Forschungszulage Glossary: Key R&D Terms Explained

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Why This Article Matters

Many companies leave money on the table because terms like "R&D", "experimental development", or "novelty" sound complicated. In practice, however, it is often not about "laboratory research" but about innovation within the company: new software, new data processes, new production processes, or new technical solutions.

If you can accurately categorize the following terms, it becomes significantly easier to:

• describe your project in a BSFZ-compliant way,
• avoid typical misunderstandings,
• and use the Forschungszulage as an attractive, technology-neutral funding instrument.

More introduction and practical guidance: internal information and support can be found at zeitmaker.com. Official bodies: BSFZ (Bescheinigungsstelle) and BMF (Federal Ministry of Finance) provide the binding framework information on certification and the tax process.

Here you can find the compact overview with frequently asked questions: The 8 Most Frequently Asked Questions About the Forschungszulage.

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The Most Important Terms

Research and Development (R&D)

R&D refers to work through which you generate new knowledge or apply existing knowledge in a way that produces something new or significantly better (product, process, or service). Importantly: it must be more than routine and there must be genuine technical/scientific uncertainty.

Basic Research

Basic research is research that generates new fundamental knowledge without it yet being clear what it will specifically be used for. It is more about "building knowledge" than "completing a product".

Industrial Research

Industrial research is planned, critical research to gain new knowledge so that you can develop new products/processes/services or significantly improve existing ones. This can also include prototypes in the laboratory or pilot lines for validation.

Experimental Development

Experimental development is the systematic combination and use of existing knowledge to build new or improved solutions. Typical activities include conception, planning, and documentation – innovation that is already very close to implementation.

Applied Research

Applied research also generates new knowledge but is clearly targeted at a practical goal (e.g. a concrete technical solution). It is closer to application than basic research.

Internal R&D

Internal R&D means: your company carries out the innovation work itself (own employees, own organization). This is often the standard case for product or software innovation.

External R&D

External R&D means: you have R&D carried out by third parties (e.g. companies, universities, research institutions domestically or abroad). This can make sense if you lack know-how or capacity.

Details can be found here: Employees Abroad.

Intramural R&D Expenditure

Intramural R&D expenditure refers to spending on R&D that takes place within your company (e.g. R&D personnel, directly attributable material costs). "Intramural" = "in-house".

Extramural R&D Expenditure

Extramural R&D expenditure refers to payments to external parties who carry out R&D for you (e.g. contract research). "Extramural" = "outside the house".

R&D Personnel

R&D personnel includes all persons who work directly on R&D or directly support R&D (e.g. R&D management, assigned administration). What matters is that their work concretely benefits the R&D project.

Terminology help on effort: What Does a Personenmonat Mean for the Forschungszulage?.

Researchers

Researchers are specialists who conceive and generate new knowledge (e.g. new concepts, models, methods, software approaches). They are the primary drivers of the actual innovation.

Technical Support Staff

Technical support staff carry out specialist work in the R&D project, often under the direction of researchers (e.g. tests, measurements, laboratory/technical tasks, use of R&D equipment). They are "the implementers in technical detail".

Other R&D Personnel

Other R&D personnel are employees who practically support R&D, e.g. workshop, assistance, administration – but directly assigned to an R&D project. Not every administrative function is R&D, only those clearly project-related.

R&D Expenditure

R&D expenditure refers to costs incurred through R&D (e.g. personnel expenses, certain directly attributable costs). For the Forschungszulage, depending on the situation, certain personnel costs are primarily central.

More here: Calculation.

Personnel Costs (for R&D Personnel)

These are costs for employees working on R&D – typically gross wages/salaries plus employer contributions (including social security contributions etc.). It is important that only the R&D proportion counts if someone works on mixed activities.

Details: Forschungszulage Personnel Costs.

Material Costs

Material costs are material and operating costs used for R&D (e.g. laboratory materials, energy, specialist literature, certain services). For the Forschungszulage, material costs are not always the core – what matters is what is specifically eligible under the law.

Overhead Costs

Overhead costs are shared costs that can be proportionally attributed to R&D (e.g. rent, energy, telecommunications, office services), provided they are clearly assigned to R&D. They are relevant in the R&D framework, but in funding, it depends on the permissible cost category.

Depreciation

Depreciation refers to the calculated reduction in value of assets over time. In R&D accounting, depreciation is often not counted as R&D expenditure in the strict sense, even though it appears as an expense in the books.

Prototypes

A prototype is a first (or early) model that primarily serves to test and improve. It is typically considered R&D as long as prototype construction serves to clarify technical questions and advance development – not when it is purely routine.

Pilot Plants

Pilot plants are facilities built to test R&D questions in practice. They count as R&D as long as the main purpose is genuinely knowledge gain and validation.

Trial Production

Trial production is production that still serves to enable series testing and further development work. Once it is essentially "production as in everyday operations", it is usually no longer R&D.

Product Design

Product design only counts as R&D if it is necessary for the R&D phase (e.g. to make new functions possible). Design that is finalized "only" for production, marketing, or aesthetics is generally not R&D.

"Feedback R&D"

Feedback R&D is R&D that arises after the launch of a product/process because genuine technical problems occur that can only be resolved through further development. Pure customer support or routine bug fixing does not count – only the part with genuine R&D character.

Contract Research

Contract research means: you commission a third party to carry out R&D, and you usually bear the financial risk. In many cases, the rights to use the results then lie with the commissioning party.

Intellectual Property Rights

Intellectual property rights are e.g. patents or licenses as legal protection of innovations. Important: patent and licensing work is generally not R&D in its own right, but rather administrative/legal work.

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R&D Criteria You Should Know (BSFZ Logic, Simply Explained)

Novel (as a Criterion for R&D)

"Novel" means: you want to develop something that is new for your company or your field and goes beyond the current state of the art. It is not sufficient to merely "replicate" something or make minimal adjustments.

Creative (as a Criterion for R&D)

"Creative" means: the solution does not arise through simple execution but through original ideas, concepts, or non-obvious approaches. It is more than routine and requires creative technical thinking.

Uncertain (as a Criterion for R&D)

"Uncertain" means: at the outset, it is not certain whether and how the technical goal can be achieved. Important: this refers to technical/scientific uncertainties – not merely commercial risks.

Systematic (as a Criterion for R&D)

"Systematic" means: you work with clear goals, a structure (e.g. work packages, timeline, milestones), and a budget. R&D is not a random project but organized innovation work.

Transferable and/or Reproducible (as a Criterion for R&D)

The result must be documented in such a way that it is fundamentally traceable and can (within reasonable limits) be repeated. The point is not to make everything public – but to ensure that the knowledge does not remain "only in someone's head".

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The "Detail Terms" Behind the Criteria

Degree of Knowledge Novelty

This describes how new the generated knowledge is: new for your company, your market, or a specific application. Copying, pure imitation, or reverse engineering typically does not count as a new knowledge contribution.

Creative Activity

This is the work in which genuinely new ideas and methods emerge. Typical examples are hypotheses, new technical approaches, new algorithms, new architectural decisions, or new technical principles.

Degree of Uncertainty

This is the measure of how unclear it is whether you can achieve the goal – e.g. due to technical hurdles, missing reference solutions, or complex interdependencies. The higher the genuine technical uncertainty, the more likely R&D is present.

Formalization and Systematization of the Process

This means: your innovation process is clearly described (goals, approach, resources, documentation of results). This also helps later with the application, review, and internal traceability.

Transferability and Reproducibility of New Knowledge

This means: the new knowledge can be transferred to other contexts (e.g. similar systems/products) and is traceable for other specialists through documentation. Without documentation, it becomes difficult to convincingly demonstrate the R&D character.

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How to Use These Terms for the Forschungszulage (Practice, Brief)

Here is the practical checklist: 6 Tips: Using the Forschungszulage Safely and Efficiently.

• Frame your project as an innovation goal ("new or significantly improved"), not as "we are building feature X".
• Describe the technical uncertainty (what obstacle? why is it non-trivial?).
• Demonstrate systematic approach (work packages, tests, milestones, resources).
• Document results so that the solution is reproducible.

If you would like support with this (e.g. project delineation, formulations, categorization), you can find suitable help and practical examples at zeitmaker.com.

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