R&D Tax Credit Report 2026: BSFZ figures and reform

The key finding lies in the queries: the BSFZ asks follow-up questions on around 70 % of applications, and every one of those queries concerned the technical risk or the novelty compared with known solutions, that is, the criteria of § 2 FZulG. An application that clearly sets out how the project differs from the state of the art and why the outcome is uncertain answers the most frequent query in advance. How to respond to a query is covered on the page BSFZ rejection and objection.

The funded costs form the assessment basis; the research allowance amounts to 25 % of it, 35 % for SMEs (§ 4 (1) FZulG). The application to the tax office can only be filed after the end of the financial year, in practice together with the annual financial statements. Since four financial years are usually claimed retroactively, a review also pays off for projects completed long ago: claiming the research allowance retroactively.

The cap on the assessment basis has risen from EUR 4 million in 2020 to EUR 12 million, while BSFZ applications grew from 46,418 by the end of 2025 to 63,718 projects applied for as of 30 June 2026. The BSFZ does not publish an approval rate broken down by year.

• The higher cap from 2026 makes it worth reviewing open tax years retroactively, not just the current project.
• As application volume grows, a clearly reasoned project description becomes more important.
• SME status pays off twice: a higher funding rate and a growing share of the rising funding volume.
• The three most common rejection reasons are avoidable: state the technical risk concretely, distinguish clearly from the state of the art, and check the scope of § 2 FZulG in advance.

The research allowance is open to every company liable to tax in Germany (§ 1 FZulG). What gets certified is a project that demonstrates novelty, technical risk and a systematic approach (§ 2 FZulG), whether it comes from a workshop, a laboratory or a software team. The distribution by industry is published by the BSFZ only as a chart (the ten most frequent sectors, updated quarterly).

Routine work is not eligible in any industry: adapting known solutions, building and operating to a fixed concept, market observation, training. The line is drawn by the project, not by the industry.