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Forschungszulage requirements: who is eligible?

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Does my company meet the requirements?

If your company meets these basic requirements, there is generally nothing standing in the way of funding.

RequirementDetails
Tax liability in GermanyFully or partially tax-liable
§ 1 (1) FZulG
Not a company in difficultyNo UiS under EU state aid law, no insolvency, no outstanding EU recovery order
§ 9 (2) FZulG
Legal formAll legal forms tax-liable in Germany are eligible
  • Corporations (GmbH, AG)
  • Partnerships (KG, OHG)
  • Sole traders
  • Freelancers
  • Agriculture and forestry businesses
  • Opting partnerships under § 1a KStG
§ 1 (1–2) FZulG
EEA for contract researchThe contractor must be based in the EEA
§ 3 (4) FZulG

Does my project meet the R&D criteria?

This is where it gets interesting — and where most applications fail. What is actually funded? Not just basic research. The vast majority of funded projects fall into experimental development: there's an unsolved technical problem and you systematically test a solution.

Research has three categories — and most development in companies falls under one of them§ 2 FZulG

  1. Basic research — New scientific knowledge without direct application
  2. Industrial research — Systematic research with a concrete application goal
  3. Experimental development — Using existing knowledge to develop new or improved products, processes, or software (← where most applications land)

The three decisive criteria

Your project must answer these three questions with yes:

  • Novelty: Does your project aim for new knowledge or significantly improved products / processes — measured against the current state of the art?Prüfleitfaden Ch. 1.1.1
  • Uncertainty (Risk): Are there technical risks or uncertainties? Could your approach fail? Purely economic risks do not count.Prüfleitfaden Ch. 1.1.2
  • Systematic approach: Is the project carried out in a planned and documented manner?Prüfleitfaden Ch. 1.1.3

The Red Thread: How to argue R&D

Technical benchmarks instead of economic goals – that's what convinces the reviewers.

Illustrative example
STATE OF THE ART
81% accuracy
Current measurable technical benchmark
WP 1 · Method
New Method / Algorithm
WP 2 · Prototype
Prototype & Validation
WP 3 · Integration
Integration & Testing
TECHNICAL TARGET
92% accuracy
Technical target – not economic!

⚠Common mistake: market goals instead of technical goals (e.g. "50% more revenue")

The BSFZ reviewers think in exactly this framework: Where are you today? → What are you doing? → Where do you want to go?Prüfleitfaden Ch. 1.1.1

Each of these three points must be described in technical, concrete terms. Economic targets like "50% more revenue" or "better user experience" will not convince the certification body.

The most common mistake: the state of the art is described vaguely or in market terms

The BSFZ wants concrete, technical benchmarks — and the reviewers immediately recognise whether someone knows their field. Many companies conduct genuine experimental development without framing it that way — leaving hundreds of thousands or even millions in funding on the table.

Good technical differentiation
  • AI / Machine Learning: "Existing models achieve 82% classification accuracy on dataset X. Our approach combines method A with B to exceed 93% — at half the inference time."
  • Software: "Existing systems process 10 requests/second. Our goal is 50/second through a new caching approach based on X."
  • Mechanical engineering: "Current manufacturing tolerances are ±0.1mm. Our process aims to achieve ±0.02mm through method Y."
  • Medical technology: "Standard sensors measure at resolution Z. We are developing a new sensor approach targeting resolution W."
Common mistakes
  • "We want to improve the user experience"→ no technical benchmark
  • "Our goal is 30% more revenue"→ economic, not technical
  • "We are building the best solution on the market"→ market positioning, not technology

Checklist: R&D or not?

Research and Development
  • New developments or significant improvements to products / processes
  • New services enabled by digitalisation
  • Development or significant improvement of software components
  • Intelligent and self-learning design of industrial and manufacturing processes
  • New, more efficient algorithms based on new technologies
Not Research and Development

What is funded by the Forschungszulage?

  • Wage costs for employees in R&D projects
  • Own work by sole traders / co-entrepreneurs
  • Contract research (70% of expenditures)
  • Depreciation on movable fixed assets related to the project

Find the exact calculation and funding amounts under Calculation.

Application deadline

Costs for R&D activities can be claimed within a 4-year period. The decisive factor is the date the application is received by the BSFZ.

The Forschungszulage is particularly attractive because you can apply retroactively. Unlike European funding programmes where you plan future projects and then report extensively, here you claim costs that have already been incurred. No planning stress, no reporting problems.

More on the application process →

Proving eligibility

The Forschungszulage is granted through a two-step process:

  1. Content review (BSFZ)— Assesses whether your project meets the R&D criteria. Prüfleitfaden Ch. 1.2 More on the application process →
  2. Financial review (tax office) — Reviews the actual expenditures (wage costs, timesheets, employment contracts). More on calculation →

FAQs on eligibility

The most important questions answered briefly. If your case isn't covered here, just write to us.
The following criteria must be met:
  • Tax liability: The company must be fully or partially tax-liable in Germany.
  • Not a company in difficulty under EU state aid law.
  • No pure consultancy: The funded project must involve its own R&D activities.
  • No insolvency at the time of application.
  • No outstanding recovery order: There must be no outstanding recovery order for EU state aid.
No. The Forschungszulage funds not only basic research, but explicitly also experimental development. In fact, the majority of all applications fall into this category. Most start-ups and SMEs carry out this kind of development every day — often without knowing they can receive funding for it.
All companies tax-liable in Germany, regardless of size, legal form, or industry. Start-ups and agricultural or forestry businesses are also eligible. Only tax-exempt institutions are excluded.
Yes. Even companies that pay little or no tax receive the Forschungszulage. If the allowance exceeds the assessed tax, the surplus is paid out as a tax refund ("cash"). This is particularly attractive for start-ups.
No. The Forschungszulage is open to companies of all sizes — from sole traders to large corporations. SMEs benefit from an increased funding rate (35% instead of 25%) since the Growth Opportunities Act. See Calculation.
No. Since research by definition involves risks and uncertainty, it is the effort that is funded, not the outcome. Even abandoned or failed projects are eligible, as long as they were carried out systematically.
Yes. Software development is a classic example of experimental development, provided it overcomes technical hurdles and does not merely configure existing components. According to the BSFZ review guideline, routine development activities (requirements analysis, testing, debugging) are not eligible — there must be genuine technical uncertainty.
The Forschungszulage funds R&D projects in three categories: basic research, industrial research, and experimental development. Specifically, the following expenditures are eligible: wage costs for employees in R&D projects, own work by sole traders, contract research (70% of costs), and depreciation on project-related assets. The funding rate is 25% (SMEs: 35%) of eligible expenditures.

Unsure whether your project is eligible?

Write us briefly what you're working on — we'll check for free whether the Forschungszulage applies to you.

Three more compact guides on the Forschungszulage — pick whichever fits your next question.

Calculation

Which costs are eligible, how the funding amount is composed, and what ends up in your account.

Application

Step by step through the BSFZ portal and tax office — deadlines and common pitfalls included.

FZulG law

The Forschungszulagengesetz at a glance: paragraphs, definitions, and the legal entitlement.

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