diff --git a/pyproject.toml b/pyproject.toml
index 6c9c4fcf..677e1881 100644
--- a/pyproject.toml
+++ b/pyproject.toml
@@ -5,11 +5,17 @@ build-backend = "setuptools.build_meta:__legacy__"
 [tool.setuptools-git-versioning]
 count_commits_from_version_file = true
 enabled = true
-version_file = "VERSION"
+version_file = "src/mrpro/VERSION"
 template = "{tag}{env:MRPROVERSIONSUFFIX:default ''}"
 dev_template = "{tag}+{branch}{sha}"
 dirty_template = "{tag}+dirty{sha}"
 
+[tool.setuptools]
+include-package-data = true
+
+[tool.setuptools.package-data]
+"mrpro" = ["VERSION"]
+
 [project]
 name = "mrpro"
 description = "MR image reconstruction and processing package specifically developed for PyTorch."
diff --git a/VERSION b/src/mrpro/VERSION
similarity index 100%
rename from VERSION
rename to src/mrpro/VERSION
diff --git a/src/mrpro/__init__.py b/src/mrpro/__init__.py
index ef825788..fb551e18 100644
--- a/src/mrpro/__init__.py
+++ b/src/mrpro/__init__.py
@@ -7,4 +7,4 @@
     __version__ = version("package-name")
 except PackageNotFoundError:
     # package is not installed
-    __version__ = Path(__file__).parent.parent.parent.joinpath("VERSION").read_text().strip()
+    __version__ = Path(__file__).parent.joinpath("VERSION").read_text().strip()