The research allowance – everything you need to know
A legal tax entitlement for research-active companies – permanent and retroactive up to four years. We show you whether your development meets the technical criteria.
What is the research allowance?
The research allowance under the Research Allowance Act (FZulG) funds research and development in German companies – as a legal tax entitlement, not a grant from a limited pot. If you meet the requirements, you're entitled.
It funds up to 35 % of eligible R&D costs for small and medium-sized enterprises (25 % for large companies), mainly staff costs. The allowance is permanent and can be claimed year after year.
The essentials
Up to 35 %
of eligible R&D costs (SMEs; 25 % for large companies).
Legal entitlement
no budget pot, permanent – meet the criteria and you're entitled.
Retroactive
up to four years. So time the application right.
Two stages
technical certificate (BSFZ) and tax assessment (tax office).
Is your work even research?
Many companies do research without calling it that. Work qualifies when you develop something technically new or uncertain – a design, a prototype, a test rig, a process or software – and it wasn't clear at the outset whether and how it would work.
The simple test: do you pay salaries to people developing something technically new or uncertain? Then that's a strong indicator of eligible research.
The five Frascati criteria
- Novel — The work aims at findings that go beyond the publicly known state of the art.
- Creative — There is an idea of your own behind it, not pure routine.
- Uncertain — At the outset it is unclear whether and how it will work.
- Systematic — Planned and documented traceably, not stumbled upon.
- Transferable — The result can be reproduced and reused.
The certifying body condenses these into three test points in its review guidelines: novelty, risk / uncertainty and systematic planning. In practice the decisive part of the application is the delineation from the state of the art.
Whether a specific activity meets the Frascati criteria is something we clarify together in the assessment – with no prejudgement of the outcome.
What could be in it for you?
A rough, non-binding order of magnitude based on your R&D staff costs. No guaranteed entitlement – the real amount is clarified in the assessment.
Non-binding estimate – no guaranteed entitlement.
Let's find out.
A non-binding assessment of whether and how much research allowance is realistic for you.