Forschungszulage – Up to €3.5 Million in R&D Funding via Tax Incentive
Germany’s tax-based innovation funding for R&D activities
Target group
Startups and SMEs
Deadline
Year-around
Location
National, Germany
Table of contents
The German research allowance (Forschungszulage) is a tax-based funding instrument that reimburses eligible R&D expenses. While it differs from competitive grants, it is considered part of non-dilutive funding, as it enables companies to finance innovation activities without giving up equity.
Are you eligible?
You can apply if you:
Are a tax-paying company in Germany – including startups, GmbHs, UGs, freelancers or large corporations
Conduct research or experimental development (R&D) either internally or through EU-based subcontractors
Have at least one employee subject to wage tax (Lohnsteuer) working on the R&D
Can document your project’s technical challenge, methodology, and innovation
What is Forschungszulage?
The Forschungszulage is a tax incentive that reimburses part of your R&D expenses – even if your company is not yet profitable. It applies to:
Ongoing or new R&D projects
Internal development work (e.g. by your engineering team)
External R&D partners (e.g. universities or labs)
R&D-related investments (from 2024 onward)
Maximum funding:
Up to €3.5 million per year for small and medium-sized enterprises (SMEs)
Up to €2.5 million per year for large companies
Funding rates:
35% of in-house R&D costs (salaries, depreciation, etc.)
24.5% of subcontracted R&D (based on 70% of the contract value)
Eligible cost base: Up to €10 million per year
The money is either deducted from your tax liability or paid out as a refund – even if you’re in loss.
Important
The funding decision-maker has particularly strict requirements for software funding. Several inquiries are common here.
Let us support you to increase your chances of success.
What are the terms and conditions?
Your R&D must involve a technical or scientific challenge, not just product or market innovation
Eligible projects must include structured research or development activities
The application is retrospective: You apply for activities carried out can for up to four years retroactively.
Costs must be well-documented and allocable
The BSFZ (Federal Certification Office) reviews and certifies the project before the tax office processes the refund
When is the deadline?
Es gibt keine feste Frist.
Sie können sich ganzjährig bewerben und für bis zu vier Jahre rückwirkend.
How does the application work?
Register at BSFZ.
Submit a technical project description for certification
After approval by BSFZ, include the certificate in your corporate tax return
The tax office (Finanzamt) processes the refund or reduces your tax burden
The BSFZ usually decides within 6–10 weeks after submission.
You can apply if you:
Are a tax-paying company in Germany – including startups, GmbHs, UGs, freelancers or large corporations
Conduct research or experimental development (R&D) either internally or through EU-based subcontractors
Have at least one employee subject to wage tax (Lohnsteuer) working on the R&D
Can document your project’s technical challenge, methodology, and innovation
You need support?
Would you like to learn more about how we can increase your companies chances of success with this funding program?
FAQs
What our clients often ask before they get started.
Is the Forschungszulage suitable for startups?
The Forschungszulage is suitable for startups, even if they do not yet pay corporate income tax. Approved funding amounts are paid out as a refundable tax credit through the company’s tax assessment.
How much funding does the Forschungszulage provide?
The Forschungszulage allows SMEs to receive up to €3.5 million per year and large companies up to €2.5 million per year, depending on the amount of eligible R&D expenses.
What qualifies as eligible R&D under the Forschungszulage?
Eligible R&D projects must address a technical or scientific challenge, follow a structured research process, and apply a systematic methodology. Routine development, purely commercial activities, or standard engineering tasks are not eligible.
Are subcontracted R&D activities eligible under the Forschungszulage?
Subcontracted R&D activities are eligible under the Forschungszulage. Up to 70% of external R&D contract costs can be considered as the cost base and are reimbursed at 35%, resulting in an effective funding rate of 24.5%.
How is funding paid out under the Forschungszulage?
Funding under the Forschungszulage is paid out as a refundable tax credit through the annual tax assessment, based on approved eligible R&D expenses.
Still have questions?
