Research allowance for innovative companies

Overview

What is the research allowance?

The research allowance is a tax incentive for research and development (R&D). It was introduced by the Research Allowance Act (FZulG) of December 14, 2019 to strengthen Germany as a business location and to encourage research activities, especially of small and medium-sized enterprises.

Every company with a tax domicile in Germany has a legal entitlement to the allowance, regardless of size, legal form, sector and profit situation. The prerequisite is an eligible R&D project carried out after January 1, 2020.

Eligible costs

What is funded?

For in-house research, the following are eligible:

• the gross salary of employees working on the R&D project
• eligible own expenses
• depreciation of movable fixed assets, if they are used exclusively for the project

For contract research, 70 percent of the fee is taken into account.

Process

How the research allowance works

1. Apply for the certification: The certification body for the research allowance (BSFZ) decides in a digital, two-stage procedure whether your project is eligible.
2. Apply at the tax office: After the end of the financial year, you apply for the allowance to be determined via “Mein ELSTER”.
3. Payout via tax: The allowance is credited against income or corporate tax, and any surplus is refunded.

Support

What we take care of for you

We check with you whether your innovation projects qualify as R&D projects and prepare the documents for the certification.

Rates and maximum amounts may change. Current information is available from the Federal Ministry of Finance and the certification body for the research allowance.

More programs can be found in the funding programs overview.

FAQ

Frequently asked questions about the research allowance

Does the research allowance only apply to SMEs?
No. Every company with a tax domicile in Germany has a legal entitlement, regardless of size, legal form and sector.

Does my company have to make a profit?
No, the allowance is independent of the profit situation. It is credited against income or corporate tax, and any surplus is refunded.

Who decides whether my project is eligible?
The certification body for the research allowance (BSFZ) in a digital, two-stage procedure. You then apply for the allowance at the tax office.

Which projects does the allowance apply to?
Eligible research and development projects carried out after January 1, 2020.