Applying for the research allowance: step by step
Two applications in a fixed order: first the certificate from the BSFZ, then research allowance application (ELSTER) at the tax office. From project analysis to payout it usually takes 4 to 9 months. We handle the whole route, including timesheet preparation and BSFZ queries.
- Two stages: BSFZ certificate, then research allowance application (ELSTER)
- Retroactive for open fiscal years from 2022
- Success-based, 70 % due only after payout
Written by Max Nodes, Founder and Managing Director · 25 of 25 supported BSFZ applications certified (as of 09/2026) · Last updated: · Law as of:
Two assessments, one project
Figures and details
* Three months is the BSFZ target period after complete documents. The 4–12 weeks are an observed processing range for the tax-office application; offset and payout take place during the next initial tax assessment (§ 10 (1) FZulG).
How the application works
The research allowance is applied for in two steps: first the BSFZ (certification office for the research allowance) certifies the R&D project, electronically via the BSFZ portal with the ELSTER organisation certificate. Then you file one research allowance application (ELSTER) per fiscal year with the tax office; it can be submitted independently of the corporate or income tax return. The allowance is offset during the next initial tax assessment and any surplus is paid out (§ 10 FZulG). A retroactive application is possible while the four-year assessment period for that fiscal year is running (§ 12 FZulG in conjunction with § 169 AO); the years from 2022 onwards are currently open.
The essentials of the application
What does the application cost, self-filed or with NOVARIS?
The BSFZ and the tax office charge no fees. Our fee is success-based: 30 % falls due with the BSFZ decision, 70 % only after the allowance is paid out; no success, no fee.
| Criterion | Self-filed | With NOVARIS |
|---|---|---|
| Fees at the BSFZ and the tax office | none | none |
| Learning the FZulG, BSFZ practice and the Frascati definition | no typically 20–40 hours | yes not needed |
| Project description and timesheet preparation | partly in-house, without knowledge of assessment practice | yes we write and prepare |
| BSFZ queries | partly yourself, under deadline pressure | yes we answer within the deadline |
| Fee | none | success-based, 70 % only after payout; no success, no fee |
| Track record | partly depends on in-house experience | yes 25 of 25 accompanied BSFZ applications approved (as of 09/2026) |
How does the application work in five steps?
The application follows a fixed order. The BSFZ certificate is the prerequisite for research allowance application (ELSTER); preparing in parallel saves the most time.
Check eligibility
Does the project meet the three criteria of § 2 FZulG: novelty, technical risk, systematic approach? Further developments count too if they go beyond routine.
Us with your engineersDocument the project
Objectives, state of the art, technical risk, methodology, period and people involved. The BSFZ assesses the route, not the result.
UsFile the BSFZ application
Electronically in the BSFZ portal with the ELSTER organisation certificate. We answer BSFZ queries within the deadline.
Us, BSFZSubmit research allowance application (ELSTER)
Filed via ELSTER for each fiscal year: certificate number, eligible expenses and assessment basis. The application can be filed independently of the corporate or income tax return. We give your tax advisor all the figures.
Tax advisorAssessment, offset and payout
The tax office assesses the allowance. During the next initial tax assessment it is offset against the tax liability; any surplus is paid out. An incorrect notice can be appealed within one month.
Tax office
Offset or payout: what happens after the tax notice?
After the application, the tax office assesses the research allowance; based on our experience, processing typically takes 4 to 12 weeks. The assessed allowance is offset only during the next initial tax assessment. If it exceeds the tax liability, the tax office pays out the surplus (§ 10 (1) FZulG). That is why the application also pays off for companies with little or no profit, such as start-ups or companies in a growth phase. The research allowance payout page explains the sequence. An incorrect research allowance notice can be appealed within one month.
Tip: start in parallel with ongoing R&D projects. A BSFZ certificate can cover a multi-year project. At the tax office, however, you file a separate research allowance application for each open fiscal year.
Which projects are eligible under § 2 FZulG?
What decides eligibility is not the size of the innovation but whether it was open at the outset whether the solution would work, and whether the work followed a system. The law names three categories for this.
- Basic research: experimental or theoretical work to gain new knowledge without a direct commercial application, for example on new materials or physical phenomena.
- Industrial research: planned research to develop new products, processes or services or to improve existing ones substantially.
- Experimental development: acquiring, combining and using existing knowledge for new or improved products and processes, including prototypes, tests and pilot projects.
The calculator gives a first estimate of the funding potential; which costs belong in the assessment basis is explained on the funding amount page.
What goes into the project description, the BSFZ application and research allowance application (ELSTER)?
The BSFZ reads the project description, not your product. It has to show where the project could have failed and how you worked through that risk systematically.
- Project objectives: what is to be achieved, which problem is solved?
- Technical novelty: state of the art and the innovative approach.
- Technical risk: why the solution is not trivial and where it can fail.
- Methodology: systematic approach and planned work steps.
- Period and people: start, end and staff resources of the project.
BSFZ portal: what does the application ask for?
- Company data: legal form, tax number, sector, headcount, annual turnover
- Project descriptions: per project with technical novelty, risk and methodology
- Project period: start and end date of the R&D activities
- Category under § 2 FZulG: basic research, industrial research or experimental development
Authentication uses the ELSTER organisation certificate you already use for the tax return. There is no paper filing. The portal has maintenance windows and slows down under load, so save entries as drafts regularly. The portal guide explains the handling.
research allowance application (ELSTER): what does it contain?
- Certificate number issued by the BSFZ
- Eligible expenses: employer gross wages, own contributions of sole proprietors and partners (EUR 100 per hour) and contract research (70 % of the fee)
- Assessment basis: sum of eligible expenses, from 2026 plus a 20 % overhead flat rate for projects started after 31 December 2025, at most EUR 12 million per year
- Allowance claimed: 25 % of the assessment basis, 35 % for SMEs
| Document | Content | Who provides it |
|---|---|---|
| Project description | Objectives, state of the art, risk, methodology per project | Us, with your engineers |
| Staff breakdown | People involved with employer gross and R&D time share | Your payroll, we prepare it |
| Time records | Project-related hours per person (time tracking) | You, we prepare it |
| Contract research agreements | Contracts and invoices of external contractors in the EEA | You |
| Own-contribution evidence | Sole proprietors and partners only: own R&D hours, EUR 100 per hour | You |
| BSFZ certificate | Notice that the projects are eligible R&D | BSFZ |
| research allowance application (ELSTER) | Standalone ELSTER application per fiscal year with the assessment basis | Tax advisor, with our figures |
One research allowance application per fiscal year is submitted separately via ELSTER and may be filed with the tax return or independently of it. Without this application, the tax office cannot assess the allowance; it can be filed later while the assessment period for that fiscal year is running (§ 12 FZulG in conjunction with § 169 AO).
Which seven mistakes lead to cuts or rejection?
Applications rarely fail because of the project. They fail because of how it was described or because a deadline passed. These seven causes come up most often.
- Vague project description: “product improvement” or “optimisation” is not enough. The BSFZ expects concrete technical detail, measurable goals and a traceable research approach.
- No separation from routine work: the documentation must show what the technical risk is and why existing knowledge is insufficient. Maintenance, routine changes and administration are not eligible.
- Personnel costs calculated incorrectly: wrong R&D time share, missing social security contributions or the forgotten 20 % flat rate.
- Contract research misallocated: only 70 % of the fee counts, the contractor must be based in the EEA, and client and contractor must be clearly defined.
- Retroactivity missed: once the four-year assessment period lapses, the allowance for that fiscal year is lost for good (§ 12 FZulG in conjunction with § 169 AO).
- BSFZ queries answered too late: the deadline is a few weeks. If it is missed, the application can be rejected without a substantive review.
- Assessment basis not exhausted: overlooked projects, R&D shares set too low, missing flat rate. For the companies we supported through to approval, funding was on average 40 % above the initial calculation.
What does the application cost, self-filed or with an advisor?
The BSFZ and the tax office charge no fees. The cost of a self-filed application is time and rejection risk; the cost of an advisor is a fee, which with us is only due on success.
Why professionally supported applications bring more funding
- More eligible projects identified: many companies overlook R&D activities that would qualify; a specialist also finds hidden potential.
- Complete assessment basis: all personnel costs, own contributions and the flat rate captured correctly.
- Fewer queries and cuts: project descriptions that match the BSFZ assessment practice.
- Retroactivity checked: open prior years are included, often a substantial additional volume.
When a self-filed application pays off and when it does not is compared honestly on Apply yourself or with an advisor. A specialist also checks whether you can claim the allowance retroactively for past years. The first consultation is free; more on the model on the consulting page.
Which questions come up most often about the application?
Which documents do the BSFZ, the tax office and a tax audit need?
The BSFZ, the tax office and a later tax audit largely require the same evidence, only at different times and from different bodies.
| Step | Document | Who prepares it | Retention |
|---|---|---|---|
| BSFZ | Project description | Us, with your engineers | Until the tax notice becomes final |
| BSFZ | Staff breakdown | Your payroll, we prepare it | Until the tax notice becomes final |
| Tax office | Time records | You, we prepare it | Until the tax notice becomes final |
| Tax office | Contract research agreements | You | Until the tax notice becomes final |
| Tax office | Own-contribution evidence | You | Until the tax notice becomes final |
| Tax audit | BSFZ certificate | BSFZ | Until the tax notice becomes final |
| Tax audit | research allowance application (ELSTER) | Tax advisor, with our figures | Until the tax notice becomes final |
What matters in each field of the BSFZ application?
All five project-description fields and the work plan: make novelty, technical risk and systematic work clear.
01 · Project title
Summarise the research subject and development task precisely. Avoid product names, promotional language and vague terms such as “optimisation”.
02 · Project objective
Which technical problem remains unresolved? Describe the intended outcome and how you will assess whether the technical objective has been achieved.
03 · Distinction from the state of the art
Identify existing solutions and their limitations. Explain the knowledge or capability that your project aims to develop beyond them.
04 · Planned activities
Connect experiments, methods and development steps to the objective. Clearly distinguish your own work from each contractor’s contribution.
05 · Scientific and technical risks
Which assumption might prove wrong? Which technical risk threatens the approach? Commercial or budget risks do not substitute for R&D uncertainty.
06 · Work plan
Align work packages with dates, responsibilities and staff effort. Each package should make a clear contribution to the research objective.
Based on the BSFZ application guidance and portal guide. See full texts in the sample application.
Prepare the application before a year becomes final
In the first consultation we check your projects against § 2 FZulG, estimate the assessment basis and set the timeline. You pay only once the allowance is approved.
Book a first consultationRead on
- Check eligibilityA short check of your project in a few questions
- Filing with the tax officeHow the research allowance application reaches the tax return.
- Research allowance (FZulG): the guideRequirements, funding amount, changes and the BSFZ application at a glance.
- BSFZ portal: guideRegistration, form fields and submission step by step.
- Application exampleA fully written project description that convinces the BSFZ.
- Research allowance calculatorCalculate the assessment basis and allowance from your personnel costs.
- Apply yourself or with an advisor?Effort, risks and when self-filing pays off.
- Apply retroactivelyWhich years are still open and how to use the deadline.
Max Nodes
Founder and Managing Director of NOVARIS Consulting. Specialised in the German R&D tax credit (FZulG) since 2021; 25 of 25 accompanied BSFZ applications approved (as of 09/2026). Max Nodes