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      Since 1 January 2020, the federal government has been supporting companies that carry out innovative and risky research and development (R&D) in Germany through the Act on Tax Incentives for Research and Development (Forschungszulagengesetz, FZulG). This funding covers all areas of technology and is available to companies of all sizes.

      Since the law came into force, the research allowance has already been optimised several times and currently supports a large number of project-related costs, also in combination. These include:

      • R&E personnel costs (including social security expenses)
      • Costs for contract research with contractors within the European Economic Area
      • Project-related depreciation for projects starting after 27 March 2024
      • Own work by self-employed persons or working owners of partnerships

      These eligible costs in their entirety form the assessment basis for the research allowance.

      Continuous improvement of the research allowance

      When the law was introduced, the maximum assessment basis per year for a group of companies was two million euros, subsidised with an allowance of 25 percent. This upper limit was raised to four million euros in the same year.

      With the Growth Opportunities Act 2024, the limit for expenses after 27 March 2024 rose to ten million euros per year. The law also introduced the inclusion of depreciation and an increased subsidy rate of 35 per cent for small and medium-sized enterprises.

      Investment programme strengthens research funding

      The immediate tax investment programme, which was approved by the Federal Council on 11 July 2025, further improves the conditions of the research allowance:

      • Increase in the maximum assessment basis for a group of companies to twelve million euros per year for expenses incurred after 31 December 2025.
      • Flat-rate consideration of additional overheads and other operating costs through a 20 percent surcharge on further eligible expenses - valid for projects starting after 31 December 2025.
      • Faster depreciation options through the so-called "investment booster", which can lead to higher depreciation in the project period and could therefore result in an increased research allowance.
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      Your path to research funding – roadmap

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      Your path to the research allowance

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      Application to the Certification Centre for Research Grants (BSFZ)

      Projects must first be submitted to the BSFZ, which checks whether they are eligible for funding in principle. The result of this assessment is a basic decision.

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      Application to the tax office

      Applications for research allowances can be submitted to the tax office for completed financial years on the basis of the basic decision. These applications only relate to the respective financial year, but should directly include all projects that were carried out in that year.

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      Offsetting the allowance notice

      The allowance notice issued by the tax office is then offset against the subsequent initial assessments or advance payments.

      Secure a tax-free research allowance

      Law on research funding: Find out what you need to do to receive your research allowance

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