Austrian R&D Premium: Recognition Also for Activities Abroad
- IG-TAX
- Aug 19
- 2 min read
In a recent and practice-relevant case, the Austrian Federal Fiscal Court (BFG) confirmed that companies may claim the research premium even if essential parts of a research project are carried out by service providers abroad. The key requirement is that the project management and substantive control take place within the Austrian entity.
Austrian R&D Premium
The research premium allows companies to claim a 14% subsidy on expenses related to research and experimental development. One of the main requirements is that the research must be carried out “in a domestic business or permanent establishment.” In practice, there has been uncertainty as to how strictly this territorial link must be interpreted – particularly when external partners abroad are involved.
The view of the Federal Finance Court
An Austrian subsidiary of an international group applied for the research premium for the development of a drug to treat cardiovascular diseases.
Project management was in the hands of the company’s managing director, a medical doctor who initiated, coordinated, and supervised all phases of the project.
Practical research work, including animal testing and clinical trials, was mainly conducted by external service providers both in Austria and in other EU countries.
The tax authority denied the premium, arguing that no in-house research activities in Austria were conducted.
The BFG reached a different conclusion: Since the decisive management and responsibility lay with the managing director in Austria, and external providers only acted under his instructions without carrying out independent creative research, the project qualified as in-house research within the meaning of Austrian law.
Key Findings of the BFG
Domestic project management is decisive: What matters is not where the research is physically carried out but that the substantive management and responsibility rest with the Austrian entity.
EU-related expenses are eligible: Costs for studies and services performed in other EU member states are also eligible. Restricting the premium to Austrian activities would violate EU law.
Services as direct expenses: Study-related services performed by external clinics were considered direct expenses attributable to the Austrian research project. Such expenses qualify regardless of whether they were incurred domestically or abroad.
BFG decision of March 31, 2025, RV/4100008/2024 in German available for download:
If you have any questions about the research premium, our experts Irene Grass and Martin Schmidt will be happy to assist you.
Photo: Wixmedia
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