Research Allowance: Tax Incentive for Research Funding
The research allowance offers companies in Germany the opportunity to reclaim expenses for R&D projects — even for those with lower levels of innovation than required by other funding programs. This strengthens the competitiveness and innovative capacity of companies. Particularly advantageous: businesses can apply for the allowance retroactively for already completed or discontinued projects while simultaneously gaining financial planning security for current and future innovation projects.
Interested? Learn more about the research allowance and how it can help advance your company!
Research Allowance
Who?
Companies of all sizes with a registered office in Germany
How?
Grants of up to €3.5 million per year with a funding rate of up to 35%
What?
Personnel and contract costs related to research and experimental development
When?
Retroactive from 2020, applicable to current and future projects until 2026
The 3 Most Important Advantages of the Research Allowance for Your Company
Legal Certainty
If an application for the research allowance is approved, companies have a legal entitlement to funding under the FZulG (Research Allowance Act). This ensures businesses gain planning security, even for future projects.
Simple Application Process
The research allowance is the R&D funding program with the best cost-benefit ratio. We take care of most of the work and only require approximately 4–6 hours of your time until approval. We handle the rest for you!
Diversity
There are no thematic restrictions: Every company subject to taxation in Germany is eligible, provided it meets the R&D criteria of the research allowance. Especially suited are innovative tech companies, machinery manufacturers, chemical companies, and businesses in the life sciences sector.
Research Allowance – Incentives for Innovation and Growth
The research allowance aims to pragmatically and sustainably strengthen Germany as a hub for research and development. Companies can retroactively claim funding starting from January 1, 2020 (with a statute of limitations on December 31, 2024) as well as for ongoing and future projects until 2026. Up to 25% of internal R&D personnel costs (from 2024, 35% for SMEs) and 15% of external contract research costs (from 2024, 17.5%) are eligible for reimbursement, with an annual funding cap of €2.5 million or, for SMEs with up to 250 employees, €3.5 million. This creates incentives for investment in research and development, strengthens competitiveness, and promotes both scientific and technological innovation.
How to Meet the Criteria for the Research Allowance
Novelty
✔️ Your project generates new knowledge or skills that advance your company.
✔️ Your innovation goes beyond the current state of the art in your market.
Technical Risks
✔️ Your project may be threatened by uncertainties or unpredictabilities, which could theoretically lead to failure.
✔️ Economic risks are not relevant in this context.
Planning
✔️ Your project includes clearly defined tasks and objectives.
✔️ A detailed work plan is in place, including resource planning and defined milestones
Some of Our Partners
The 5 Steps to Securing the Research Allowance
Application Submission
Following a joint workshop, we draft the application for you and finalize it together.
Review by the BSFZ
The BSFZ (Certification Body for Research Grants) has 3 months to review the application. Once approved, a legal entitlement to the grant is established.
Tax Office Documentation
The hours and costs incurred so far are legally prepared by us for submission to the tax office.
Determination by the Tax Office
The tax office sets the exact funding amount based on the incurred costs in a determination notice.
Offset via Tax Return
The determination notices are submitted and offset through the tax return (or paid out if the tax liability is insufficient).
Our Goal
Our goal is to maximize your chances of success in securing the research allowance while minimizing your effort. Our experts have successfully managed hundreds of applications and bring extensive experience to every step of the application process. We handle the entire application process, including the work plan, detailed breakdown of project costs, and the tax office procedures. With our success-driven approach, we pursue the same goals as you — right through to the final payout and beyond.
