R&D Tax Credit FAQ: All Questions & Answers
The Forschungszulage is Germany's tax-based R&D funding: a 25 % funding rate on the assessment basis, or 35 % for SMEs. For research contracts commissioned after 27 March 2024, the 70 % eligible share yields 17.5 % or 24.5 % of the fee before the additional flat rate. This page answers 33 questions, from basics and funding amount through application, deadlines, consulting and payout.
- 25% funding rate, 35% for SMEs; contract research 17.5% or 24.5% before the flat rate
- Up to EUR 4.2 million allowance per year
- Retroactive up to 4 years
Written by Max Nodes, Founder and Managing Director · 25 of 25 supported BSFZ applications certified (as of 09/2026) · Last updated: · Law as of:
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Key facts in brief
The most common questions about Germany's R&D Tax Credit (Forschungszulage, FZulG) answered: the funding rate is 25% of the assessment basis, or 35% for SMEs. For contract research commissioned after 27 March 2024, this equals 17.5% or 24.5% of the fee before the additional flat rate. The assessment basis is capped at EUR 12 million per year, so the SME allowance is capped at EUR 4.2 million. All figures at a glance: the Forschungszulage facts 2026 page.
The essentials of the R&D Tax Credit
What are the basics of the R&D Tax Credit?
The Forschungszulage (FZulG) is Germany's tax-based R&D funding: a 25% funding rate on the assessment basis, or 35% for SMEs. For contract research commissioned after 27 March 2024, this equals 17.5% or 24.5% of the fee before the additional flat rate. The maximum annual allowance is EUR 4.2 million.
Any company conducting R&D in Germany: GmbH, sole proprietor, KG or AG, SMEs and large corporations, regardless of industry – from aerospace to mechanical engineering.
Three criteria under § 2 FZulG: novelty, technical risk and a systematic, documented approach. Routine development and pure adaptations don't qualify.
Looking for support? How research allowance consulting works, which tasks it covers and when the fee falls due is set out on the consulting page. To put providers side by side: compare research allowance advisers.
How much funding is available and which costs count?
25% of the assessment basis, or 35% for SMEs. For contract research commissioned after 27 March 2024, this equals 17.5% or 24.5% of the fee before the additional flat rate. The assessment basis is capped at EUR 12 million, so the SME allowance is capped at EUR 4.2 million per year.
Personnel costs, own contributions by sole proprietors and partners (EUR 100 per hour, not for a GmbH), and contract research (70%). From 2026, a 20% overhead flat rate applies to new projects.
It is offset against the assessed tax and any surplus is paid out as a refund (§ 10 FZulG), so it is not operating income. Under commercial law it appears as income, for tax purposes it is removed again. More on corporate tax.
How does the application process work?
Two steps: BSFZ certification of your R&D projects, then research allowance application (ELSTER) at the tax office. Details: How to apply.
File an objection or revise and resubmit. A specialised consultant improves the odds of success.
For the BSFZ: project description, timeline, involved staff. For the tax office: personnel costs, time records and the BSFZ certificate.
What deadlines apply and can I apply retroactively?
Not within the year: applications can be filed year-round. Looking backwards there is a limit — the four-year assessment period for that fiscal year (§ 12 FZulG in conjunction with §§ 169, 170 AO). For fiscal year 2022 it ends on 31 December 2026.
Four years retroactively: the assessment period starts at the end of the fiscal year (§ 12 FZulG in conjunction with §§ 169, 170 AO). The years from 2022 onwards are currently open, 2022 only until 31 December 2026.
Do I need a consultant and what does it cost?
Not required, but recommended: without knowledge of the BSFZ assessment practice, applications are cut or rejected more often and eligible costs are overlooked. For the companies we supported through to approval, funding was on average 40 % above the initial calculation. More on consulting.
Usually success-based. NOVARIS works on a success basis: no upfront costs, 70 % of the fee is due only after the allowance is paid out; the first consultation is free.
FZulG specialisation, a proven track record, industry experience, success-based fees, full service. Details: R&D Tax Credit consulting.
How is the R&D tax credit paid out and accounted for?
Offset against your next tax assessment; any surplus is paid out directly to your account.
As other operating income, details in our accounting guide.
Not at all: the allowance is not operating income, so it does not raise trade income (§ 7 GewStG). The commercial income is corrected outside the balance sheet. Details: Corporate tax & FZulG.
How does the R&D Tax Credit compare to other programmes?
From 2026: EUR 12 million assessment basis, up from EUR 10 million, plus a 20% overhead flat rate for projects started after 31 December 2025. Details: FZulG 2026 update.
FZulG: tax-based, industry-independent, no deadline. ZIM: a grant, project-specific, with application windows. Both combinable.
Yes, combinable with Horizon Europe or the EIC Accelerator; the same costs cannot be funded twice. Details in the direct comparison: research allowance or EU funding.
Which questions come up during implementation?
Yes. Under Art. 3 Annex I GBER, the SME check adds the staff, turnover and balance sheet total of affiliated and partner companies on a pro-rata basis; the SME instrument therefore asks for the consolidated figures, not just those of the applying company.
No. § 3 (4) FZulG requires a contractor within the EU or EEA; contracts with companies outside this area are not eligible for the research allowance, regardless of the contract terms or invoicing.
Only the statutory part. § 3 (1) FZulG covers employer expenses for future provision to the extent they are tax-free under § 3 no. 62 EStG, meaning the statutory employer contributions. Voluntary top-ups from salary conversion do not count.
Yes, 40 hours a week. § 3 (3) FZulG credits EUR 100 per working hour, but only for sole proprietors and partners and only up to this weekly limit; managing shareholders of a GmbH are excluded.
Yes. Under § 10 FZulG the allowance is first offset against the assessed tax; if the tax liability is insufficient or there is none, the surplus is paid out. A loss year does not rule out payment.
Yes, as long as the same expenses are funded only once. § 7 FZulG prohibits double funding; programmes such as ZIM or EU funding can be combined if they cover different cost shares of the same project. An overview of all programmes is in the funding comparison.
Yes, EUR 15 million. § 4 (3) FZulG caps the sum of all state aid, including the research allowance, per company and project at this amount.
The base ruling under § 6 FZulG covers only the certified project. If the objective or approach changes materially, the change should be resubmitted to the BSFZ; otherwise no certificate covers the new part.
Yes. § 11 FZulG provides for interest on a clawback claim, for example if it later turns out a project did not meet the criteria under § 2 FZulG.
Only if it assigns every hour to a specifically certified R&D project and is kept GoBD-compliant, meaning contemporaneous and unalterable. Details: Time tracking for the research allowance.
Four years from the end of the calendar year in which the claim arose, which is the end of the fiscal year (§ 12 FZulG in conjunction with §§ 169, 170 AO and § 4 (2) FZulG). A reservation of subsequent review does not extend this period: it lapses when the assessment period ends (§ 164 (4) AO).
Affiliated companies share one assessment basis. § 3 (6) FZulG does not allow the cap of at most EUR 12 million to apply more than once when companies are affiliated under the SME definition.
Where does all this stand in the law?
Twelve key references in the FZulG and Germany's Fiscal Code where every answer on this page can be looked up.
| Question | Reference |
|---|---|
| Who is eligible? | § 1 FZulG |
| Which projects are eligible? | § 2 FZulG |
| What counts as a personnel cost? | § 3 (1) FZulG |
| What applies to own contributions by sole proprietors and partners? | § 3 (3) FZulG |
| How is contract research credited? | § 3 (4) FZulG |
| How is the assessment basis capped? | § 3 (5) FZulG |
| How does a corporate group affect it? | § 3 (6) FZulG |
| What is the funding rate? | § 4 (1) FZulG |
| What is the maximum aid amount per project? | § 4 (3) FZulG |
| How is the application filed? | § 5 FZulG |
| Who certifies the project? | § 6 FZulG |
| How long can the tax office claw back? | § 169 AO |
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Official sources
- Research Allowance Act (FZulG). Statutory text
- BSFZ. Certification Office for the Research Allowance
- BMF circular of 7 February 2023. Application guidance on the FZulG (PDF, German)
- Regulation (EU) No 651/2014, Annex I. SME definition
- Income Tax Act (EStG). Statutory text (German)
- Fiscal Code (AO). Assessment period, appeal, interest (German)
- Trade Tax Act (GewStG). Trade income (German)
Read on
- Research allowance: the factsFunding rate, cap, deadlines and legal basis on one page
- Research allowance (FZulG): the guideRequirements, funding amount and the BSFZ application at a glance.
- Research allowance vs. EU fundingDifferences to Horizon Europe and the EIC.
- Calculate the funding amountHow the assessment basis and the allowance are put together.
- How to apply for the research allowanceThe BSFZ application and research allowance application (ELSTER) step by step.
- Apply retroactivelyWhich tax years are still open and how to use the deadline.
- Consulting costs at a glanceWhat FZulG consulting costs and how success-based fees work.
- Payout of the research allowanceOffsetting against the tax liability and the payout of any surplus.
- Research allowance vs. ZIMThe difference between a tax credit and a grant.
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