R&D Tax Credit 2026: the new cap and the flat rate
The assessment basis rises to EUR 12 million on 1 January 2026, plus a 20% flat rate on all eligible expenses, including the depreciation under § 3 (3a). It only applies to projects started after 31 December 2025, regardless of the fiscal year of the expenditure.
- Assessment basis: EUR 12 million instead of EUR 10 million
- 20% flat rate only for new projects
- Funding rate unchanged: 25%, 35% for SMEs
Written by Max Nodes, Founder and Managing Director · 25 of 25 supported BSFZ applications certified (as of 09/2026) · Last updated: · Law as of:
What changes in 2026
Figures and details
The flat rate only applies to projects started after 31 December 2025. The funding rate, the contract-research share and the own-contribution rate do not change on 1 January 2026.
Key facts in brief
On 1 January 2026, the assessment basis of the R&D Tax Credit rises to EUR 12 million and a 20% flat rate is added (§ 3 (3b), (5) FZulG). The flat rate depends on when the project started, not on the fiscal year of the expenditure: a project that started in 2024 does not get it even for expenditure incurred in 2026. The funding rate stays at 25%, for SMEs 35% (§ 4 (1) FZulG). The ten percentage point SME bonus, however, only applies to activities after 27 March 2024; before that the rate was 25 % for SMEs too.
The essentials of the 2026 changes
What exactly changes in 2026?
The assessment basis cap rises to EUR 12 million, and a 20% flat rate is added. The funding rate and the contract-research share stay the same.
| Rule | Until 2025 | From 2026 | Legal basis |
|---|---|---|---|
| Assessment basis cap | EUR 10 million | EUR 12 million | § 3 (5) FZulG |
| Overhead flat rate | none | 20% (only for projects started after 31 December 2025) | § 3 (3b) FZulG |
| Maximum allowance, SME (35%) | EUR 3.5 million | EUR 4.2 million | § 4 (1), § 3 (5) FZulG |
| Maximum allowance, large enterprise (25%) | EUR 2.5 million | EUR 3 million | § 4 (1), § 3 (5) FZulG |
| Contract-research share | 70% | unchanged: 70% | § 3 (4) FZulG |
The maximum allowance rises along with it, because it is the cap times the funding rate: EUR 12 million x 35% for SMEs, EUR 12 million x 25% for large enterprises. Only the cap and the flat rate are new; the funding rate and the contract-research share already applied before 2026.
What changed for the R&D Tax Credit on 1 January 2026?
Two values change, three stay the same.
Only the assessment basis and the flat rate are new (table in the “What changes in 2026?” section above). The funding rate, the contract-research share and the own-contribution rate already applied before 2026 and do not change with the new year.
Which projects get the 20% overhead flat rate?
What matters is when the project started, not the fiscal year the costs fall in.
The flat rate only applies to projects that started after 31 December 2025 (§ 3 (3b) FZulG). A project that started in 2024 or 2025 does not get it even for expenditure incurred in fiscal year 2026.
Project started in 2024
EUR 800,000 in personnel costs in fiscal year 2026, project started in 2024.
No flat rate: the project started before 1 January 2026.
Project started in 2026
Same EUR 800,000 in personnel costs in the same fiscal year, project started in 2026.
With flat rate: 20% added to the assessment basis.
Both cases fall in the same fiscal year with the same costs. The only difference is the date the project started.
How high is the maximum R&D Tax Credit after the increase?
The new EUR 12 million cap mainly benefits SMEs.
The maximum R&D Tax Credit is EUR 4.2 million for SMEs and EUR 3 million for large enterprises (EUR 12 million x 35% or 25%). Until 31 December 2025, the cap was EUR 10 million, putting the maximum allowance at EUR 3.5 million (SME) or EUR 2.5 million (large enterprise).
Who benefits most from the changes on 1 January 2026?
How the new flat rate and the higher cap play out depends on the starting position.
- SMEs with new projects from 2026: the flat rate and the higher cap combine, up to EUR 4.2 million allowance.
- Companies with R&D costs close to the old EUR 10 million limit: the higher cap creates extra headroom.
- Companies with contract research: the flat rate also applies to the 70% share of contract research if the project started after 2025.
Companies with projects already running from 2024 or 2025 only benefit from the higher cap, not the flat rate, as long as they do not start a new project.
Which questions about the 2026 changes come up most often?
What does this mean for ongoing projects?
The cut-off date is when the project started, not the fiscal year of the expenditure.
- Project started before 1 January 2026: no flat rate, not even for expenditure in fiscal year 2026.
- New project started on or after 1 January 2026: 20% flat rate added to the assessment basis (§ 3 (3b) FZulG).
- The higher EUR 12 million cap applies to all projects once the expenditure falls in fiscal year 2026, regardless of when the project started.
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- Research Allowance Report 2026What changed in 2026, in figures
- Research allowance: the factsFunding rate, cap, deadlines and legal basis on one page
- R&D Tax Credit amountFunding rate, assessment basis and maximum allowance in detail.
- Contract researchWhich share of contract research is eligible.
- SMEsThe EU criteria for the increased funding rate.
- R&D Tax Credit calculatorAssessment basis and allowance across several years.
- Apply retroactivelyWhich years are still open.
- How to apply for the R&D Tax CreditBSFZ application and research allowance application (ELSTER) step by step.
Max Nodes
Founder and Managing Director of NOVARIS Consulting. Specialised in the German R&D tax credit (FZulG) since 2021; 25 of 25 accompanied BSFZ applications approved (as of 09/2026). Max Nodes