Apply for Research Allowance Germany: Guide 2026

The R&D tax allowance (Forschungszulage) has been Germany's central R&D funding instrument since January 2020 – and has become significantly more attractive following the 2024 and 2025 legislative amendments. Those looking to apply for the Research Allowance in Germany benefit from a non-dilutive, non-repayable liquidity advantage that can be combined with grants, VC or bank financing. This guide shows how the process works in practice in 2026.

What Is the Research Allowance and Who Can Apply?

The Research Allowance is a direct tax credit based on the Research Allowance Act (FZulG). It is credited against income or corporate tax and paid out in the event of a surplus – including to companies without current profits.

Who Receives the Research Allowance?

Eligible are all companies subject to tax in Germany: corporations, partnerships, sole proprietors and startups without a profit history. Size, legal form and industry are irrelevant, provided an eligible R&D project and qualifying expenditures exist.

From 2026: SMEs receive 35 percent of the eligible assessment basis, large enterprises 25 percent. For SMEs, the Research Allowance is thus the most direct lever for liquidity relief.

Which R&D Projects Are Eligible?

Eligible are projects in basic research, industrial research and experimental development – as defined in the OECD Frascati Manual. What matters is demonstrable technical or scientific uncertainty, not innovation buzzwords.

Not eligible are:

• Routine programming and pure product maintenance
• Standard integration and customising without research character
• Series development without technical uncertainty

Particularly frequently suited: software/AI, deep tech, biotech/pharma, automotive, mechanical engineering and energy tech.

The Two-Stage Application Process at a Glance

The Research Allowance application process is clearly two-stage: first the BSFZ reviews the technical eligibility of the project, then the tax office assesses the allowance. Those who confuse both levels produce follow-up queries and delays.

Step 1 – Apply for R&D Certification at the BSFZ

The Certification Body for Research Allowance (BSFZ) is the central point of contact for the technical project review. The application for R&D certification runs entirely digitally through the BSFZ web portal.

A convincing project description contains:

• State of the art and identified technical problem
• Own solution logic and methodological approach
• Milestones and abort risks
• Justification for why the outcome was still open at project start

CTOs and R&D leads should not delegate the description solely to finance. For software projects, architecture boundaries, model validation or scaling challenges are more convincing than general innovation claims.

Step 2 – Submit the Research Allowance Application at the Tax Office

After receiving the BSFZ certification, the Research Allowance application is submitted to the tax office via Mein ELSTER. It is filed per fiscal year based on actually incurred eligible expenditures – not per project start.

Practical timing: several weeks for the BSFZ review, then further weeks to months until the tax assessment. Without a BSFZ decision, the tax assessment is not possible.

Applying for the Research Allowance via Mein ELSTER – How It Works

Mein ELSTER is the operational core of the payout. After the BSFZ certification, companies report the eligible expenditures of the completed fiscal year in the electronic form. Since the Growth Opportunities Act (March 2024), eligible costs include:

• Taxable wages in the R&D team
• Owner-performed R&D by sole proprietors and co-entrepreneurs (flat rate 70 Euro/hour (from 2026: 100 Euro, Tax Investment Stimulus Program), max. 40 hours/week)
• Contract research costs (70 percent of the fee claimable)
• 20 % overhead cost flat rate on the remaining eligible expenditures (from 2026 for projects starting after 31.12.2025, Tax Investment Stimulus Program)
• Certain capital asset costs (new since March 2024)

Structure and Modules of the Application Form

The ELSTER form has a modular structure. Typical modules:

• Company details and tax reference number
• Eligible project with BSFZ certification number
• Internal personnel costs with time records
• Contract research with contract references
• Owner-performed R&D (only for sole proprietors/co-entrepreneurs)

Not every module is relevant for every company. The structure follows the audit trail of tax, payroll and project controlling.

Recommended sequence for data preparation:

• Verify BSFZ certification and project ID
• Reconcile personnel lists, time records and payroll totals
• Document contract research agreements and invoices separately

When Can the Research Allowance Be Applied For – Including Retroactively?

The BSFZ certification can be applied for before, during or after the project. The tax assessment via ELSTER always takes place after the end of the fiscal year. Applying for the Research Allowance retroactively is possible as long as the relevant tax years are still open and the project was eligible since 2020.

Calculation example – AI startup with 10 employees:

Item  —  Amount

Eligible R&D wages  —  800,000 Euro

Contract research (gross)  —  200,000 Euro

Of which claimable (70 %)  —  140,000 Euro

Total assessment basis  —  940,000 Euro

Research Allowance (SME, 35 %)  —  329,000 Euro

Research Allowance Amount and Tax Effect

The funding amount has risen significantly since the Tax Investment Stimulus Program (July 2025). The maximum assessment basis is 12 million Euro per fiscal year. For SMEs, this yields a maximum Research Allowance of 4.2 million Euro (35 percent of 12 million Euro).

The allowance is credited against income or corporate tax. If it exceeds the tax liability, the surplus is paid out – including to loss-making startups.

Specifics for Large Enterprises and Technology-Neutral Development Projects

Large enterprises receive 25 percent of the assessment basis – a maximum of 3 million Euro per year. The Research Allowance remains strategically relevant for them because it prescribes no thematic funding framework.

An automotive supplier, a semiconductor manufacturer or a mechanical engineering company can use the same R&D criteria as a software house – provided the project contains genuine technical uncertainty. Unlike grants or VC, the Research Allowance is non-dilutive and non-repayable.

Bosch for example uses the R&D tax incentive in Germany as a permanent component of its research financing and combines it with direct project grants from the BMBF – a model that is scalable also for mid-sized industrial companies (Bosch Annual Report 2023).

Correctly Accounting for and Recognising the Research Allowance

How can I recognise the Research Allowance? What is recognised under commercial law is not the allowance as an intangible R&D result but the sufficiently concrete refund claim. Prerequisites: the balance sheet date falls after the claim arises, evidence quality is given, assessment is sufficiently probable.

For booking and accounting for the Research Allowance: without solid project delineation, BSFZ certification and traceable cost accounting, no recognition should occur. Many companies record the claim only after receipt of the assessment notice – particularly relevant for financial statements involving investors or banks.

The treatment under Section 10 FZulG governs the tax crediting. The commercial balance sheet treatment follows the general HGB principles for receivable recognition.

Frequently Asked Questions and Practical Tips on the Research Allowance

Most rejections arise not from insufficient innovation level but from unclear R&D delineation. According to an analysis by the BSFZ on common application deficiencies, inadequate project descriptions are among the most frequent reasons for follow-up queries.

Typical errors:

• Declaring routine development as research
• Claiming personnel costs without time records
• Drafting contract research agreements without R&D delineation
• Classifying implementation work as experimental development

TRUMPF, the laser technology manufacturer from Ditzingen, documents R&D projects internally with standardised project profiles recording uncertainty level, milestones and delineation from series development – a model directly transferable to the BSFZ application