The Research and Development Tax Credit Guidelines 2025 (draft) provide a comprehensive interpretative aid for the uniform application of the R&D Tax Credit law in Austria. These guidelines supersede previous statements in the Income Tax Guidelines 2000 and apply to Research and Development Tax Credit from the calendar year 2026 onwards.
Natural persons subject to unlimited or limited income tax liability can apply for the R&D Tax Credit.
Partnerships
Companies with co-partners are eligible, with special regulations applying to partnerships.
Corporations
Non-tax-exempt corporations according to § 1 Corporate Tax Act 1988 can claim the R&D Tax Credit.
The R&D Tax Credit amounts to 14% of the assessment basis for fiscal years from 2018 onwards. It is calculated by the applicant themselves and granted upon application by the competent tax office.
Definition of Research and Experimental Development
Research and experimental development (R&D) is a creative activity carried out systematically using scientific methods. The aim is to increase the stock of knowledge and devise new applications.
Basic Research
Original investigations to advance knowledge without a specific practical objective.
Applied Research
Investigations directed towards a specific practical objective.
Experimental Development
Systematic activities aimed at producing new or improved materials and processes.
The Five Criteria for the R&D Tax Credit
01
Novelty (generation of new knowledge)
The activity must lead to findings that are new to the company and not yet utilized in the relevant economic sector.
02
Creative Activity (innovative approaches)
New concepts or ideas that increase the existing state of knowledge. Routine changes do not qualify as grant-supported R&D.
03
Uncertainty (unpredictable outcome)
The outcome and costs cannot be precisely determined at the outset. There is fundamental uncertainty regarding the achievement of objectives.
04
Systematic Activity (planned and documented work)
The R&D process follows a fixed plan; procedural steps and results are documented.
05
Reproducibility (results must be verifiable and replicable)
The findings must be reproducible and use systematic, comprehensible methods.
In-house R&D vs. Contract Research
In-house R&D
R&D with own resources
Own project responsibility
Domestic operation or permanent establishment
Mainly performed by own employees
No cap on the assessment basis
Personnel expenses, direct expenses, investments, financing costs, and overhead costs are eligible.
Contract Research
Commissioned R&D
Contractor in EU/EEA
No controlling influence
Reporting obligation required
Cap at 1 million Euros per year
The assessment basis is the costs invoiced by the contractor. No FFG expert opinion required.
Distinctions and Activities Not Eligible for R&D Tax Credit
Market Research
Market surveys and observations are generally not eligible, except for the development of new survey methods.
Routine Tests
Routine quality and production controls do not fall under R&D; only project-specific tests are eligible.
Trial Production
The start-up phase of series production is not to be assigned to R&D, as the main goal is smooth functioning.
Standardization
Standardization work is generally not R&D, except for systematic research activities aimed at standardization.
The distinction is made according to the criteria of the OECD Frascati Manual. The decisive factor is whether the activity is primarily aimed at technical improvement or market development.
Assessment Basis for In-house R&D
14%
Tax Credit Rate
For fiscal years from 2018
1-5
Cost Categories
Various eligible types of costs
100%
Tax Deductibility
Only deductible expenses are relevant
The assessment basis comprises five main categories of expenses, all of which must be attributable to the R&D Tax Credit:
1
Personnel Expenses
Wages, salaries, social security, and other personnel costs for R&D employees
2
Direct Expenses and Investments
Costs directly attributable to R&D and investments
3
Financing Expenses
Interest costs and other financing costs attributable to R&D
4
Overhead Costs
Costs indirectly attributable to R&D according to an appropriate key
5
Imputed Entrepreneur's Wage
For sole proprietors and co-entrepreneurs in direct R&D activities
Personnel Expenses and Time Tracking
Personnel expenses often constitute the largest portion of the assessment basis. Precise allocation and documentation are therefore essential for a successful application.
Eligible Personnel Costs
Gross salaries and wages, including non-cash benefits
Meaningful time records must reflect the actual circumstances. Project-specific allocations and a standardized recording system are required.
100%
Project Activity
Complete recording in the time tracking system
For employees with mixed activities, only the portions corresponding to R&D are to be considered. The calculation is made using individual personnel hourly rates.
Procedures and Documentation
1
FFG Assessment
Annual assessment by the Austrian Research Promotion Agency (FFG) is a prerequisite for in-house R&D
2
Application Submission
Self-calculation of the R&D Tax Credit by the applicant; no special documentation required upon application
3
Decision
Credit to the tax account or formal assessment by the tax office
4
Review
Possibility of subsequent review and amendment for retroactive events
For contract research, an FFG assessment is not required. Instead, each research project must be described by its title, objective, content, and methodology.
Important Note: The notification obligation for contract research must be fulfilled by the end of the financial year to avoid double funding.
Practical Implementation and Outlook
The R&D Tax Credit Guidelines 2025 (draf) offer companies a clear framework for claiming the R&D Tax Credit. The systematic application of these guidelines strengthens Austria's R&D location.
Compliance
Uniform application of law through clear guidelines and demarcation criteria
Promotion
Strengthening the innovative capacity of companies through tax incentives in Austria
Documentation
Structured records as a basis for successful applications
The FoPR 2025 will come into force for R&D Tax Credit from calendar years starting in 2026. For tax audits of past periods, they are to be applied insofar as they do not provide for less favorable regulations than the previous EStR 2000.