The BSFZ certificate: getting your R&D project recognised for Germany's research allowance

The BSFZ certificate is the first of two steps towards Germany’s research allowance (Forschungszulage): the certification office (Bescheinigungsstelle Forschungszulage, BSFZ) checks whether your project qualifies as research and development (R&D) under the Research Allowance Act. The application is online, free of charge according to the BSFZ, and decided within three months of receipt at the latest. Only with this certificate can the tax office grant the allowance.

What the BSFZ does

The BSFZ acts on behalf of the Federal Ministry of Research, Technology and Space (BMFTR). It answers one question only: is the project eligible R&D? Everything about money, such as staff costs, hourly rates or contract research, is decided later by the tax office (Finanzamt).

The assessment is based on the definitions of basic research, industrial research and experimental development in the EU General Block Exemption Regulation (Regulation (EU) No 651/2014). These definitions draw on the OECD Frascati Manual, which describes R&D by five features: novel, creative, uncertain in outcome, systematic, and transferable or reproducible.

The BSFZ itself applies three criteria, and all three must be met:

Applying step by step

1. Register on the BSFZ portal. You need an ELSTER organisation certificate (ELSTER-Organisationszertifikat), the digital ID used for German tax administration. If your German entity does not have one yet, allow time to obtain it.
2. Describe the project. The online form asks for the objective, state of the art, technical challenges, work plan, timeline and staff involved. Only what is entered in the form is assessed; additional attachments are not taken into account.
3. Sign and submit. The application is signed digitally with the ELSTER organisation certificate.
4. Review. The BSFZ decides within three months at the latest. It may request further documents or carry out on-site checks.
5. Decision. If positive, you receive the certificate, which is also transmitted to the tax authorities.

You can apply before, during or after the project. Eligible projects must have started, or been commissioned, after 1 January 2020. Applying early gives you certainty before you put together the cost figures.

Typical weaknesses

The BSFZ does not publish statistics on why applications fail. Based on its criteria, these weak points come up often:

• Routine work presented as research. Adapting known solutions, standard software development or product maintenance rarely counts as novel.
• No real uncertainty. If known methods will clearly work, the technical risk is missing.
• Sales language instead of engineering. Market potential does not help. What matters is which technical problem is unsolved and why.
• No state of the art. Without a comparison to existing knowledge, novelty cannot be judged.
• Blurred scope. If several sub-projects are mixed, it is unclear which part is R&D.

If your application is rejected, you can lodge an objection (Widerspruch) electronically via the portal within one month; the BSFZ limits the reasoning to 4,000 characters per project. You can also submit new applications for other projects at any time.

Checklist for your project description

Before filling in the form, prepare these points in writing:

1. Objective in one sentence: what technical or scientific result should the project deliver?
2. State of the art: which solutions already exist and why are they not enough?
3. Technical uncertainty: which questions are open at the start, and what could make the project fail?
4. Approach: which hypotheses, experiments, prototypes or simulations are planned?
5. Work plan: work packages with timeline, staff involved and estimated person-months.
6. Boundaries: which activities are not R&D, such as production ramp-up, sales or routine testing?

Write so that an expert outside your company can follow the project without asking questions. Internal abbreviations and unexplained product names make the assessment harder.

Next step: the tax office

The certificate does not pay out anything on its own. After the financial year ends, you file a claim via ELSTER with the tax office responsible for your income or corporate tax (Section 5 FZulG), listing the certified projects and the eligible costs in enough detail for checking. The tax office then sets the allowance and credits it against your tax, paying out any excess.

Rates, caps and the new overhead flat rate are explained in our guide to the research allowance, and the research allowance calculator gives a first estimate. If you want help, see how to choose a grant consultant or browse the research allowance category.

Sources

• BSFZ: frequently asked questions
• Certification office BSFZ
• Research Allowance Act (FZulG)

This guide does not replace tax or legal advice; the Act, the certificate and the tax office’s notice are binding.