ZIM: grants for SME innovation projects.

1. What is ZIM?

A short orientation on the programme, its owner, and where it sits in the German funding landscape.

ZIM has run as a permanent federal programme since 2008 and is one of the most widely used innovation instruments in Germany, with more than 40,000 projects funded to date. It is deliberately open to all technologies and sectors: the typical recipient is not a corporate lab but a mid-sized machine builder, a software company with a dozen staff, or a craft business developing a new production process. Around three quarters of funded companies have fewer than 50 employees.

Unlike the Forschungszulage, which is a tax incentive with a legal entitlement, ZIM is a discretionary grant. Applications are assessed on quality, and the project must not have started when you apply.

2. What it funds

The project types ZIM supports and the activities that are eligible.

ZIM funds R&D projects for innovative products, processes, or technical services, plus supporting services to bring results to market. It comes in several project types:

• Single projects (Einzelprojekt): one company carries out the R&D on its own.
• Cooperation projects (Kooperationsprojekt): two or more partners (companies, and research institutions) work together on a shared goal.
• Innovation networks (Innovationsnetzwerke): managed networks of at least six companies (four for international networks).
• Feasibility studies: now run on a de-minimis basis and can last up to 12 months.
• Market-introduction services: support to commercialise results, available up to 18 months after the project ends.

Eligible costs are mainly personnel costs for R&D staff. Subcontracts to third parties are eligible up to 35 percent of the personnel costs, which is useful for bringing in external specialists such as IT freelancers.

3. Who can apply

The size classes that qualify, including the mid-cap rules.

ZIM is aimed at the Mittelstand:

• Small enterprises (under 50 employees, under EUR 10 million turnover) and medium enterprises (under 250 employees, under EUR 50 million turnover).
• Larger mid-caps with up to 499 and up to 999 employees under defined conditions.
• Companies with 500 to 999 employees only within cooperation projects that include at least one SME.

Research institutions can participate in cooperation projects and networks. Foreign partners can join but do not receive ZIM funding themselves.

4. How much you get

The funding rates and the cost ceilings that determine the grant.

The grant rate ranges from 25 to 60 percent, set by company size, location, and project type. Small and young companies and first-time innovators receive the most favourable rates. The grant is calculated on the eligible costs, capped as follows:

• Single project: up to EUR 690,000 eligible costs per company.
• Cooperation project: up to EUR 560,000 eligible costs per company, with a total cap of EUR 3 million across the cooperation.

The V5 directive raised these ceilings compared with the previous version, so figures from older approvals are out of date.

5. How to apply and deadlines

The timing rule that matters most and the route to apply.

There is no fixed deadline round; applications can be filed on a rolling basis. The decisive rule is that the application must be submitted before the project begins. Applications go to the specialised project executing agencies listed on the official portal (zim.de), on the official form or via the electronic submission route. A clear technical project description and a credible work and cost plan are central to approval.

6. Notes and combination

How ZIM interacts with the Forschungszulage and other aid.

ZIM can be combined with the Forschungszulage, but not for the same costs: any cost already included in the ZIM funding base is blocked for the research allowance. In practice many companies use ZIM for one project and claim the Forschungszulage for costs that ZIM does not cover, or for other projects. As a discretionary grant under EU state-aid rules, ZIM also requires that the company is not a "company in difficulty".

7. Project types in depth

ZIM is a family of five routes; the one you choose sets your rate, your ceiling and your partners.

Single R&D projects. One company runs the project alone, with research institutions engaged only as subcontractors. Funding 25 to 45 percent; eligible costs up to EUR 690,000.

Cooperation projects. Two or more partners (companies, or a company with a research institution) work to a shared goal at a higher rate than a single project. Foreign partners may join but receive no ZIM money and fund themselves nationally. The partnership must be balanced: a research institution may hold no more than 50 percent of all person-months; in a two-partner project no single company may exceed 70 percent; with more than two partners no company may exceed 50 percent. Eligible costs up to EUR 560,000 per company and EUR 3,000,000 in total.

Innovation networks. ZIM funds the management of a network, in two phases, up to EUR 490,000 for a national network (six or more companies) and up to EUR 600,000 for an international one (at least four companies).

Feasibility studies. For young companies (up to 10 years), micro-enterprises and first-time applicants, a study of up to 12 months and up to EUR 125,000 (EUR 250,000 in cooperation), funded on a de-minimis basis, de-risks the main project.

Market-introduction services. For companies that already hold an approved ZIM R&D project: up to EUR 100,000 of eligible costs at a 50 percent rate, available during the project and for up to 18 months after it ends.

8. Eligible and ineligible costs

A streamlined cost model built so small teams need not itemise every receipt.

Eligible costs come from three blocks. Personnel is the core: gross salary counts up to EUR 150,000 per person per year, and a full-time employee is typically planned at about 10.5 person-months a year (up to 12 may be settled if genuinely worked); overtime never counts. Subcontracts to third parties are eligible up to 35 percent of personnel costs. An other-costs flat rate of up to 100 percent of personnel costs (85 percent for research institutions) covers materials, equipment depreciation, travel and overheads without itemisation. Only net costs are eligible where input tax is deductible.

What is not eligible: anything spent or committed before the application is received; routine development with no genuine technical risk; gross VAT where deductible; costs above the stated ceilings; and overtime or non-project time. Because the flat rate can double personnel costs, a single project reaches its EUR 690,000 ceiling at roughly EUR 290,000 to 300,000 of personnel, which is often the point where a cooperation becomes the better structure.

9. Funding rates in detail

Rates run from 25 to 60 percent, set by size, age, region and project type. Smaller is better; cooperation beats going alone; international cooperation adds up to ten points, capped at 60 percent.

Applicant	Single	Cooperation	Intl. coop.
Small enterprise, structurally weak region	45%	55%	60%
Small young enterprise (≤ 10 yrs)	45%	50%	60%
Small enterprise (standard)	40%	45%	55%
Medium enterprise	35%	40%	50%
Company under 500 employees	25%	30%	40%
Research institution (cooperation partner)	—	up to 100%	up to 100%

Eligible-cost ceilings: EUR 690,000 per company in a single project; EUR 560,000 per company in a cooperation, capped at EUR 3,000,000 across all partners; a research institution up to EUR 280,000. A company may hold at most two ZIM R&D approvals in any rolling 12 months.

10. Applying, step by step

The process is fully digital and rolling; the timing rule is what catches people out.

• Optional project sketch. Submit an informal sketch (up to four pages) for free, non-binding feedback on fundability.
• Apply before you start. File via the Förderzentrale Deutschland portal, to VDI/VDE (single projects, networks, feasibility) or AiF Projekt GmbH (cooperation), before any work begins.
• Receipt confirmation. From this point, project commitments are safe.
• Assessment (~3 months). The agency judges innovation level, technical risk, market prospects, team and completeness; clarification requests are deadline-bound.
• Decision and start. On approval (Zuwendungsbescheid) the project may begin.
• Execution and reporting. Keep daily, contemporaneous time records signed monthly; request payment roughly quarterly; a 10 percent retention is released after the final report (Verwendungsnachweis). Plan three to six months from kick-off to a decision.

11. Common mistakes

The errors that most often reduce or forfeit a grant.

• Starting the project, or signing binding contracts, before the application is received, which can forfeit the entire grant.
• Choosing a single project when a cooperation would pay a higher rate and add a research partner funded at up to 100 percent.
• Reconstructed rather than daily, contemporaneous time sheets, a classic audit failure.
• Calling routine development R&D when there is no genuine technical risk beyond the state of the art.
• Forgetting the EUR 150,000 salary ceiling, or budgeting above ~10.5 person-months per person per year.
• Subcontracting above 35 percent of personnel costs, which is simply lost from the calculation.
• Expecting ZIM money for a foreign partner, who must fund themselves nationally.
• A weak exploitation strategy, or applying as a pre-revenue start-up with no means to finance the own share.

12. More questions

Quick answers to the questions we hear most often.

Is the grant taxable? ZIM is not subject to VAT but is taxable income for corporate or income-tax purposes; your project expenses remain deductible. This is general information, not tax advice.

How long can a project run? Typically 6 to 36 months; feasibility studies up to 12 months.

When is the money paid? In arrears, on request, in roughly quarterly intervals against proof of progress, with a 10 percent retention released after the final report.

Does software qualify? Yes, on the same terms as any field, provided it is genuine R&D with real technical risk; routine work such as setting up a database does not.

Can we combine ZIM with the Forschungszulage? Often yes, provided the same costs are not funded twice, which lets companies stack a cash grant and a tax credit across a well-structured project.

See the full program page: ZIM