Research allowance and corporate tax: how the offset works

The research allowance is offset against the assessed corporate tax. If it exceeds the tax liability, the tax office pays out the remainder as a refund, even in loss years (§ 10 FZulG).

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  • Offset against assessed corporate tax, surplus is refunded
  • Loss years receive the full allowance
  • Trade tax remains unaffected

Written by Max Nodes, Founder and Managing Director · 25 of 25 supported BSFZ applications certified (as of 09/2026) · Last updated: · Law as of:

Offset and payout§ 10 FZulG
Research allowanceEUR 150,000
Offset against tax− EUR 80,000
Paid outEUR 70,000
Paid into your account EUR 70,000 EUR 80,000 of it offset against tax

The allowance is first offset against the tax assessed. Whatever remains is paid out by the tax office (§ 10 FZulG).

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Key facts in brief

Under § 10 FZulG, the research allowance is first offset against the assessed corporate tax; any surplus is paid out as a refund, regardless of profit. Loss years receive the full allowance. The research allowance application (ELSTER) is filed electronically via ELSTER; trade tax does not apply to the allowance.

The essentials of the offset

  • Legal basis
    § 10 FZulG: offset against the assessed corporate tax
  • Surplus
    paid out as a corporate tax refund, even in loss years
  • Trade tax
    remains unaffected because the allowance does not increase taxable profit (BMF circular of 7 February 2023)
  • Filing
    research allowance application (ELSTER) electronically via ELSTER, can be filed separately from the tax return
  • Partnerships
    distributed by the profit-sharing key, offset against partners' tax

    • How does the research allowance affect corporate tax?

    The research allowance directly reduces corporate tax, and it is paid out even when the GmbH makes no profit.

    The allowance is assessed in its own research allowance notice and offset in full against the next initial assessment of corporate tax (§ 10 FZulG). If it exceeds the tax liability, the tax office pays out the surplus as a refund.

    1. Assessment

      The tax office assesses the research allowance in its own research allowance notice.

    2. Offset

      The allowance is offset in full against the next initial assessment of corporate tax (§ 10 FZulG).

    3. Refund

      Any surplus over the tax liability is paid out as a refund.

    Money flows even in a loss year: the allowance is credited first, and whatever exceeds the assessed tax is refunded by the tax office (§ 10 FZulG). It is therefore not a tax reduction that presupposes a profit. The rules of the Fiscal Code on tax refunds apply accordingly, except § 163 AO (§ 12 FZulG).

    How does the tax office offset the research allowance against corporate tax?

    The allowance is first credited against the tax liability of the next initial assessment, the remainder is refunded.

    The tax office assesses the research allowance as a separate notice, then offsets it against corporate tax at the next initial assessment (§ 10 FZulG). Any surplus is refunded.

    Three examples: offset and refund
    ScenarioCorporate taxResearch allowanceResult
    Partial offsetEUR 200,000EUR 150,000EUR 50,000 remaining
    Full offset with refundEUR 80,000EUR 150,000EUR 70,000 refund
    No tax liabilityEUR 0EUR 150,000EUR 150,000 refund
    Loss years: Without a tax liability, the tax office pays out the full allowance, regardless of the company's profit.
    Booking in the example: EUR 150,000 receivable from the tax office
    SKR 04DebitCredit1590 Other assetsEUR 150,0007695 Other operating incomeEUR 150,000The receivable is cleared once the tax office offsets or pays out the allowance.

    How does the allowance appear in the annual accounts?

    Until it is assessed, the allowance sits on the balance sheet as a receivable from the tax office.

    In the example on this page, the GmbH books EUR 150,000 as a receivable from the tax office (SKR 04). Once the tax office offsets or pays out the allowance, the receivable is cleared. Chart of accounts, booking entries and the right point of recognition are on Booking the research allowance.

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    We check how your research allowance affects corporate tax and prepare research allowance application (ELSTER) with your tax advisor. No result, no invoice.

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    Max Nodes

    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