_guide to the r&d tax incentive (forschungszulage) in germany
Germany has implemented comprehensive improvements as of 2024 to its "Forschungszulage" program, which is offered to support innovative projects. This incentive allows companies to finance their research and development costs directly through tax credits or cash refunds.
1. Project Eligibility Criteria For a project to receive support, it must mandatorily include three basic elements:
Risk Element: The project outcome must be technically or scientifically not fully predictable.
Innovation and Originality: It must be a study that differs from the current state and produces a new value or solution.
Plannability: The project is expected to have a specific budget, timeline, and procedure.
2. Who Can Apply? Company size or partnership structure does not constitute a restriction for benefiting from the incentive:
Tax Registration: All legal and natural persons (including sole proprietorships) who are taxpayers in Germany can apply.
Financial Status: It is not required for the company to be currently profitable or to have exceeded a certain turnover threshold; it is sufficient for the project to have a commercial purpose.
Company Structure: When the company was established or the nationality of the partners is not a criterion.
3. Current Incentive Rates and Limits With the legal changes in 2024, the maximum annual supported cost limit and the advantages offered to SMEs have been increased:
Total Cost Limit: €12,000,000
Maximum Support Amount: €4,200,000
SME Support Rate: 35%
Outsourced Services Support: (conducting R&D through a contractual relationship) 24.5%
Payment Method: The incentive amount is first offset against taxes to be paid. If the company's tax debt is less than the incentive or if the company is making a loss, the amount is paid to the company in cash.
4. Frequently Asked Questions
Can the same employee participate in more than one project? Yes. An employee's time can be divided (e.g., 50%-50%) to receive support from different funds for different projects.
Can one work with freelancers? Yes, but the incentive rates for employed personnel are higher and more advantageous financially.
Can a guarantee be obtained before investment? For the official process, the company structure must first be established in Germany. However, the chance of receiving approval can be evaluated in advance through preliminary analyses.
5. Clayston Consultancy Services Clayston offers professional support for your investment and R&D processes in Germany:
Analysis: The suitability of your projects is examined by engineers and experts.
Other Services: Full-scope support is provided in areas such as company formation, tax and accounting, market research, personnel recruitment, and immigration services.
Contact: dagdeviren@clayston.com