Forschungszulage for Startups and SMEs: The Complete Guide for 2026

Dr Anne Küsters, September 8th 2026

Many companies conduct research and development without explicitly calling it R&D. They test new technical approaches, address uncertainties in software or hardware, or develop production processes whose success is not certain at the outset. These are precisely the types of projects that may qualify for the German R&D tax incentive, known as the Forschungszulage.

The Forschungszulage is open to all industries, is not tied to specific funding calls or application rounds, and is generally available regardless of a company’s profitability. A dedicated research department is not required. What matters is whether a clearly defined project meets the statutory R&D criteria and whether the associated expenses are documented transparently.

What is the Forschungszulage?

The Forschungszulage is a statutory tax incentive for eligible research and development projects in Germany. It complements traditional grant programmes. Instead of competing for a limited funding budget, a company first demonstrates to the BSFZ that its project qualifies as R&D and then applies for the allowance through the competent tax office.

The BSFZ assesses whether the project qualifies as eligible research and development in principle. In the second stage, the tax office reviews the eligible expenses and determines the amount of the Forschungszulage. This distinction is essential: a positive BSFZ certificate does not, by itself, determine the final amount paid to the company.

Who can apply for the Forschungszulage?

In principle, taxable companies and self-employed individuals earning the types of business income specified in the German Research Allowance Act may be eligible, provided they are not tax-exempt. This includes startups, SMEs, larger companies, sole proprietorships and eligible partnerships. The company’s industry, technology and legal form are not decisive.

For affiliated companies, the annual maximum assessment base applies to the group as a whole. State aid requirements must also be observed. Eligibility should therefore always be assessed for the specific company and financial year.

Why is the Forschungszulage particularly relevant for startups and SMEs?

For innovative startups and SMEs, product and technology development is often one of the largest cost items. The Forschungszulage can cover personnel costs, certain owner-performed R&D activities, contract research, qualifying depreciable assets and, for new projects, a flat-rate allowance for overhead and operating costs.

The funding is non-dilutive: companies do not give up any additional equity in return. Losses do not exclude a company from claiming the allowance. Venture capital and the Forschungszulage therefore complement each other. The allowance can strengthen the non-dilutive part of the funding mix, while equity financing supports growth, market entry and scaling.

Which R&D projects are eligible?

Eligible projects must qualify as basic research, industrial research or experimental development. Experimental development is particularly relevant for many startups and SMEs.

Basic Research

Basic research aims to generate new knowledge about fundamental principles without necessarily focusing on a specific commercial application. It may be relevant to research-driven DeepTech projects, for example.

Industrial Research

Industrial research generates new knowledge and capabilities for developing new or significantly improved products, processes or services. It may include the development of necessary components, laboratory environments or validation models.

Expertimental Development

Experimental development uses existing knowledge to create new or significantly improved products, processes or services. This may include prototypes, pilot systems, testing and validation. Market launch activities, routine modifications and the stabilisation of a largely completed product no longer qualify as eligible R&D.

R&D eligibility check: The BSFZ’s three core criteria

To qualify for the Forschungszulage, a project must meet three key criteria: novelty, technical or scientific uncertainty, and a systematic approach:

Novelty concerns the technical or scientific advancement the project aims to achieve compared with the available state of knowledge and technology. A standard product improvement or the application of an established solution is generally not sufficient.

The criterion of technical or scientific uncertainty is met when the solution cannot be readily derived at the beginning of the project. The project must involve technical or scientific challenges that could cause individual approaches, or even the project as a whole, to fail.

A systematic approach demonstrates that the project is carried out according to a structured plan. This includes clearly defined work packages, appropriate methods and tests, and transparent milestones and decision points leading towards the intended result.

A new feature, a customer-specific modification or the use of artificial intelligence is not sufficient on its own. Eligibility arises from the underlying technical or scientific challenge—not from marketing claims about a product’s novelty.

Which costs can be covered by the Forschungszulage?

Personnel costs

Wages and certain employer contributions may qualify to the extent that employees work directly on an eligible R&D project. If an employee spends only part of their working time on R&D, that share must be documented. Remuneration paid to shareholders may also be relevant where it is based on an employment agreement subject to German wage tax.

Owner-performed R&D activities

Since 2026, sole proprietors may claim EUR 100 for each documented hour spent on eligible R&D activities, subject to a maximum of 40 hours per week. Special requirements apply to agreed remuneration for work performed by partners in an eligible partnership.

Contract research

For R&D commissioned after 27 March 2024, 70% of the contract value may be included in the eligible expense base. The contractor must have its place of management in the European Union or in an EEA country covered by the legislation.

Not every external development service qualifies as contract research. The nature of the work, the allocation of R&D risk, the contractual structure and the distinction from standard services are decisive. Subcontracts awarded by the contractor are not eligible under the legislation.

Qualifying investments and assets

Depreciation on qualifying movable depreciable assets may be taken into account if the assets were acquired or produced after 27 March 2024, are necessary for the project and are used exclusively for the company’s own eligible R&D activities. The full acquisition cost is not automatically eligible.

Overhead and operating costs for new projects

For R&D projects that began after 31 December 2025, additional overhead and operating costs are recognised at a flat rate of 20% of the project’s other eligible expenses for the relevant financial year. The actual start date of the project is therefore decisive for whether this new provision applies.

What changed for the Forschungszulage in 2026?

Since 1 January 2026, the maximum annual assessment base has increased from EUR 10 million to EUR 12 million. The new limit applies to eligible expenses incurred after 31 December 2025.

At the same time, the hourly rate for certain owner-performed R&D activities increased from EUR 70 to EUR 100. Projects beginning after 31 December 2025 may also benefit from the new 20% flat-rate allowance for additional overhead and operating costs. Improved depreciation rules may further increase the eligible depreciation of qualifying assets.

How much Forschungszulage can a company recieve?

The standard Forschungszulage rate is 25% of the assessment base. Companies that meet the European SME definition at the end of the relevant financial year may apply for an additional ten percentage points, increasing the rate to 35%.

Based on the maximum annual assessment base of EUR 12 million, companies may receive up to EUR 3 million per year. Qualifying SMEs may receive up to EUR 4.2 million. In addition, the currently published legislation provides for a state aid ceiling of EUR 15 million per company and R&D project.

A simplified example: An SME incurs EUR 500,000 in eligible personnel expenses for an R&D project launched in 2026. At a funding rate of 35%, this initially results in a Forschungszulage of EUR 175,000. The new 20% allowance for overhead and operating costs adds EUR 100,000 to the assessment base and therefore increases the Forschungszulage by a further EUR 35,000. The company may consequently receive a total Forschungszulage of EUR 210,000, provided all eligibility requirements are met.

The calculation differs for contract research because only 70% of the contract value is included in the eligible expense base.

The process: Applying for the Forschungszulage in four steps

1. Identify and define the R&D Project

The first step is to develop a clear and technically substantiated description of the project. The company must explain how the project meets the criteria of novelty, technical or scientific uncertainty, and a systematic approach.

At the same time, the relevant activities and work packages must be defined, and the project’s timeline and financial framework, including its estimated total costs, must be established.

2. Submit the BSFZ Application

The completed application is submitted digitally to the Bescheinigungsstelle Forschungszulage, or BSFZ—the German Research Allowance Certification Office.

In addition to the project description, the application contains information about the company, project duration, participating employees and, where applicable, cooperation partners or contractors. If information is missing or questions remain unresolved, the BSFZ may request further explanations or supporting documents.

3. Obtain the BSFZ Certificate

The BSFZ assesses whether the project meets the statutory criteria for research and development. A positive certificate confirms that the project qualifies as an eligible R&D project in principle.

This satisfies the technical requirement for claiming the Forschungszulage, but no payment is made at this stage. The BSFZ is responsible for the technical assessment of the project and an initial plausibility check. The tax office subsequently reviews the eligible expenses and determines the final amount of the allowance.

4. Apply for the Forschungszulage through the tax office

After the end of the relevant financial year, the company applies for the Forschungszulage electronically through ELSTER with the competent tax office. The expenses actually incurred must be calculated and documented.

For multi-year projects, a separate tax application must be submitted for each financial year. Find out more in our detailed guide: Proper Documentation for the Forschungszulage Application and Templates.

Can the Forschungszulage be claimed retrospectively?

Yes. Ongoing and completed projects may generally be eligible if they began after the relevant statutory start date and the assessment limitation period has not expired. Companies may apply for the BSFZ certificate before, during or after carrying out the project. The tax application, however, remains subject to the limitation periods set out in the German Fiscal Code.

A relevant example as of September 2026: For a company whose financial year corresponds to the calendar year, the standard four-year assessment limitation period for an entitlement arising in 2022 generally expires on 31 December 2026. Different financial years, provisions delaying the start or expiry of the limitation period, and other special circumstances may affect this deadline. Companies should therefore not automatically disregard earlier years but should have them reviewed for tax purposes without delay.

Forschungszulage for Startups without Profits

Startups that are not yet profitable or are operating at a loss can also benefit from the Forschungszulage. The approved allowance is credited when the company’s next income tax or corporate income tax assessment is issued for the first time. If this results in a balance in the company’s favour, the amount is paid out as a tax refund.

Combining the Forschungszulage with Venture Capital and other Funding

Non-dilutive funding is an important part of the financing strategy for many R&D-intensive startups. The Forschungszulage can extend a company’s runway, create additional development budgets and strengthen the non-dilutive component of its capital stack. Investors also frequently view the effective use of available funding instruments positively and may even expect startups to make use of them as part of an efficient financing strategy.

The Forschungszulage therefore combines well with venture capital and can generally also be used alongside other funding programmes or forms of state aid. However, the same expenses cannot be funded twice. A clear allocation by project, employee, period and cost category is essential.

Which mistakes can put funding potential at risk?

Problems frequently arise when a project has not been defined clearly enough. Product benefits are used in place of technical challenges, novelty is not substantiated, or market risks are confused with technical uncertainty. Other common issues include overly broad work plans, working hours reconstructed retrospectively, unclear agreements with project partners and expenses claimed more than once.

A positive BSFZ certificate should also not be confused with a payment guarantee. The certificate confirms that the project meets the R&D criteria. The tax office then reviews the expenses and the applicable tax requirements.

Do companies need an advisor or agency to apply for the Forschungszulage?

Not necessarily. Companies can handle both stages of the application process themselves. However, expert support can be valuable, particularly when several development streams need to be separated, technical content must be translated into the BSFZ’s assessment criteria, or internal and external R&D expenses must be coordinated.

This is where DnA Ventures supports companies. Together with the technical team, we identify potentially eligible projects, structure the evidence relating to novelty, uncertainty and systematic planning, and translate complex development work into a clear and verifiable project description.

We consider not only the application itself, but also personnel deployment, contract research, documentation and the connection to the company’s broader financing strategy. The objective is to create a robust basis for the application while minimising the company’s internal workload.

Assess your R&D project's eligibility together with DnA

Are you developing software, artificial intelligence, hardware, new production processes or DeepTech solutions but unsure which activities qualify for the Forschungszulage?

DnA combines technical and project expertise with a startup and financing perspective. Together, we define the R&D project, identify potentially eligible expenses and determine the next steps. Contact us to check your project’s eligibility now or schedule a call.

About DnA Ventures

From industry, for industry: DnA Ventures combines industrial and startup experience with venture capital and non-dilutive R&D financing. Anna Saari and Maite Pazmino are your contacts for an initial eligibility assessment.

Please note: This article provides general information and does not constitute tax or legal advice. Actual eligibility and the amount of funding available depend on the individual circumstances. Information correct as of September 8th, 2026.