Forschungszulage: 8 Benefits over Classic Funding Programs

The 8 benefits of the Forschungszulage at a glance

1) Legal entitlement instead of competing for funds

With grant programs, you compete with other applicants for a limited budget. The Forschungszulage has no such race: every company subject to tax in Germany that meets the requirements of the law is entitled (§ 1 FZulG). The entitlement arises at the end of the financial year in which the eligible costs were incurred (§ 4 para. 2 FZulG).

The prerequisite is a certificate from the BSFZ confirming that your project is an R&D project within the meaning of § 2 FZulG. This hurdle is about substance, not budget: across all years, 79% of projects were fully or partially certified, and the evaluators explicitly name the legal entitlement as the reason for the instrument's high planning certainty (evaluation report on the FZulG, BT-Drs. 21/7999). What the BSFZ checks is explained in the guide to the requirements.

2) Claimable up to four years retroactively

Classic programs require you to apply before the project starts. The Forschungszulage, by contrast, is claimed after the end of the financial year in which the costs arose (§ 5 para. 1 FZulG). Because the provisions of the German Fiscal Code (AO) for tax refunds apply to the allowance (§ 12 FZulG), the four-year assessment period applies (§ 169 AO). This means projects that have long been running or are already completed can still be funded.

For you, this means you start a project when it makes technical and commercial sense, not when a funding call happens to be open. Surveyed companies highlight exactly this benefit: being able to start without waiting for application and expert review procedures (evaluation report on the FZulG, BT-Drs. 21/7999). How the deadlines work in detail is covered in claiming the Forschungszulage retroactively.

3) Open to all sectors and company sizes

The FZulG is not tied to sector, size or legal form, but to tax liability in Germany (§ 1 para. 1 FZulG). Corporations, partnerships, sole traders and freelancers can all be entitled. SMEs even get a bonus: they can apply for an increase of the funding rate from 25% to 35% (§ 4 para. 1 FZulG). Whether your company counts as an SME depends on the EU SME definition.

4) Paid out even without profit

This is the biggest difference from classic tax breaks, which only help when taxes are due. The assessed Forschungszulage is offset against the next income or corporate tax, and any remaining surplus is paid out as a tax refund (§ 10 para. 1 FZulG). A start-up without profit would therefore receive the full allowance as cash. Under certain conditions, tax prepayments can also be reduced by the assessed allowance (§ 10 para. 2a FZulG).

When the money actually arrives depends on the procedure at the tax office. The timeline is described in when does the Forschungszulage get paid out?. Whether and how the offset applies in your case is for your tax advisor to confirm.

5) Standardised two-stage procedure

Instead of project outlines, expert review rounds and interim reports, there are two clearly separated steps:

1. Certification by the BSFZ: The certification body determines whether your project meets the requirements of § 2 FZulG (§ 6 FZulG). On average, it takes 62 days to receive the decision (evaluation report on the FZulG, BT-Drs. 21/7999).
2. Assessment by the tax office: With the certificate, your company applies for the Forschungszulage (§ 5 FZulG). Only this tax office decision is final. Tax offices reject only around 2.8% of assessment applications (evaluation report on the FZulG, BT-Drs. 21/7999).

Standardised does not mean undemanding. The BSFZ frequently requests additional information, mostly on novelty and technical risk. A technically precise project description and traceable documentation therefore determine how smoothly both stages run. The guide to the application process shows how an application is structured.

6) Fully digital

Both stages are paperless: the BSFZ application is submitted exclusively through the certification body's portal, and the application for the Forschungszulage is filed as an officially prescribed data record via the tax administration's electronic interface, i.e. ELSTER (§ 5 para. 1 FZulG). For you, that means no postal delays, traceable processing status and documents you can reuse over several years.

7) No topic restrictions: criteria instead of funding priorities

Many programs only fund what fits a funding call, such as hydrogen, mobility or digitalisation in the trades. The FZulG has no topic catalogue. It only asks whether a project is fundamental research, industrial research or experimental development (§ 2 FZulG). What counts are the R&D criteria, not the topic.

This makes the Forschungszulage a fit for product-oriented development too, as long as it goes technically beyond the state of the art: in software and AI, mechanical engineering, MedTech or process engineering.

8) Broad range of eligible costs

The assessment base covers more than salaries (§ 3 FZulG):

• Personnel costs for employees working in R&D, including the employer's social security contribution (§ 3 para. 1 FZulG)
• Own work by sole traders and co-entrepreneurs at an hourly rate per documented working hour (§ 3 para. 3 FZulG)
• Contract research by contractors in the EU/EEA at 70% of the contract costs for contracts since 28 March 2024, previously 60% (§ 3 para. 4 FZulG)
• Depreciation on assets required for the project, since 28 March 2024 (§ 3 para. 3a FZulG)

Since 2026, the maximum assessment base is €12 million per financial year. On average, companies were assessed a cumulative Forschungszulage of around €211,000 between 2020 and 2024 (evaluation report on the FZulG, BT-Drs. 21/7999). How the amount works out for your company is shown in the guide to the calculation.

Forschungszulage vs. ZIM vs. state grant

The differences are clearest in a direct comparison. State programs vary widely, so the last column describes the typical structure of a project grant.

The comparison also shows the limit of the Forschungszulage: it arrives afterwards, while a grant pays during the project. When ZIM can still be the better choice and how the two can be combined is covered in the detailed article ZIM or Forschungszulage.

In practice, few companies combine them: of roughly 18,600 assessment applications, only around 290 were combined with other funding (evaluation report on the FZulG, BT-Drs. 21/7999).

Sources

All sections refer to the statutory text of the FZulG, explained section by section in the guide FZulG explained. The figures come from the Evaluierungsbericht zum Forschungszulagengesetz für den Zeitraum 2021 bis 2025, BT-Drs. 21/7999 of 10 September 2026. What else the report shows is summarised in is the Forschungszulage worth it?. This information is general in nature; your tax advisor makes the final assessment of your company's tax questions.

Which of these benefits apply to your company and what funding amount you can expect can be assessed quickly in a free discovery call.