Forschungszulage (Research Allowance)
Germany's rule-based R&D tax credit: a legal entitlement of 25% (35% for SMEs) on eligible R&D expenses, refundable in cash where it exceeds tax liability. Two-step process: project certification by the BSFZ, then assessment by the tax office.
Key parameters
| Rate | 25% standard, 35% for SMEs SME uplift since 28 March 2024 |
|---|---|
| Assessment base cap | €12M per year Since 1 January 2026 |
| Overhead flat rate | 20% on eligible direct costs For projects starting after 31 December 2025 |
| Max annual credit | €3.0M (large), €4.2M (SMEs) |
| Refundable | Yes Payout of any excess over tax liability |
| Eligible costs | R&D personnel; contract research (70% of invoice); depreciation on R&D equipment; proprietor own-effort Proprietor own-effort at €100/h since 1 Jan 2026, max 40h/week |
Eligibility
- HQ
- Any headquarters country
- Local presence
- Local tax presence required (branch is sufficient) A branch office (Zweigniederlassung/permanent establishment) of your existing company is enough — you do not need to form a new legal entity such as a GmbH or BV.
- R&D substance
- Required
- Company size
- No size restriction
- Models
- All
- Sectors
- All
- Goals
- Additional design site in Europe; Manufacturing / fab site; R&D cooperation without own site; Access to pilot lines & prototyping
R&D must qualify as basic research, industrial research, or experimental development (Frascati-aligned). The claiming entity must be subject to German income or corporate tax; a German design subsidiary of a foreign group qualifies.
Mechanism & application
Rule-based entitlement — Legal entitlement — self-assessment, no case-by-case funding decision.
Step 1: Apply for project certification with the Bescheinigungsstelle Forschungszulage (BSFZ) — free of charge, decision typically within 3 months. Step 2: Claim the allowance with the competent tax office in the annual tax filing; the credit is set off against tax liability and any excess is paid out.
Timeline: BSFZ certificate ~3 months; credit with annual tax assessment
Legal basis & sources
- Legal basis
- FZulG, as amended by Wachstumschancengesetz (BGBl. 2024 Nr. 108, Art. 26/27) and Investitionssofortprogramm (BGBl. 2025 Nr. 161)
- Verification
- BMF / BSFZ / gesetze-im-internet.de/fzulg — permanent (no sunset; 5-year evaluation clause only)
Changelog
-
1 Jan 2026
Investitionssofortprogramm: assessment base cap raised to €12M; 20% overhead flat rate for projects starting after 31 Dec 2025; proprietor own-effort rate raised to €100/h.
Source: BGBl. 2025 Nr. 161
-
28 Mar 2024
Wachstumschancengesetz: SME rate raised to 35%, contract research share to 70%, base cap to €10M.
Source: BGBl. 2024 Nr. 108