Forschungszulage FAQ: 8 Key Questions Answered

1. What Is the Forschungszulage (Tax-Based R&D Incentive) – and What Is Fundamentally Eligible for Funding?

The Forschungszulage is a tax-based incentive for companies that carry out research and development (R&D). Eligible are R&D projects within the meaning of the Forschungszulagengesetz (FZulG), i.e. projects that qualify as industrial research or experimental development.

The key point: it must be an R&D project (not "normal" product maintenance, routine further development, or purely economic optimisation).

2. How Much Is the Forschungszulage – and Which Expenditure Is Fundamentally Eligible?

The specific amount depends on the eligible expenditure that is later claimed in the application at the tax office. The offset/payout is treated as tax-free.

Important for classification:

• The BSFZ does not assess whether or to what extent expenditure has actually been incurred.
• The assessment of expenditure (and the determination of the Forschungszulage) is carried out by the responsible tax office.

For details on eligible expenditure and the assessment/offset procedure, the BSFZ refers to the information provided by the Federal Ministry of Finance (BMF) and the BMF letter of 7 February 2023.

3. Who Is Eligible to Apply – Which Companies Can Apply for the Forschungszulage?

Only the eligible party may submit the certificate application (BSFZ) and the Forschungszulage application (tax office). Eligible parties are generally limited or unlimited taxpayers (EStG/KStG), provided they meet the requirements of the FZulG and generate the relevant income.

For partnerships, the partnership itself is the eligible party.

Practical takeaway: start-ups, KMU, and large companies are frequently eligible – but what matters is the tax classification and the requirements of the FZulG.

4. Why Do I Need a BSFZ Certificate – and What Role Do the BSFZ and the Tax Office Each Play?

The BSFZ certificate confirms bindingly that the project is an eligible R&D project within the meaning of the FZulG.

Division of roles:

• BSFZ: assesses the substantive R&D eligibility of the project (R&D criteria) and issues the certificate.
• Tax office: determines the Forschungszulage (amount/offset/payment) – the basis for this is inter alia the BSFZ certificate, which must be attached to the application at the tax office.

5. What Criteria Must a Project Meet to Be Recognised as an R&D Project (Novelty, Risk/Uncertainty, Systematic Planning)?

The BSFZ assesses R&D projects according to uniform standards. In the BSFZ review, the requirements are essentially consolidated into three overarching criteria:

• Novelty: the goal is to gain new knowledge/skills or to use the state of the art in a new way (e.g. new/improved products, processes, services, or possibly new business models/methods).
• Risk / Uncertainty: there are scientific/technical uncertainties, obstacles, or challenges that could jeopardise the achievement of objectives. Purely economic risks do not count here.
• Systematic planning: the project follows a clear plan (e.g. timeline/work plan, resource and personnel planning, work packages, milestones, expected interim results).

All three criteria must be met for a certificate to be issued.

6. Do I Need to Conduct Basic Research to Receive the Forschungszulage – or Is Industrial Research or Experimental Development Sufficient?

No, you do not necessarily have to conduct basic research. R&D can (depending on the activities) be assigned to one or more of the three categories:

• Basic research: acquisition of new fundamental knowledge without any discernible direct commercial application.
• Industrial research: systematic/critical research to gain new knowledge/skills with the aim of new or significantly improved products/processes/services (including development of components of complex systems; sometimes also prototypes/pilot lines if required for validation).
• Experimental development: combination/use of existing knowledge to develop new or improved products/processes/services; includes e.g. design, planning, documentation.

What matters is therefore not "basic research only," but whether the activities have R&D character and meet the criteria (in particular novelty, uncertainty, and systematic planning).

7. When Can I Submit the Application – Are There Deadlines (BSFZ Application vs. Tax Office Application / Assessment Deadlines)?

• The FZulG has been in force since 01.01.2020. Certificates can be applied for projects that started after 01.01.2020 (or contracts awarded after that date).
• You can submit the BSFZ application before, during, or after a project is carried out; there is generally no "classic" exclusion deadline for the BSFZ ("possible at any time").
• However, the assessment deadlines under tax law are practically relevant: the BSFZ explains that under the General Tax Code (AO), a 4-year deadline generally applies (relating to the year in which the expenditure arose). Important: to ensure the application at the tax office remains possible even later, the BSFZ application must be submitted within these 4 years (keyword: underlying assessment notice / suspension of expiry).
• Example from the BSFZ: expenditure from 2020 is to be claimed; in order to still be able to do so in 2025, the BSFZ application must have been submitted by 31.12.2024.

8. What Happens If the Project Is Abandoned or Fails?

Abandonment or an unsuccessful completion is not a disqualifying criterion for R&D: research and development is characterised precisely by technical/scientific uncertainties. If the project meets the R&D criteria, a certificate can in principle be issued even in the event of delays, abandonment, or failure.

To note: when submitting the application at the tax office, you must confirm that the facts underlying the certificate have not changed. If material facts change, a new certificate may be required. In addition, in the event of abandonment, only the expenditure incurred up to the point of abandonment can be taken into account.