FR Fiscal Radar

DE · tax-credit · Updated 2026-04-23

Forschungszulage — Germany's R&D tax credit

A 25% (35% for SMEs) tax credit on qualifying R&D wage costs in Germany. Works alongside project grants. Two-step approval — certification first, tax credit second.

Amount
25% of R&D wage costs (35% for SMEs), up to €10M eligible base per year

What it is

The Forschungszulage is Germany’s research allowance, introduced in 2020 to broaden R&D support beyond project grants like ZIM. It’s a tax credit, not a grant, and it runs in parallel with other funding — companies can claim both.

Since the 2024 Wachstumschancengesetz (Growth Opportunities Act), the eligible cost base was expanded and the SME rate was lifted.

Who qualifies

  • Any taxable company in Germany (unbeschränkt or beschränkt steuerpflichtig), regardless of legal form or industry.
  • R&D projects must qualify as basic research, industrial research, or experimental development under the EU General Block Exemption definition.
  • Contract R&D counts — even if the work is commissioned to a third party (25% of invoice value for contract R&D, typically).

In plain terms: if the work is genuinely novel, technically uncertain, and planned, it tends to qualify. Process optimisation and routine development typically don’t.

What you get

  • 25% tax credit on eligible R&D personnel costs (wages, social contributions, founder’s own hours).
  • 35% for SMEs (bonus introduced 2024, subject to SME definition: fewer than 250 employees, revenue under €50M or balance sheet under €43M).
  • Eligible base capped at €10M per company per year.
  • Offset against corporate or income tax. Excess is refunded — loss-making companies still get cash back.

How the process works

Two separate authorities. Both steps are required.

  1. Project certification (BSFZ) — submit the project description to the Bescheinigungsstelle Forschungszulage (BSFZ). They confirm whether the work qualifies as R&D. Decision in ~3 months.
  2. Tax credit application (Finanzamt) — after the financial year closes, apply via your tax return at your responsible Finanzamt. Attach the BSFZ certificate.
  3. Assessment — credit is offset against tax liability; excess paid out as a refund.

The BSFZ certificate is the bottleneck. Start that application early — ideally before or during the project year.

Common traps

  • Assuming project grants (ZIM, BMBF) disqualify you. They don’t — just deduct the already-funded portion of costs from the Forschungszulage base.
  • Waiting until after year-end to start the BSFZ process. The certificate can take months.
  • Weak project descriptions that conflate development with innovation. The BSFZ reads them like a grant committee.
  • Underestimating founder hours — time logs for managing directors are eligible if documented.

Who to talk to

A Steuerberater with active Forschungszulage practice, and ideally a specialist for the BSFZ project description. The economics change at scale: for teams with ≥5 engineers, the ROI of a specialist prepping the BSFZ application is usually strongly positive. Joint applications (tax + grant) benefit from advisors who handle both sides.

Official sources

Indicative information only. This is not legal or tax advice. Eligibility and rates change — verify with the BSFZ or a licensed German tax advisor before acting.