Requirements for the Forschungszulage

TL;DR – Summary

Process Overview

1Company: Tax-liable in Germany & no company in difficulty
2Project: R&D criteria met (Novel, Uncertain)
3Period: Project start after 01.01.2020

The Forschungszulage is open to all tax-liable companies in Germany — regardless of size or industry.

Many companies underestimate their funding potential: what is internally referred to as “product development”, “process optimisation”, or “digitalisation” often meets the criteria for Research and Development (R&D). It's worth taking a closer look — even if you don't see yourself as a traditional research company. Most start-ups and SMEs carry out this kind of development on a daily basis — often without knowing they can receive funding for it.

Below you'll find a short questionnaire to help you quickly check whether you qualify for the Forschungszulage. Further down, you'll find detailed information on the requirements, the application process, and everything else you need to know.

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1. Company & Status

To receive the Forschungszulage, certain formal requirements regarding the company must be met.

Is my company eligible?

Here you'll find a compact overview of the requirements for the Forschungszulage. The Forschungszulage is a key funding instrument for state-supported research in Germany, offering a wide range of funding opportunities. It targets all tax-liable companies, regardless of size, legal form, or industry — including large corporations, mid-sized companies, start-ups (even in loss phases), and companies that fall under the SME definition.

All companies that are tax-liable in Germany are entitled to apply, provided they are not exempt from taxation. Universities and other research institutions are not eligible under the Forschungszulagengesetz.

Legal Form

The Forschungszulage can be applied for by the following taxpayers:

Companies of any legal form (GmbH, AG, KG, OHG, etc.)
Sole traders
Freelancers
Agricultural and forestry businesses
Non-profit organisations (e.g. associations, foundations), provided they carry out commercial activities.

Key Basic Requirements

The following criteria must be met to be eligible:

Tax liability: The company must be fully or partially tax-liable in Germany.
Not a company in difficulty: The applicant must not be a “company in difficulty” under EU state aid law at the time of application.
No pure consultancy: The funded project must involve its own R&D activities.
No insolvency: The company must not be in insolvency proceedings.
No outstanding recovery order: There must be no outstanding recovery order for EU state aid.

Companies in Difficulty

An important negative requirement is that the applicant must not be a “company in difficulty” (CiD). This is an EU state aid definition. Companies meeting these criteria are generally excluded from funding.

Exceptions: There are certain exceptions, particularly for young SMEs (less than 5 years old), which are often not classified as companies in difficulty despite losses.

Find out whether your company qualifies as a company in difficulty.

Eligible R&D Activities

Not every project is eligible. The project must fall into one of three OECD categories (Frascati Manual).

Basic research: Work to acquire new scientific knowledge without any obvious direct practical application.
Industrial research (applied research): Systematic research to acquire new knowledge aimed at developing specific applications or solutions.
Experimental development: Using existing scientific knowledge to develop new or significantly improved materials, devices, products, processes, or services.

Activities must meet the criteria of novelty, creative character, uncertainty, systematic approach, and transferability/reproducibility. The key questions are:

Novelty: Is the goal to gain new knowledge or develop new/improved products or processes?
Uncertainty: Are there technical risks or uncertainties in the implementation?
Systematic approach: Is the project carried out in a planned and documented manner?

✓Checklist: Research and Development

Activities qualify as R&D if they aim at new developments or significant improvements to products, processes, or services whose functionalities, parameters, or characteristics clearly surpass previous products, processes, or services.

An activity can be considered R&D if its completion leads to scientific or technical progress, or resolves a scientific uncertainty.

Examples of eligible activities:

New services enabled by digitalisation
New developments in financial or actuarial methods
Development or significant improvement of software components
Intelligent and self-learning design of industrial and manufacturing processes
New, more efficient algorithms based on new technologies and scientific findings

✗Checklist: Not Research and Development

Use of already known products, processes, or approaches
Recurring and routine changes to existing products
Development of management systems based on business concepts
Administrative and legal activities for intellectual property rights
Pure administrative tasks
Feasibility studies
Optimisation in production (after the prototype phase)
Certification and approval activities
Work to achieve market readiness
Market launch activities
Supporting activities such as transport, storage, maintenance, etc.

Eligible Expenditures

The following expenditures can be taken into account when calculating the Forschungszulage (as of March 2024, for details see Changes 2024 and 2026):

Wage costs for employees working on eligible R&D projects
Own work by sole traders (€70 per working hour, max. 40 hours per week)
Own work by co-entrepreneurs (€70 per working hour, max. 40 hours per week)
Contract research (70% of expenditures for contracted R&D activities, with a 25%/35% funding rate applied)
Depreciation on depreciable movable fixed assets directly related to the project

The exact calculation of eligible expenditures is explained in the Calculation section.

European Economic Area

For research activities, the employee or contractor must be based in a member state of the European Union or another state of the European Economic Area (EEA). Additionally, the state must provide administrative assistance in accordance with the EU Mutual Assistance Act to the extent necessary to verify eligibility requirements.

The European Economic Area (EEA) comprises the following 30 countries:

Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden

Iceland, Liechtenstein, and Norway are the only countries that are members of the EEA but not the EU.

Application Deadline

Costs for R&D activities can be claimed within a 4-year period. The decisive factor is the date the application is submitted to the Certification Office for Forschungszulage (BSFZ).

Deadline
To claim costs from 2022, the application must be submitted to the BSFZ by the end of 2026. Costs from 2021 have already expired. If the application was submitted in the BSFZ portal on time, the deadline is considered met.

Many companies are uncertain about the exact deadlines. The decisive factor for meeting the deadline is the date the application is received by the BSFZ.

Proving Eligibility

To receive the Forschungszulage, the requirements must be demonstrated in a two-step process.

1. Content Review (Certification)

Whether your project meets the content requirements (R&D criteria) is assessed by the Certification Office for Forschungszulage (BSFZ). If approved, it issues a certificate that is binding for the tax office.

Learn exactly how the process works under Application Process.

2. Financial Review (Tax Office)

Whether the costs are eligible and the tax requirements are met is reviewed by the tax office. The actual expenditures (wage costs, contract research) are claimed here.

Find out exactly which costs are eligible under Calculation.