiting from this opportunity – from the project idea to the application and access to funding. We adapt our services to your needs. We would be happy to enter into a dialogue with you.
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