Forschungszulage glossary

The key terms around the German research allowance, clearly defined and individually linkable. Filter by category or search for a term directly.

67 terms

Ablehnung und Einspruch (rejection and appeal)
Application & procedure
A rejection means a project is assessed as not eligible in the form submitted. It is not a permanent bar: a rejecting decision by the certification body can be appealed within one month, or a revised application can be filed.
In the two-stage procedure problems can arise twice: the BSFZ may reject the project on the merits, or the tax office may cut the amount despite a positive certificate if costs are poorly documented or misallocated.
Request for additional information: missing details, often with a short ~14-day deadline.
Rejection: formal appeal within one month of receiving the decision.
Common causes: novelty, technical uncertainty and systematic approach not clearly shown, too little technical depth, weak documentation, non-attributable costs.
Forschungszulage rejected: what to do Certification body (BSFZ)Application
Abschreibungen (depreciation)
Costs & assessment base
Since 28 March 2024, depreciation on certain movable fixed assets is an eligible expenditure (§ 3 (3a) FZulG). It is the asset's decline in value that is claimed, not the full purchase price.
The Wachstumschancengesetz added subsection 3a to § 3: for fiscal years starting after 31 Dec 2023, the part of the acquisition or production cost of an eligible asset attributable to its decline in value counts as an eligible expenditure.
Requirement: acquired/produced after 27 Mar 2024 and project started after 27 Mar 2024.
The asset must be used exclusively in-house for the project and be necessary for it.
The tax-allowed depreciation is claimed, possibly including the temporary declining-balance method under § 7 EStG (acquisitions after 30 Jun 2025 and before 1 Jan 2028).
Fixed assets & Forschungszulage Eligible fixed assets Calculation
Angewandte Forschung (applied research)
R&D definition & types
Applied research also generates new knowledge but is clearly directed at a practical goal, such as a concrete technical solution. It is closer to application than basic research.
The term comes from the research taxonomy of the Frascati Manual and describes the transition from pure knowledge to practical use.
The FZulG does not list it as a separate category. The law only knows basic research, industrial research, and experimental development. In substance, applied research largely overlaps with industrial research.
Industrial research Frascati Manual
Anrechnung und Auszahlung (offsetting and payout)
Calculation & amount
The assessed Forschungszulage is offset against the next income or corporate tax under § 10 FZulG; any surplus beyond that is paid out as a tax refund. This benefits loss-making companies too.
The Forschungszulage is not transferred directly but offset against the assessed tax at the tax office. If it exceeds the tax, the surplus is paid out (§ 10 FZulG). In practice it therefore acts tax-free.
Example: €1,200,000 allowance, €800,000 corporate tax, €800,000 offset, €400,000 paid out.
Especially relevant for start-ups and companies in loss phases.
In practice often 6–9 months from preparation through BSFZ review to assessment.
When is it paid out?Is the Forschungszulage tax-free?Application
Arbeitgeberanteile zur Sozialversicherung (employer social contributions)
Costs & assessment base
Besides gross wages, employer social security contributions are eligible as future-provision expenses under § 3 No. 62 EStG (§ 3 (1) FZulG). They increase the claimable personnel costs in proportion to the R&D effort.
§ 3 (1) FZulG explicitly names the employer's expenses for the employee's future provision under § 3 No. 62 EStG, i.e. typically the statutory employer social security contributions. They are added to the gross wage subject to wage tax.
Part of the basis: (gross wage + employer contributions) × R&D time share.
Eligible only insofar as the employee works on the eligible R&D project.
Increases personnel costs and thus the assessment base.
Personnel costs Forschungszulage personnel costs § 3 FZulG explained
Auftragsforschung (contract research)
Costs & assessment base
Contract research is when a company commissions an R&D project to an external contractor. For the research allowance, 70 % of the fee paid to the contractor is eligible (for contracts placed from 28 March 2024; previously 60 %).
The client, not the contractor, is entitled to the allowance. This means R&D a company buys in externally rather than performing itself is also supported.
Requirements
The contractor must be based in the EU or EEA.
70 % of the fee (excluding VAT) is eligible, as a flat R&D cost share.
Costs for sub-contracts passed on by the contractor are not eligible.
A BSFZ certificate is also required for the commissioned project.
The 70 % enter the assessment base and are subject to the same annual cap as in-house expenditures.
Assessment base BSFZ certificate Calculating the research allowance
Begünstigtes FuE-Vorhaben (eligible R&D project)
R&D definition & types
An eligible R&D project is a research and development project that can be assigned to one of the three R&D categories under § 2 FZulG and therefore qualifies for the research allowance. Only expenditures for such projects enter the assessment base.
A project is eligible if it can be assigned to one or more of the categories basic research, industrial research, or experimental development (§ 2 (1) FZulG) and meets the criteria novel, uncertain, and systematic.
What is not eligible (§ 2 (2) FZulG)
Activities whose primary goal is market development, once the product or process is essentially defined.
Work intended to make the production system run smoothly, such as trial production and routine tasks.
§ 2 FZulG explained Does my project meet the R&D criteria?
Bemessungsgrundlage (assessment base)
Costs & assessment base
The assessment base is the total of eligible R&D expenditures in a fiscal year on which the research allowance is calculated. The support rate is applied to this amount. It is currently capped at 10 million euros per year, rising to 12 million from 2026.
What counts towards the assessment base
Gross wages of R&D staff subject to wage tax plus employer social-security contributions.
Own work by sole traders and co-entrepreneurs (70 euros per hour, 100 from 2026, max. 40 hours per week).
70 % of the fee for contract research.
Depreciation on movable assets used exclusively in the R&D project.
The support rate is applied to the assessment base: 25 % for all companies, 35 % for SMEs. A fully used assessment base of 10 million euros yields an allowance of 2.5 or 3.5 million euros per year.
For affiliated companies the cap applies to the group as a whole. Costs already funded elsewhere may not also enter the assessment base (no double funding).
Calculating the research allowance Contract research SMEs and the higher rate
Bescheinigungsstelle Forschungszulage (BSFZ)
Institutions
The Bescheinigungsstelle Forschungszulage (BSFZ) is the government body that, in the first stage of the procedure, certifies whether a project qualifies as research and development. Without its certificate the tax office cannot assess any research allowance.
The research allowance is granted in a two-stage procedure. In the first stage the BSFZ decides, on the merits, whether a project meets the criteria of an R&D project under § 2 FZulG. In the second stage the tax office calculates the allowance based on that certificate.
What the BSFZ assesses
Whether the project is novel, creative, uncertain, systematic, and reproducible.
Which R&D category it belongs to (fundamental research, industrial research, experimental development).
The certificate is binding on the tax office but covers only eligibility on the merits, not the level of costs.
The BSFZ application can be filed per project at any time, even during or after the project, and is free of charge.
Forschungszulagengesetz (FZulG)How the application works Official BSFZ website
BSFZ certificate
Application & procedure
The BSFZ certificate is the substantive proof under § 6 FZulG that a project qualifies as eligible R&D. It is binding on the tax office and a precondition for the assessment.
The certification body issues it when a beneficiary R&D project meets the three criteria of novelty, uncertainty and systematic approach. It is binding on the tax office.
Covers the entire project including its full duration
One certificate can serve several fiscal years
The BSFZ application is free; processing takes about two months
BSFZ Application process
Company in difficulty
Company & state aid
A company in difficulty under § 9 FZulG together with Art. 1(4)(c) and Art. 2(18) GBER is an economically endangered company, for example in insolvency or with heavy capital loss. Such companies are generally excluded from the Forschungszulage.
The exclusion stems from EU state-aid law: under **§ 9 FZulG** and the GBER, aid may not flow to companies in difficulty. The status must be assessed separately for each fiscal year. Exceptions exist for young SMEs under three years and for the COVID-19 window (1 Jan 2020 to 30 Jun 2021).
Companies in difficulty FZulG explained (§ 9)
Cooperation and documentation duties
Application & procedure
Applicants must document eligible expenditures in an audit-proof way and provide evidence on request. Missing records are a common cause of cuts or clawbacks.
While the BSFZ only checks plausibility, the tax office requires concrete evidence during its detailed review. Poor documentation risks clawbacks years later.
Gross salaries and personnel costs of R&D staff
Activity records / timesheets of R&D hours
Employment contracts and invoices for contract research and assets
Activity record Application process
De minimis aid
Company & state aid
De minimis aid is state support deemed too small to distort competition meaningfully, so it may only be granted up to a ceiling per period. The Forschungszulage is not de minimis aid as a whole, but individual components can fall under those rules.
Overall the Forschungszulage is not de minimis aid but a tax-based incentive under the Forschungszulagengesetz, governed mostly by the GBER. Per BMF practice, de minimis rules can apply to the part based on eligible own work of sole and co-entrepreneurs, which matters for combining it with other funding.
Is the Forschungszulage de minimis aid?Own work
Eigenleistung (own work)
R&D personnel
Own work covers the R&D hours of sole traders and co-entrepreneurs. It is applied at a flat rate: €70/hour until 2025, €100/hour from 1 Jan 2026, capped at 40 hours per week.
Through own work, founders and shareholders can add their own development work to the assessment base, governed by § 3 (3) FZulG. This matters especially for founder-led tech companies where many development hours sit with the founders themselves.
Flat hourly rate: €70/h until 2025, €100/h from 1 Jan 2026.
At most 40 hours per week, only for certain groups of people.
Evidenced via hour records with a clear split: R&D versus management, sales, administration; holidays and sick leave do not count as working time.
Calculation Timesheet templates
Eligible claimant
Company & state aid
Under § 1 FZulG, all companies subject to unlimited or limited taxation in Germany are eligible, provided they are not exempt from taxation. Size, sector and legal form are irrelevant.
The Forschungszulagengesetz ties eligibility to tax liability, not company size, covering corporations, partnerships (the partnership itself is the claimant), sole traders, freelancers and farmers. Tax-exempt bodies, and typically universities and pure research institutions, are excluded. Only the eligible claimant itself may file the application.
Who can apply for the Forschungszulage?Eligibility
Experimentelle Entwicklung (experimental development)
R&D definition & types
Experimental development is the systematic combination and use of existing knowledge to develop new or substantially improved products, processes, or software. It is one of the three R&D categories eligible under § 2 FZulG and by far the most common funding case.
The typical pattern: there is an unsolved technical problem and you systematically test a solution. The vast majority of funded projects fall into this category.
Many companies do experimental development without calling it that: what they internally label product development, process optimisation, or digitalisation often meets the R&D criteria.
Differentiation
Eligible: new development or substantial improvement of products, processes, or software components; new, more efficient algorithms.
Not eligible: pure configuration, porting, routine software development (testing, debugging), or trial production to reach market readiness.
Does my project meet the R&D criteria?Eligible R&D project How do I know if my project is eligible?
Federal Ministry of Finance (BMF)
Institutions
The German Federal Ministry of Finance issues BMF letters (BMF-Schreiben), binding administrative guidance on how tax offices interpret and apply the Research Allowance Act in practice.
The BMF letter of 7 February 2023 is the central administrative guidance on the Forschungszulage. It tells the tax offices who is eligible, what counts as an R&D project, which costs qualify and how the procedure works.
It remains formally authoritative but no longer reflects the legislative changes since 2024. A draft of a new BMF letter has existed since October 2025; the final version is still pending.
Tax office bundesfinanzministerium.de
Feedback R&D
Scope & related funding
Feedback R&D is research and development that arises after a product or process has launched, because genuine technical problems appear that can only be solved through further development. It is eligible only within narrow limits and only for the truly R&D-relevant part.
If a post-launch technical problem carries genuine uncertainty and can only be solved by further development, that part may qualify as experimental development. Plain customer support, maintenance or routine bug-fixing explicitly does not count.
Experimental development Uncertain
Förderfähige Wirtschaftsgüter (eligible fixed assets)
Costs & assessment base
Eligible assets are new, depreciable, movable fixed assets used exclusively and necessarily in the R&D project (§ 3 (3a) FZulG). They enter the assessment base via depreciation.
Since 28 Mar 2024 certain assets can be funded via depreciation. They must be depreciable movable fixed assets, such as machinery, plant or operating equipment.
Not eligible: intangible assets (software, licences, usage rights), land, current assets, and low-value items up to €800.
The certification body checks whether the asset is necessary for the chosen solution path.
The application must state, per asset, in which sections of the work plan it is needed.
Fixed assets & Forschungszulage Depreciation Calculation
Fördersatz (funding rate)
Calculation & amount
The funding rate is the percentage applied to the assessment base (§ 4 (1) FZulG): 25% for all companies, and with a 10-percentage-point bonus 35% for SMEs.
Under § 4 (1) FZulG the Forschungszulage is 25% of the assessment base. SMEs within the GBER Annex I definition may additionally apply for a 10-percentage-point increase to a total of 35%.
35% (SME) or 25% (large company) apply to expenditures after 27 Mar 2024.
Before that: a uniform 25% for everyone.
Example: €261,000 assessment base × 35% = €91,350 Forschungszulage.
SME Calculation § 4 FZulG explained
Forscher (researcher)
R&D personnel
Researchers are the people doing the scientific and conceptual work in the R&D project, i.e. developing new findings, methods and solution approaches.
Researchers together with technical specialists and other R&D personnel make up the R&D personnel. They typically carry the conceptual load: forming hypotheses, designing experiments, interpreting results.
Only the verifiable project share of their working time is eligible, not their entire working time.
Requirements Personnel costs
Forschung und Entwicklung (research and development)
R&D definition & types
Research and development (R&D) refers to work that generates new knowledge or applies existing knowledge to create something new or substantially improved. Under § 2 FZulG, R&D is the precondition for the research allowance and is split into three categories.
R&D must be more than routine and involve genuine technical or scientific uncertainty. Pure implementation, standard engineering, or reaching market readiness do not count.
The three categories under § 2 FZulG
Basic research: acquiring new knowledge without a focus on direct application.
Industrial research: systematic research with a concrete application goal.
Experimental development: using existing knowledge for new or improved products and processes. This is where most applications land.
Internationally, this classification follows the OECD Frascati Manual, which defines R&D consistently.
Requirements of the research allowance Eligible R&D project Key terms explained simply
Forschungszulage (research allowance)
Law & basics
The Forschungszulage is Germany's central tax incentive for research and development. Since 2020 it reimburses a fixed share of R&D costs, with a statutory legal entitlement and even retroactively.
Based on the Forschungszulagengesetz, it is not a competitive grant: if a project meets the criteria, it must be funded. The rate is 25% for all companies, 35% for SMEs (for expenditures after 28 March 2024).
Statutory entitlement, no selection process
Technology- and industry-agnostic
Up to four years retroactively
Paid out in cash if it exceeds the tax liability
Research Allowance Act FZulG explained
Forschungszulage application
Application & procedure
The application is filed electronically via ELSTER with the responsible tax office after the fiscal year ends, with the BSFZ certificate attached.
The tax application is the second stage after the BSFZ certificate. It can only be filed after the fiscal year in which the costs were incurred, via Mein ELSTER at the tax office.
One application per fiscal year, all projects bundled
The BSFZ certificate must be attached
Once filed, corrections are practically impossible
Up to four years retroactively
Application process Mein ELSTER
Forschungszulage assessment notice
Application & procedure
The assessment notice is the formal decision by which the tax office bindingly sets the amount of the Forschungszulage after a successful review.
After the detailed review the tax office issues the assessment notice. The allowance is not paid out directly but offset at the next tax assessment.
It is set off against the next income or corporate tax due; any remaining surplus is refunded, so companies without a tax liability also benefit.
Crediting and payout Tax office
Forschungszulagengesetz (FZulG)
Law & basics
The Forschungszulagengesetz (FZulG) is the legal basis for Germany's tax-based R&D incentive. Since 1 January 2020 it governs who can claim the research allowance, which R&D projects are eligible, and how high the allowance is.
The FZulG introduces a tax incentive for research and development (R&D) that is granted regardless of profit and open to every company subject to tax in Germany. Unlike classic grant programmes, it is a legal entitlement: if you meet the requirements, you receive it.
What the law covers
Who is eligible (§ 1): all taxable companies, regardless of size or legal form.
Which projects qualify (§ 2): fundamental research, industrial research, experimental development.
Which costs are eligible (§ 3): personnel costs, own work, contract research and depreciation.
How high the allowance is (§ 4): 25 % of the assessment base, 35 % for SMEs.
The Wachstumschancengesetz (in force since 28 March 2024) raised the assessment base to 10 million euros, introduced the SME bonus, and made asset depreciation eligible. From 1 January 2026 the cap rises further to 12 million euros.
The FZulG explained paragraph by paragraph Assessment base Official statutory text
Frascati Manual
R&D definition & types
The Frascati Manual is an OECD reference work that defines and categorises research and development in a consistent way. It is the internationally recognised basis for the R&D definition that the FZulG also builds on.
The manual sets out what counts as research and development and lists five core features: novel, creative, uncertain, systematic, and transferable/reproducible.
The three-way split used in the FZulG, basic research, industrial research, and experimental development, derives from the Frascati taxonomy.
Research and development (R&D)Frascati Manual 2015 (OECD)
FuE-Aufwendungen (eligible R&D expenditures)
Costs & assessment base
Eligible R&D expenditures are the costs of a fiscal year claimable under § 3 FZulG; together they form the assessment base. They mainly cover personnel costs, own work, contract research and depreciation.
The eligible expenditures are exhaustively defined in § 3 FZulG and add up to the assessment base. They are not the project budget: only costs attributable to the eligible project count.
Personnel costs (§ 3 (1)): gross wages subject to wage tax + employer social contributions, pro-rated by R&D time.
Own work (§ 3 (3)): €70/h, €100/h from 1 Jan 2026, max. 40 hrs/week.
Contract research (§ 3 (4)): 70% of the fee (from 28 Mar 2024, previously 60%), contractor in EU/EEA.
Depreciation (§ 3 (3a)): on certain movable fixed assets, eligible since 28 Mar 2024.
From 2026 additionally a 20% overhead allowance for projects starting after 31 Dec 2025.
The same costs may not be funded twice (§ 7 (2) FZulG).
Assessment base Calculation § 3 FZulG explained
FuE-Personal (R&D personnel)
R&D personnel
R&D personnel are the staff working on the eligible R&D project. What matters is not job title or department but the actual activity in the project.
R&D personnel usually provide the biggest lever of the Forschungszulage via their personnel costs. Only actual work on the project counts, evidenced by a project-related activity record.
Researchers: scientific and conceptual work.
Technical specialists: technical implementation and testing.
Other R&D personnel: supporting activities in the project.
Requirements Personnel costs
GBER (General Block Exemption Regulation)
Company & state aid
The GBER (Regulation (EU) No 651/2014) is the EU state-aid basis that lets the Forschungszulage be granted as state aid without individual notification. It supplies the binding SME definition and excludes companies in difficulty from funding.
The GBER declares certain aid compatible with the EU single market so it does not need individual approval. The Forschungszulage relies on it via **§ 9 FZulG**, so its rules feed directly into the German procedure. Annex I defines when a company counts as an SME and excludes companies in difficulty.
FZulG explained (§ 9 state aid)SME
Gemeinkostenpauschale (overhead allowance)
Costs & assessment base
Overhead costs (e.g. administration, IT, infrastructure) are not individually eligible until 2025. For projects starting after 31 Dec 2025 they are recognised as a flat 20% of the other eligible expenditures.
Indirect overhead costs (project management, IT, QM, infrastructure) cannot be booked as a separate line into the assessment base. Until the end of 2025 they stay out.
From 1 Jan 2026: a 20% overhead allowance on the other eligible expenditures of the fiscal year.
Only for projects starting after 31 Dec 2025.
Benefit: fewer individual proofs, a plannably larger funding base.
Changes 2024 and 2026 Calculation
Grundlagenforschung (basic research)
R&D definition & types
Basic research generates new fundamental knowledge without it being clear yet what it will be used for in concrete terms. It is one of the three R&D categories eligible under § 2 FZulG.
The focus is on gaining knowledge, not a finished product. It is about building knowledge, not finalising a product.
Basic research is only one of three eligible categories. You do not need to conduct basic research for the research allowance. Most funded projects fall into experimental development.
Unlike applied research, basic research pursues no immediate practical goal.
Research and development (R&D)Does my project meet the R&D criteria?
Höchstbetrag (maximum amount / cap)
Calculation & amount
The cap limits the assessment base to €10m per year (for expenditures from 28 Mar 2024), rising to €12m from 1 Jan 2026. This yields a maximum funding of up to €4.2m per year for SMEs.
The assessment base is capped under § 3 (5) FZulG. Funding equals min(assessment base, cap) × funding rate.
Until 27 Mar 2024: €4m, since 28 Mar 2024: €10m, from 1 Jan 2026: €12m.
Maximum funding from 2026: €4.2m (SME, 35%) or €3.0m (25%).
For affiliated companies the cap applies to the whole group (§ 3 (6) FZulG).
Assessment base Changes 2024 and 2026 Calculation
Industrielle Forschung (industrial research)
R&D definition & types
Industrial research is systematic, critical research to gain new knowledge for developing new products, processes, or services, or substantially improving existing ones. It is one of the three R&D categories eligible under § 2 FZulG.
Unlike basic research, industrial research pursues a concrete application goal, while still preceding actual product development.
It can include lab prototypes or pilot lines for validation, as long as the main purpose is gaining knowledge rather than production.
It sits between basic research and experimental development and is part of an eligible R&D project.
Experimental development § 2 FZulG: which projects are eligible?
Intramurale und extramurale Ausgaben (intramural and extramural expenditure)
Costs & assessment base
Intramural expenditure is R&D cost incurred internally (mainly personnel, own work, depreciation); extramural expenditure is outsourced (contract research). Both can feed into the assessment base.
This distinction (from R&D statistics) helps classify the eligible expenditures. Intramural = performed in-house, extramural = commissioned to third parties.
Intramural: personnel costs, own work, depreciation, and from 2026 the overhead allowance.
Extramural: contract research, claimable at 70% (from 28 Mar 2024), contractor in EU/EEA.
Both are combined in the assessment base before the funding rate is applied.
Contract research Calculation
IP rights
Scope & related funding
IP rights are the legal protection of innovations, such as patents, utility models or licences. Patent and licensing work itself is generally not R&D, so its filing and administrative costs typically do not count as eligible R&D expenses.
What is eligible is the technical work that leads to the innovation, that is experimental development itself. Filing, defending or licensing a protective right is a legal-administrative activity and is not part of R&D expenses.
R&D expenses Calculation
Kooperationsvorhaben (collaborative R&D project)
R&D definition & types
A collaborative project is the third way to carry out an eligible R&D project under § 2 FZulG, alongside in-house research and contract research. Several companies or research institutions work jointly on a project, and each partner claims its own eligible expenditures.
The FZulG allows three ways to run an R&D project: in-house, as contract research, or in cooperation with other companies or research institutions. In a cooperation the partners research jointly, with no one commissioning the other, so there is no 70 % fee reduction as in contract research. Each partner claims its own eligible expenditures and needs its own BSFZ certificate and tax-office application.
§ 2 FZulG: eligible projects Contract research Eligible expenditures
Landesförderprogramme (state funding programmes)
Scope & related funding
State funding programmes are regional schemes run by Germany's individual federal states, such as Invest BW or programmes in Saarland and Hesse. They are an alternative or complement to the nationwide Forschungszulage, usually as project funding with an application before the project starts.
Unlike the nationwide Forschungszulage, which grants a legal entitlement once the requirements are met, state programmes are typically project funding: competitive, with calls, deadlines and no entitlement. The application generally has to be filed before the project starts, so retroactive claims are not possible.
Invest BW: grants up to 650,000 euros per single project, up to 1,300,000 in a consortium; AGVO rates of 15 %-45 % by company size.
Combining instruments triggers the no-double-funding rule: the same costs cannot be funded twice.
Forschungszulage or Invest BW?No-double-funding rule Project funding
Large enterprise
Company & state aid
A large enterprise is a company that exceeds the GBER SME thresholds and therefore no longer counts as a small or medium-sized enterprise. For the Forschungszulage it receives the base rate of 25% instead of the 35% available to SMEs.
Large-enterprise status follows by exclusion from the SME definition: once the thresholds of 250 staff and either €50m turnover or €43m balance sheet are durably exceeded, SME status is lost. Large enterprises receive 25% of the assessment base versus 35% for SMEs, though both are equally entitled to apply.
SME Calculation
Linked enterprises
Company & state aid
Linked enterprises are companies where one exercises a controlling influence over another, delimited since 2021 by § 290(2)-(4) of the German Commercial Code. For the Forschungszulage their figures are fully aggregated and the maximum amount applies jointly across the whole group.
The definition in the Forschungszulagengesetz was clarified in 2021 and applied retroactively from 1 January 2020. What matters is controlling influence under § 290(2)-(4) HGB. For the SME test, figures of linked enterprises are fully attributed (100%), and the annual maximum amount is shared across the group and must be allocated.
Forschungszulage in corporate groups Partner enterprises
Mitarbeiter im Ausland (employees abroad)
R&D personnel
Wages for employees working abroad are eligible only under narrow conditions. Under § 3 (1) and (2) FZulG they count if the wage would in principle be subject to German payroll tax and is assigned to an EU, EEA or Swiss state only because of a double taxation agreement (DBA).
In principle only wages the domestic employer pays directly to its own employee for R&D work are eligible. The DBA exception extends this to wage portions assigned to another EU/EEA state or Switzerland, provided a German employment relationship exists.
With an Employer of Record (EOR), the strict tax-authority reading sees the costs as not eligible (no direct payment, no own employee, no German payroll tax). A direct employment with the German company is the safest route; see also contract research under § 3 (3) FZulG.
Employees abroad and EOR Personnel costs § 3 FZulG
Neuartig (novelty)
R&D criteria
An R&D project is novel if it aims to acquire new knowledge that goes beyond the current state of the art. What matters is the degree of novelty of the knowledge created, not necessarily global uniqueness.
Novelty is one of the three core criteria of an eligible R&D project. The decisive factor is the degree of novelty of the knowledge: the project must generate new findings or use the state of the art in a new way. New to the company can suffice, as long as genuine technical knowledge results from it.
Likely novel: new or far more efficient algorithms, new security/encryption mechanisms, performance breakthroughs.
Not novel: mere copying, rebuilding, reverse engineering or standard integration without technical progress.
Routine debugging, market research and production ramp-up usually do not count.
Novelty rarely stands alone. In the review logic it is assessed together with creative, uncertain and systematic.
Novelty criterion explained Requirements
Partner enterprises
Company & state aid
Partner enterprises exist where one company holds between 25% and 50% of another. For the SME test their headcount and financial figures are added on a pro-rata basis according to the participation share.
The partner enterprise sits between a standalone and a linked enterprise: a holding of 25% to 50% of capital or voting rights, but no controlling influence. For the SME classification a pro-rata share of the partner's figures is added, using the higher of capital or voting-rights percentage.
Forschungszulage in corporate groups SME
Personalkosten (personnel costs)
Costs & assessment base
Personnel costs are the largest item of the assessment base under § 3 (1) FZulG: gross wages subject to wage tax plus employer social security contributions, each only for the working-time share spent on the R&D project.
Eligible under § 3 (1) FZulG are wages subject to wage-tax withholding plus employer social security contributions (§ 3 No. 62 EStG). What matters is the actual work on the project, not job title or department.
Calculation: eligible personnel costs = (gross wage + employer contributions) × R&D time share, then apply the funding rate (25%, SMEs 35%).
Example: €80,000 × 60% project share = €48,000 eligible, of which 35% (SME) = €16,800.
Also salaries of shareholder-managing directors if subject to wage tax (§ 3 (1) sentence 3).
Audit requirement: clear activity delineation and time tracking.
Forschungszulage personnel costs Assessment base Calculation
Personenmonat (person-month)
R&D personnel
A person-month (PM) is one person's work over a month relative to their contractual working time. It is a planning and plausibility unit used to present a project's R&D effort and eligible personnel costs in an auditable way.
What counts is the attributable effort on the project, not the calendar month. Partial involvement yields a partial person-month: 50 % of a month spent on the project equals 0.5 PM, full involvement 1.0 PM.
Ultimately the Forschungszulage is based on eligible personnel costs (pro-rated gross salary plus employer social contributions, times the innovation time share). Person-months make that effort consistent and audit-ready.
Person-month explained Calculation Personnel costs
Planmäßig (systematic)
R&D criteria
An R&D project is systematic if it follows a structured approach whose objectives, methodology and timeline are documented in a traceable way. It is not unstructured trial and error.
Systematic requires clearly defined scientific or technical tasks with clearly set goals. Systematic does not mean rigid: agile projects (Scrum, Kanban) can be systematic too, as long as roadmap, hypotheses, sprint goals, milestones and result documentation are clearly described.
Time or work plan (roadmap, sprint/release plan, project phases).
Resource and staffing plan plus work packages and milestones.
Description of the procedural steps and expected (interim) results, plus documentation of the approach.
Most common mistake: too much business language, too little technical structure. Evidenced via a clean activity record.
Systematic criterion explained Requirements
Product design
Scope & related funding
Product design counts as R&D only where it is necessary for the R&D phase, for example to enable new technical functions. Design finalised purely for production, marketing or aesthetics is not eligible R&D.
What matters is purpose: if the design helps resolve technical uncertainties or realise new functions, it can be part of experimental development. Once it is only about form, aesthetics or preparing series production, the R&D character is missing.
Experimental development Eligibility
Prohibition of cumulation
Scope & related funding
The prohibition of cumulation under § 7 FZulG prevents double funding: expenses already supported by other state aid or funding may not additionally form part of the Forschungszulage. The same costs may only be funded once.
**§ 7 FZulG** prevents eligible expenses from entering the assessment base if they were or are funded by other aid. Combining programmes is possible only if costs are cleanly separated, for example via distinct projects, which is where most combination errors arise.
FZulG explained (§ 7 cumulation)Assessment base
Project funding
Scope & related funding
Project funding refers to application- and competition-based grants or loans applied for before a project starts and awarded for a specific, delimited undertaking. It contrasts with the legal entitlement of the Forschungszulage.
With project funding, such as ZIM, a funding body decides competitively on an application filed before the project begins. The Forschungszulage works differently: no competition, no quotas, a legal entitlement when criteria are met, claimable retroactively, subject to the no-double-funding rule for the same costs.
ZIM vs. Forschungszulage compared ZIM
Prototyp (prototype)
R&D definition & types
A prototype is a functional interim result that answers technical questions of an innovation project, not an early sales or show model. Prototype development is eligible as experimental development as long as technical insight is the primary goal.
A prototype counts as part of a favoured R&D project when it is functional, resolves technical uncertainties and is built in a systematic plan-build-test-iterate cycle. Physical or digital is largely secondary; technical risk and traceable development are what matter.
The eligible R&D phase ends with the test of the prototype. Design studies without technical function, pilot or pre-series production, marketing and routine project management are generally not eligible.
Financing prototype development Requirements Experimental development
Reproduzierbar (reproducible / transferable)
R&D criteria
Reproducible (transferable) means the project's results can be traced through documented artefacts and applied to other cases, e.g. measurements, test logs, benchmarks or specifications.
Reproducible/transferable complements the core criteria: an R&D project produces knowledge that does not just work once but is documentable and traceable. This distinguishes systematic knowledge gain from accidental success.
Typical artefacts: measurement series, test logs, benchmarks, architecture/model documentation, code repositories, technical reports.
Reproducibility also supports systematic approach and the evidence for novelty.
Requirements Documentation
Retroactive application
Application & procedure
The Forschungszulage can be claimed up to four years retroactively for past R&D expenditures. This is a deliberate advantage, not a fallback.
Eligible expenditures can be claimed up to four years after the end of the fiscal year in which they were incurred, governed by the tax assessment deadlines.
The key advantage: you apply with actual data instead of plan figures, describing state of the art, goals and risks concretely and knowing the real costs.
Often optimal: 1 to 2 years retroactively plus the current year
Order matters: BSFZ certificate first, then the tax office per year
The four-year window keeps closing, unused years lapse
Apply retroactively Application process
Sachkosten (material costs)
Costs & assessment base
Material costs such as consumables or running operating supplies are generally not directly eligible for the Forschungszulage. The § 3 FZulG catalogue does not list them as a separate item.
Unlike many grant schemes, pure material costs cannot be claimed via the eligible expenditures under § 3 FZulG. The assessment base rests on personnel costs, own work, contract research and depreciation.
Not directly eligible: materials, consumables, travel, rent, running supplies.
They can enter indirectly: via depreciation on movable assets (since 28 Mar 2024) and the 20% overhead allowance from 2026.
In contract research, material shares may be inside the fee if the contract is predominantly R&D in character.
Depreciation Calculation
Schöpferisch (creative)
R&D criteria
Creative means the work rests on original, non-obvious concepts and hypotheses, i.e. genuine creative technical problem-solving rather than routine. It means technically and scientifically original, not artistically creative.
Creative is one of the R&D criteria and a frequent stumbling block in the BSFZ argument. Simplest test: if the project can honestly be described as a standard implementation, it is usually not creative. If you need hypotheses, variants and tests, you are close.
Likely creative: a new algorithm or heuristic, prototype building with an open outcome, a novel system reconfiguration solving a hardware/software conflict.
Not automatically creative: customizing standard software, routine debugging, market research, pure project management.
A non-obvious combination of known knowledge can also be creative if it yields a new solution.
Closely tied to novel and uncertain.
Creative criterion explained Requirements
SME (small and medium-sized enterprises)
Company & state aid
Under the EU definition, SMEs are companies with fewer than 250 employees and at most 50 million euros in turnover or 43 million euros in balance-sheet total. For the research allowance, SMEs receive an increased support rate of 35 % instead of 25 %.
The relevant standard is the SME definition in Annex I of the General Block Exemption Regulation (GBER). It determines whether a company can claim the support rate raised by ten percentage points on the assessment base.
The thresholds
Fewer than 250 employees (full-time equivalents) and
at most 50 million euros annual turnover or 43 million euros balance-sheet total.
Both conditions (headcount and one of the financial figures) must be met.
Note: affiliated and partner enterprises are counted proportionally. A small company majority-owned by a group is therefore usually not an SME under the definition.
Assessment base Forschungszulagengesetz (FZulG)Calculating the research allowance
Sonstiges FuE-Personal (other R&D personnel)
R&D personnel
Other R&D personnel are supporting staff who contribute directly to the R&D project, e.g. in data collection, documentation or testing, without being researchers or technical specialists themselves.
Other R&D personnel complete the R&D personnel alongside researchers and technical specialists. The condition is a direct, verifiable contribution to the project.
Purely administrative or sales activities do not count, even if they occur within the project.
Requirements Personnel costs
Stand der Technik (state of the art)
R&D criteria
The state of the art is the generally accessible, current level of knowledge and technology against which a project's novelty is measured. A project only qualifies if it targets knowledge that goes beyond this level, not merely beyond what is new for the company itself.
Per the BSFZ review guideline, a project is novel if it aims to acquire new knowledge that goes beyond the current state of the art. A solution already established in the market or industry is not novel, even if it is new to the applicant company.
Strong differentiation: measurable benchmarks (e.g. existing models reach 82 % accuracy, target over 93 %).
Weak differentiation: economic goals such as more revenue or better user experience.
The state of the art moves: what was novel a few years ago may now count as established.
Requirements & R&D criteria The novelty criterion explained Novel
Steuerliches Investitionssofortprogramm (tax investment booster act)
Law & basics
The German tax investment booster act (promulgated 18 July 2025) is the legislation behind the 2026 improvements to the Forschungszulage. Among other things it raises the assessment-base cap to 12 million euros and introduces a 20 % overhead flat rate.
The act builds on the Wachstumschancengesetz and applies by cutoff dates, based on when eligible expenditures arise (and partly on the project start), not by calendar year.
Assessment-base cap rises to 12 million euros per year for expenditures from 1 January 2026 (previously 10 million).
New 20 % overhead flat rate, only for projects starting after 31 December 2025.
Own-work rate rises to 100 euros/hour (max 40 hours/week) for activities from 1 January 2026.
Temporary improved depreciation under § 7 EStG for movable assets acquired after 30 June 2025 and before 1 January 2028.
All changes 2024 & 2026 What changes in 2026 Growth Opportunities Act
Tätigkeitsnachweis (activity record)
R&D personnel
The activity record is the project-related hour log that evidences the eligible share of working time spent on the R&D project. No specific template is mandatory, but the record must be GoBD-compliant and plausible.
The activity record links project work, time tracking and personnel costs. As soon as staff do not work 100 % on the project or span several projects, a robust time logic is needed. A common planning unit is the person-month (one person's work over a month, applied pro rata).
Content: name and period, project name and any project ID, daily/monthly hour overview, short activity description, sign-off.
GoBD-compliant: traceable, complete, accurate, timely, ordered and ideally tamper-proof.
Also supports evidence of systematic approach and founders' own work.
Documentation Timesheet templates Person-month explained
Tax office (Finanzamt)
Application & procedure
The tax office is the second stage of the Forschungszulage procedure. It assesses the allowance, reviews the actual expenditures in detail, and offsets the allowance against the tax due.
In the two-stage procedure the tax office follows the technical review by the certification body. After the fiscal year ends you file via ELSTER; the BSFZ certificate is the binding basis.
Unlike the BSFZ, the tax office checks the numbers precisely: gross salaries, timesheets, employment contracts, invoices and the assessment base. Larger amounts often trigger a tax audit.
Application process Two-stage procedure
Technisches Fachpersonal (technical specialists)
R&D personnel
Technical specialists carry out the R&D project technically: building experiments, programming, prototyping, measurements and tests, closely guided by the researchers.
Technical specialists are, alongside researchers and other R&D personnel, part of the R&D personnel. They do the practical, technical work: implementation, test setup and validation.
As with all R&D roles, only the project-related share of time counts, cleanly separated from routine and support.
Requirements Personnel costs
Trial production
Scope & related funding
Trial production is production that still serves to enable series testing and further development work. It counts as R&D only while the development purpose prevails; beyond that it is no longer eligible R&D.
As long as trial production serves to resolve technical questions and develop the product further, it can be part of experimental development. Once it is essentially normal production, market roll-out or routine manufacturing, § 2(2) FZulG no longer treats it as R&D.
Experimental development Eligibility
Two-stage procedure
Application & procedure
The Forschungszulage is applied for in two separate steps: first the substantive BSFZ certificate, then the tax application at the tax office. No certificate, no assessment.
The procedure separates the technical from the financial review. Stage 1: the BSFZ checks whether the project qualifies as R&D and issues a certificate. Stage 2: the tax office assesses the allowance on that basis and reviews the costs in detail.
No BSFZ certificate, no tax-office assessment
BSFZ checks only for plausibility
One certificate can serve several tax-office filings
Application process Tax office
Ungewiss (uncertainty / technical risk)
R&D criteria
Uncertain means: at project start it is not certain whether and how the technical goal can be reached. What counts are scientific and technical risks, not market or financial risks.
Uncertainty is the technical-risk criterion. When assessing risk, the BSFZ considers only scientific and technical aspects; economic risks are disregarded. Uncertainty may concern feasibility, performance, stability or integration risks and must, in the extreme, be able to lead to failure.
Technical risk (counts): We don't know whether the technology can meet the requirements.
Economic risk (does not count): We don't know whether customers will buy it.
A failed or abandoned project is not automatically excluded: the systematic effort is funded, not the outcome.
Without uncertainty there is no eligible innovation. Works together with novel and systematic.
Uncertainty criterion explained Requirements
Wachstumschancengesetz (Growth Opportunities Act)
Law & basics
The Wachstumschancengesetz substantially expanded the Forschungszulage as of 28 March 2024: assessment base raised to EUR 10 million, a 35% SME bonus introduced, and depreciation made eligible.
Since 28 March 2024 improved rules apply. The cutoff is decisive: only eligible expenditures incurred after 27 March 2024 benefit from the new rates.
Assessment base raised from EUR 4M to EUR 10M
SME bonus: funding rate 35% instead of 25%
Contract research eligible at 70% instead of 60%
Own work at EUR 70/hour, depreciation eligible for the first time
From 1 January 2026 the cap rises further to EUR 12M, with a 20% overhead flat rate for projects starting in 2026.
Calculation
Wirtschaftsjahr (fiscal year)
Calculation & amount
The fiscal year is the relevant claim period of the Forschungszulage: eligible expenditures are determined per fiscal year, and the application is only filed with the tax office after it ends.
The assessment base always relates to one fiscal year. The application for assessment is filed after the end of the fiscal year in which the costs were incurred (§ 5 (1) FZulG).
Cutoff dates also depend on the fiscal year and when expenditures arise (e.g. the €12m cap from 1 Jan 2026).
Costs can be claimed up to four years after the end of the fiscal year (retroactive application).
The depreciation rules (§ 3 (3a)) apply to fiscal years starting after 31 Dec 2023.
Retroactive application Application
ZIM (Central Innovation Programme for SMEs)
Scope & related funding
ZIM is a nationwide grant programme for R&D projects in SMEs that must be applied for before the project starts and is awarded competitively. Unlike the Forschungszulage it is project-based funding without a legal entitlement.
ZIM is classic project funding: you apply before the project starts and are subsidised during the term. The Forschungszulage instead is granted via taxation, retroactively, with a legal entitlement when criteria are met. For the same costs the no-double-funding rule applies.
ZIM vs. Forschungszulage compared Project funding

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Forschungszulage glossary

Ablehnung und Einspruch (rejection and appeal)

Abschreibungen (depreciation)

Angewandte Forschung (applied research)

Anrechnung und Auszahlung (offsetting and payout)

Arbeitgeberanteile zur Sozialversicherung (employer social contributions)

Auftragsforschung (contract research)

Begünstigtes FuE-Vorhaben (eligible R&D project)

Bemessungsgrundlage (assessment base)

Bescheinigungsstelle Forschungszulage (BSFZ)

BSFZ certificate

Company in difficulty

Cooperation and documentation duties

De minimis aid

Eigenleistung (own work)

Eligible claimant

Experimentelle Entwicklung (experimental development)

Federal Ministry of Finance (BMF)

Feedback R&D

Förderfähige Wirtschaftsgüter (eligible fixed assets)

Fördersatz (funding rate)

Forscher (researcher)

Forschung und Entwicklung (research and development)

Forschungszulage (research allowance)

Forschungszulage application

Forschungszulage assessment notice

Forschungszulagengesetz (FZulG)

Frascati Manual

FuE-Aufwendungen (eligible R&D expenditures)

FuE-Personal (R&D personnel)

GBER (General Block Exemption Regulation)

Gemeinkostenpauschale (overhead allowance)

Grundlagenforschung (basic research)

Höchstbetrag (maximum amount / cap)

Industrielle Forschung (industrial research)

Intramurale und extramurale Ausgaben (intramural and extramural expenditure)

IP rights

Kooperationsvorhaben (collaborative R&D project)

Landesförderprogramme (state funding programmes)

Large enterprise

Linked enterprises

Mitarbeiter im Ausland (employees abroad)

Neuartig (novelty)

Partner enterprises

Personalkosten (personnel costs)

Personenmonat (person-month)

Planmäßig (systematic)

Product design

Prohibition of cumulation

Project funding

Prototyp (prototype)

Reproduzierbar (reproducible / transferable)

Retroactive application

Sachkosten (material costs)

Schöpferisch (creative)

SME (small and medium-sized enterprises)

Sonstiges FuE-Personal (other R&D personnel)

Stand der Technik (state of the art)

Steuerliches Investitionssofortprogramm (tax investment booster act)

Tätigkeitsnachweis (activity record)

Tax office (Finanzamt)

Technisches Fachpersonal (technical specialists)

Trial production

Two-stage procedure

Ungewiss (uncertainty / technical risk)

Wachstumschancengesetz (Growth Opportunities Act)

Wirtschaftsjahr (fiscal year)

ZIM (Central Innovation Programme for SMEs)

Questions about the Forschungszulage?