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Forschungszulage for defense tech and dual-use: technology-neutral, but not trivial

Sensors, autonomous systems, secure communications, robotics, materials: the core of your work is development with an open technical outcome, and the personnel costs for it are high. The Forschungszulagengesetz defines eligible projects through R&D criteria, not through sectors or fields of application. The delicate part is procedural: what can be described in a BSFZ application when parts of the work are classified, and which share is your own R&D rather than contract development for a public client? Those questions belong before the application. We handle the application, you invest less than 5 hours across 4 calls.

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What counts as R&D in defense tech and dual-use

The segment is growing fast and the funding side is moving: the German government's startup and scaleup strategy (July 2026, around 150 individual measures) provides for a new vehicle for direct federal stakes in start-ups and scale-ups with militarily usable products, and the European Innovation Council has opened its Accelerator and STEP Scale Up to dual-use and launched a dedicated STEP Defence Scale Up with a €100 million budget. None of that changes the criteria of the Forschungszulage. What is decisive are the R&D criteria of the law, which the BSFZ bundles into three assessment criteria, not the field of application. What the individual characteristics mean:

NoveltyCreativeUncertaintySystematic

Sensors and signal processing

Detection at the limit of range, interference resilience and false-alarm rate, where it is open whether the required detection performance is achievable under real conditions.

Autonomous and uncrewed systems

Navigation, mission and avoidance logic for uncrewed ground, air or maritime systems, whose behaviour only becomes reliable through systematic trial series.

Secure communications

Waveforms, mesh procedures and cryptography integration for links that still have to hold under jamming, bandwidth shortage and latency.

Positioning and navigation without GNSS

Inertial, visual or magnetic-field navigation as a fallback layer when satellite signals are jammed or unavailable, with the achievable drift rate still an open question.

Materials and manufacturing

New materials, coatings or additive processes whose process window and material behaviour you still have to work out.

Robotics and operating concepts

Manipulators, teleoperation and situational displays where control quality, latency and failure behaviour are technically uncertain. Pure interface styling does not count.

A project is rarely entirely in or entirely out. In defense tech the dividing line also runs along funding and secrecy: self-funded development, contract development for a public client, and shares already covered by other funding have to be kept cleanly apart in the application. Nobody can promise upfront that a defense project is certifiable, and we will not either. That is a case-by-case decision by the BSFZ; the Forschungszulage itself is then assessed by the tax office.

Not sure which part of your portfolio is your own R&D, or what can even be described under your obligations? That is exactly what we sort out in a call, 5 minutes are enough for a first assessment.

Clarify the scope in a call

Which costs you can claim

In defense tech the effort sits almost entirely in people, prototypes and trials. The cost side is less delicate than the project description, but it decides the size of the funding.

Personnel costs
100% claimable: development, design, software, testing and trials, proportional to R&D time
Contract research
70% of the fee for external R&D contracts (for expenditure up to 27.03.2024: 60%), e.g. institutes or development partners, contractors based in the EU/EEA
Depreciation
On newly acquired movable assets used exclusively for R&D, e.g. measurement, test and trial equipment (acquired after 27.03.2024)
Overhead flat rate
A 20% flat rate on direct project costs, but only for projects starting in 2026 or later. Ongoing projects do not benefit automatically
Own contributions
€100/h for work from 2026 (until the end of 2025: €70/h), for sole traders and partners, max. 40 hours per week
No double funding
Expenditure already covered by another grant or state aid does not belong in the assessment base. Where grants or EU money are involved, the demarcation has to hold
Funding rate
25% of eligible expenditure, 35% for SMEs
Assessment base
Up to €12 million per year from 2026 (28.03.2024 to the end of 2025: €10 million, before that €4 million); retroactive applications are capped at the limits in force at the time

Common doubts

The three doubts defense teams raise first

Three sentences that come up in almost every first call with defense teams, and what actually applies:

“Our project is classified, so we cannot write the application at all.”

It depends on the individual case: you clarify with your security officer which level of description is permissible, and we check whether the R&D argument holds at that level. Sometimes an unclassified sub-area carries the R&D argument, sometimes the honest answer is to leave a project out.

“We are dual-use, so we fall through the cracks.”

The Forschungszulagengesetz has no sector test and no intended-use test: eligible projects are defined solely through the R&D criteria. Unlike EU programmes with a civil-use clause, there is no restriction on purpose here. Your dual-use classification still matters, but in export control, contracts and compliance, which run in parallel.

“In the end the government pays, so there is nothing in it for us.”

The share you fund yourself stays with you: advance development, technology maturation, your own platform and component work at your own risk. For defense teams that is often the largest eligible block, long before a contract is signed. Pure delivery against a given specification does not count, and we make that separation visible in the application.

Do you recognise yourself in one of these sentences? Then let's clarify in a call what actually counts in your case.

Check your eligibility in a call

8 benefits

Why is the Forschungszulage a good funding option?

Compared to traditional funding programmes, the Forschungszulage is the better choice for most companies.

  • 1

    Legal entitlement

    No competition for budgets: if the criteria are met, funding must be granted.

  • 2

    Up to 4 years retroactive

    Even completed projects can still be funded.

  • 3

    Open to all industries

    Software, mechanical engineering, MedTech, construction: R&D is R&D, whatever the industry.

  • 4

    Even without profit

    No tax burden needed, the allowance is paid out as a credit.

  • 5

    Less bureaucracy

    No upfront project plan, no interim reports, no proof of use.

  • 6

    Fully digital process

    Application via BSFZ portal and ELSTER, no paper, no postal mail.

  • 7

    Thematically open

    No rigid topic catalogue: product development, process innovation, everything counts.

  • 8

    Broad cost base

    Personnel costs, contract research and capital assets are eligible.

All 8 benefits in detail →

Common questions from defense tech and dual-use

The Forschungszulage is technology-neutral: the Forschungszulagengesetz describes eligible projects through R&D categories and the criteria of novelty, technical uncertainty and a systematic approach, not through sectors or fields of application. The hard exclusions in the law are neutral on intended use as well: they apply to undertakings in difficulty as defined by the EU and to outstanding state-aid recovery claims, not to particular fields of application. That is not a guarantee, though. Whether a specific project is certifiable is decided case by case by the BSFZ, and for defense projects there is the added question of whether secrecy obligations and the required level of documentation can be reconciled. Both belong in the upfront clarification. The BSFZ certificate is the technical basis; the Forschungszulage itself is then assessed by the tax office.
This is the hardest topic in the sector and there is no blanket answer. The application requires a technical project description that is traceable in itself: state of the art, technical goal, planned solution path, the open uncertainty. If parts of your project are classified (national security classification, your company's security clearance arrangements, contractual confidentiality), it has to be clarified before the application which level of description is permissible and whether the R&D argument still holds at that level. You run that clarification with your security officer and, where relevant, the client, not with us alone. We will tell you honestly if a description would become so thin that an application makes no sense.
For the procedure itself, not much: what is decisive is the R&D character of the project, not its later use. The demarcation becomes practically relevant in two other places. First internally, because you have to determine cleanly which part of your development is self-funded R&D and which part hangs off a customer contract. Second outside the Forschungszulage, in export control, contract design and compliance. Those requirements run in parallel and are neither satisfied nor affected by a BSFZ certificate.
The difference lies in who carries the technical and commercial risk. Pure procurement, meaning manufacture and delivery against a given specification, is not R&D. Development work you deliver as a contractor for a third party is generally not your own R&D, because in contract research it is the client who is entitled to claim and who can put 70% of the fee into the assessment base, provided the contractor is based in the EU or EEA. What remains for you is the self-funded share: pre-development, technology maturation, your own platform or components you advance at your own risk. In mixed projects, that separation has to be visible in the application and in the time records.
In principle yes, but not for the same expenditure. Expenditure already covered by another grant or state aid cannot additionally be claimed through the Forschungszulage. That applies to grants, such as the grant component of the EIC Accelerator or national funding: the funded cost shares have to be netted out cleanly, and the allocation has to be traceable through your accounting and time records. Pure equity instruments such as STEP Scale Up, by contrast, are not a grant on expenditure and therefore not double funding. When in doubt, have it checked before the application, because without that demarcation, separating it after the fact becomes laborious.
No. The German government's strategy from July 2026 works on the capital side, among other things by extending the Deutschlandfonds beyond 2030 and creating a new vehicle for direct federal stakes in start-ups and scale-ups with militarily usable products. The opening of the EIC Accelerator and STEP Scale Up to dual-use and the new EIC STEP Defence Scale Up with a €100 million budget are equity and grant instruments as well. The criteria of the Forschungszulagengesetz are untouched by all of this. What the development does mean for you is mainly a demarcation task: the more public money sits in a project, the more precisely you have to establish which expenditure still belongs in the assessment base.
Personnel costs are the biggest block and 100% claimable, proportional to R&D time. Added to that: contract research at 70% of the fee for contractors in the EU/EEA and depreciation on movable assets used exclusively for R&D, such as measurement and trial equipment. From 2026 the assessment base rises to €12 million per year (28.03.2024 to the end of 2025: €10 million, before that €4 million) and a 20% overhead flat rate on direct project costs is added, but only for projects starting in 2026 or later. Own contributions of sole traders and partners count at €100/h from 2026 and at €70/h until the end of 2025, capped at 40 hours per week.
Yes. Expenditure can be claimed retroactively as long as the assessment period of the relevant tax assessment is still open, regularly 4 years. What matters is less “the project year” than the point in time at which the expenditure was incurred, and in some cases when the project started. For projects whose funding changed over time, for instance self-funded pre-development followed later by a contract, looking back is particularly worthwhile, because that is often exactly where the self-funded R&D share sits.

Settle the procedural questions before you write

In a first call we sort out which part of your development is your own R&D, which level of description is realistic under your obligations, and which costs belong in the assessment base. If a project does not hold up, we say so. 5 minutes are enough for a first assessment.

Book a call directly

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