Germany's research allowance (Forschungszulage) in 2026: who qualifies and how to claim

Germany’s research allowance (Forschungszulage) is a tax incentive for research and development: the state refunds 25 % of eligible R&D costs, and small and medium-sized enterprises (SMEs) can claim 35 %. For costs incurred from 2026, the cost base is capped at 12 million euros per financial year, so the allowance can reach 3 million euros, or 4.2 million euros for SMEs. Unlike most grant programmes, there are no calls, no deadlines within the year and no budget that can run out: if you meet the conditions, you are legally entitled to it.

Who can claim

Under Section 1 of the Research Allowance Act (Forschungszulagengesetz, FZulG), any taxpayer under German income or corporate tax law can claim, provided they earn business income (agriculture and forestry, trade or business, or self-employment) and are not tax-exempt. For partnerships, the partnership itself is the claimant.

For international founders and companies, this has some practical consequences:

• Company size, sector and legal form do not matter. Large groups qualify as well.
• Profit is not required. Loss-making start-ups receive the allowance as a cash payment.
• The German entity must be taxable in Germany. Group structures matter because the annual cap is shared across affiliated companies.
• Basic research, industrial research and experimental development qualify. Whether a project counts as R&D is decided by the certification office (Bescheinigungsstelle Forschungszulage, BSFZ).

Rates and caps in 2026

SME status follows the EU definition, which counts linked and partner enterprises; see our guide to the EU SME definition. In addition, Section 4 (3) FZulG currently limits the total state aid for a single R&D project to 15 million euros per company.

What counts as eligible cost

1. Staff costs for employees working on eligible R&D projects (wages subject to payroll tax plus employer contributions to social security).
2. Owner’s own work for sole traders and partners at 100 euros per hour. This element is treated as de minimis aid under EU state aid rules.
3. Contract research: 70 % of the fee paid to a contractor based in the EU or EEA.
4. Depreciation of certain movable assets required for the project (since 2024).
5. Overhead flat rate of 20 % for projects started after 31 December 2025, with no need to document overheads individually.

The wording of the law calculates the 20 % on the eligible costs under Section 3 (1), (2), (3), (3a) and (4) FZulG. How the tax authorities apply this in individual cases, for example to contract research, is something to confirm with your tax adviser before you file.

Worked example

Round numbers, for illustration only: an SME starts a new development project in 2026 and pays 500,000 euros of eligible staff costs in the financial year.

You can run your own figures in the research allowance calculator. The result is an estimate; the tax office’s notice is what counts.

How to claim: two steps

1. Certificate from the BSFZ. You describe the project in the BSFZ online portal (in German). The office checks whether it is R&D within the meaning of the Act and decides within three months of receipt at the latest. The result is also sent to the tax authorities. See our guide to the BSFZ certificate.
2. Claim with the tax office. After the financial year ends, you file the claim with the actual costs via ELSTER, the German online tax portal. The tax office sets the allowance in a formal notice and credits it at the next tax assessment; any excess is paid out.

The claim can generally be filed up to four years after the end of the year in which the costs were incurred.

Common pitfalls

• Vague project description. The BSFZ decides only on what is in the form. Novelty, technical uncertainty and a planned approach must be clear.
• No time records. The tax office may ask for evidence of R&D hours. Recording time per project from day one saves effort later.
• Double funding. Costs already covered by a grant cannot be claimed again.
• Ignoring the group. The cap and SME status depend on the whole group of companies.

How it fits with other funding

The research allowance is particularly useful when grant programmes are unavailable, for example during the temporary application freeze in the ZIM programme. It can be combined with loans and other programmes as long as costs are not funded twice; our guide on loans vs. grants explains the differences. If you want support with the claim, the research allowance category lists specialised advisers.

Sources

• Research Allowance Act (FZulG)
• Certification office BSFZ
• Federal Ministry of Finance: Forschungszulage
• Federal funding database: Forschungszulage

This guide does not replace tax or legal advice; the Act and the notice from the tax office are binding.