Business Finland

Eligible costs in a Business Finland R&D application

The eligible cost categories in a Business Finland R&D application — personnel, subcontracting, materials, indirect costs — with the caps and the common mistakes.

Your funding is a percentage of eligible costs, so the definition of “eligible” is not administrative trivia — it is the thing that determines how much money you receive and how much you have to hand back if you get it wrong. Costs that look eligible when you write the budget but fail when you report them are the quiet way projects lose funding after the fact.

Here is what the categories actually cover, and where teams get caught.

Details and caps depend on your funding decision and current Business Finland rules. Confirm the specifics that apply to your project rather than budgeting from general figures.

Personnel costs

For most AI R&D projects this is the largest category. It covers the salaries of the people doing the development work, allocated to the project by the hours they actually book to it.

The discipline that matters: hour tracking. Personnel cost is claimed on real, recorded hours against the project, not on an estimate. If your team does not keep credible working-time records for the project, the cost cannot be substantiated at reporting time. Set up time tracking on day one, not the week before a report.

Indirect costs (overhead)

You do not itemise every coffee, license, and square metre of office. Instead, indirect costs are covered by an overhead allowance calculated as a percentage on top of personnel costs — a flat multiplier covering general expenses and personnel side costs. This is efficient, but it also means you cannot separately claim the things the overhead is meant to cover. Trying to itemise costs that the overhead percentage already accounts for is a common double-counting error.

Purchased services and subcontracting

External work you buy in — specialist research, development you cannot do in-house, expert services — is eligible, but it is typically capped as a proportion of the project. Business Finland wants the R&D to be substantially your company’s own work, not a project you have entirely outsourced and are merely administering.

Two traps here:

Over-reliance on subcontracting. If subcontracting dominates the budget, the project reads as procurement, not R&D.
Related-party subcontracting. Buying services from an owner, a sister company, or a closely connected party invites scrutiny and specific rules. Assume it will be questioned.

Materials and supplies

Direct materials consumed in the R&D work are eligible. For most AI projects this line is small — the cost is people and compute, not physical materials — but data acquisition and similar direct inputs can belong here depending on how they are treated.

Equipment and depreciation

You generally cannot expense a capital asset in full to the project. Instead, the depreciation attributable to the project period and project use is what counts. Buying hardware and charging the whole invoice to the project is a classic error that gets corrected downward.

Travel

Project-related travel is eligible where it genuinely serves the R&D work. It is a minor line for most software-based AI projects and rarely worth optimising.

What is not eligible

Costs consistently stripped out include:

ordinary business-as-usual running costs unrelated to the R&D
sales, marketing, and commercialisation activity (this is development funding, not go-to-market funding)
costs incurred outside the approved project period
VAT, where recoverable
anything you cannot document and attribute to the project

The mistake underneath most mistakes

Almost every eligible-cost problem traces back to the same root: the budget was built as a fundraising number rather than as an accurate model of the work. A budget written to hit a target invites cuts during assessment and shortfalls during reporting. A budget built bottom-up from real work packages, staffed with real hours, survives both.

Cost the project you are actually going to run. That is the version that holds up.