R&D Tax Credit vs. ZIM: which funding fits when?
The Research Tax Credit is a legal entitlement with no application competition, open to every company size. ZIM is a competitive grant only for SMEs and mid-caps, with an approval decision before the project starts. Both are combinable, as long as the same costs are not funded twice.
- Research Tax Credit: legal entitlement, 25 %, 35 % for SMEs, no competition (Section 4(1) FZulG)
- ZIM: competitive grant up to 45 %, only for companies up to 499 employees
- Combination possible if the same costs are not funded twice (Section 7 FZulG)
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 routes to R&D support
Figures and details
ZIM can reject even an eligible project.
Key facts in brief
The Research Tax Credit fits ongoing or finished research, regardless of company size: a legal entitlement under the FZulG, with no application competition, claimable up to four years retroactively. ZIM fits a project that has not yet started, when the higher funding rate of up to 45 % (up to 55 % for cooperation) decides, but only up to 499 employees. The Research Tax Credit rate is 25 %, 35 % for SMEs (Section 4(1) FZulG), on at most EUR 12 million assessment basis per year (Section 3(5) FZulG). Both programs can be combined, as long as the same expenses are not funded twice (Section 7 FZulG).
Which ten criteria separate the Research Tax Credit and ZIM in detail?
The Research Tax Credit wins on legal entitlement and retroactive filing, ZIM wins on the funding rate for a single project.
| Criterion | Research Tax Credit | ZIM |
|---|---|---|
| Legal entitlement | yes Yes, no competition | no No, approval decision after expert review |
| Application timing | yes After the fiscal year ends, retroactive up to 4 years (Section 5 FZulG) | no Only before the project starts |
| Company size | yes Any size | partly SMEs and mid-caps up to 499 employees only |
| Funding rate | 25 %, 35 % for SMEs (Section 4(1) FZulG) | Up to 45 % of eligible costs (up to 55 % for cooperation) |
| Assessment basis / cap | EUR 12 million assessment basis (Bemessungsgrundlage), max. EUR 4.2 million allowance (Section 3(5) FZulG) | EUR 690,000 individual project, EUR 560,000 per company for cooperation |
| Payout route | yes Offset against the assessed tax, the surplus is paid out (Section 10 FZulG) | Grant after approval and proof of use |
| Time to decision | yes 4 to 9 months from analysis to payout | 6 to 12 months to approval |
| Combinability | yes Yes, as long as the same costs are not funded twice (Section 7 FZulG) | yes Yes, combinable with the Research Tax Credit |
| Application effort | 2 steps: BSFZ application, then tax office application | 4 steps: project outline, formal application, expert review, approval |
| Proof-of-use obligations | BSFZ certificate plus cost documentation at the tax office | Proof of use after the project ends |
What fundamentally separates the Research Tax Credit from ZIM?
The key difference is not the funding rate, it is the process: the Research Tax Credit is a legal entitlement, ZIM an approval decision.
Anyone who meets the criteria of novelty, technical risk and systematic approach has a right to the Research Tax Credit, with no application competition. ZIM, by contrast, is approved by the Federal Ministry of Economic Affairs and Climate Action after an expert evaluation: an application can be rejected even for an eligible project.
| Criterion | Research Tax Credit | ZIM |
|---|---|---|
| Legal entitlement | yes Yes, no competition | no No, approval decision after expert review |
| Application timing | yes After the fiscal year ends, retroactive up to 4 years (Section 5 FZulG) | no Only before the project starts |
| Funding rate | partly 25 %, 35 % for SMEs (Section 4(1) FZulG) | partly Up to 45 % of eligible costs (up to 55 % for cooperation) |
| Payout | yes Offset against the assessed tax, the surplus is paid out (Section 10 FZulG) | Grant after approval and proof of use |
| Combinability | yes Yes, as long as the same costs are not funded twice (Section 7 FZulG) | yes Yes, combinable with the Research Tax Credit |
When does the Research Tax Credit fit, when does ZIM fit?
The two programs are not mutually exclusive, but the situation decides which one applies first.
| Situation | Research Tax Credit | ZIM |
|---|---|---|
| Project is already running or completed | Fits, retroactive up to 4 years | Excluded, only before project start |
| Company has more than 499 employees | Fits, any size | Excluded |
| Planning certainty without rejection risk matters | Fits, legal entitlement | Rejection possible |
| New, capital-intensive project, not yet started | Possible, but lower rate | Fits, up to 45 % and market launch eligible |
| Cooperation with a research institution is planned | Possible independently | Fits, up to EUR 560,000 per company |
A project that has already started rules out ZIM. A new, capital-intensive project often benefits more from ZIM's higher rate, provided the company still qualifies as an SME.
How much funding do the Research Tax Credit and ZIM provide?
The Research Tax Credit caps at EUR 12 million assessment basis per year, ZIM caps at the costs of a single project.
SME with EUR 800,000 in R&D personnel costs, new project from 2026
Full-year personnel costs for research and development, no contract research, no own contribution.
Assessment basis includes the 20 % overhead flat rate, which applies only to projects starting after 31 December 2025 (Section 3(3b) FZulG).
| Project type | Funding rate | Maximum eligible costs |
|---|---|---|
| Individual project | up to 45 % (small enterprises in structurally weak regions or young small enterprises) | EUR 690,000 |
| Cooperation project | up to 55 % (small enterprises, with surcharges) | EUR 560,000 per company |
The maximum Research Tax Credit is EUR 4.2 million per year, EUR 12 million assessment basis times the 35 % SME rate (Section 4(1), Section 3(5) FZulG). ZIM caps per project, not per year, several projects can each be approved on their own.
Can the Research Tax Credit and ZIM run at the same time?
Yes, but not for the same costs.
Section 7 FZulG only prohibits double funding of the same expenses: ZIM-funded costs are removed from the Research Tax Credit's assessment basis, the remaining R&D costs stay eligible.
- Remove ZIM-funded costs from the Research Tax Credit assessment basis.
- Continue claiming remaining R&D costs through the Research Tax Credit.
- Document the allocation per partner for cooperation projects.
Which questions come up most often about the Research Tax Credit and ZIM?
When is ZIM the better choice than the Research Tax Credit?
Three situations where ZIM brings more funding than the Research Tax Credit alone.
- New, capital-intensive project: A project that has not yet started often benefits from ZIM's higher rate of up to 45 % of eligible costs (up to 55 % for cooperation projects), well above the FZulG rate of 35 % for SMEs, provided the company still qualifies as an SME.
- Cooperation with a research institution: A cooperation project with a partner fits ZIM, which funds up to EUR 560,000 per company; the Research Tax Credit has no comparable cooperation funding.
- Market launch included: ZIM also funds the market launch phase of a project, while the Research Tax Credit covers only R&D costs.
Without a cooperation partner and without a market launch phase, the case for ZIM disappears on its own; the Forschungszulage stays the only legal entitlement of the two, and it also works retroactively.
Choose the right program and use both funding pots
In the first consultation we check whether the Research Tax Credit, ZIM, or both fit your project, and calculate your assessment basis. No result, no invoice.
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- Funding programmes comparedResearch allowance, ZIM, KMU-innovativ and EIC side by side
- Research Tax Credit: Funding AmountHow the assessment basis and funding rate add up to the maximum credit.
- Claiming RetroactivelyUp to four years back: which fiscal years are still open.
- Research Tax Credit for SMEsHow SME status is assessed and who gets the 35 % rate.
- Contract ResearchClaim 70 % of the fee for external R&D contracts.
- The Application ProcessThe BSFZ certification and tax office application step by step.
- Research Tax Credit: the guideRequirements, funding amount and process at a glance.
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