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BSFZ: Role, Certification & Strategies for the Research Allowance
BSFZ explained clearly: learn about its role, the certification process, assessment criteria, funding rates, and practical tips for applications, strategy, and the BSFZ seal.
The BSFZ (Certification Body for the Research Allowance) is a central pillar of Germany’s research funding system for innovative companies. As the official assessment body, it determines whether research and development (R&D) projects are eligible under the Research Allowance Act and therefore qualify for the tax-based research allowance. A positive certification from the BSFZ is a prerequisite for receiving this significant tax relief, which can refund companies up to 35% of their R&D expenses.
What is the BSFZ and what role does it play in research funding?
The Certification Body for the Research Allowance (BSFZ) was established under the responsibility of the Federal Ministry of Education and Research (BMBF) and is operated by a consortium consisting of VDI Technologiezentrum GmbH, AiF Projekt GmbH, and DLR Projektträger. With locations in Bonn, Berlin, Düsseldorf, and Dresden, it acts as the central evaluation authority for all R&D projects seeking to claim the tax-based research allowance.
The BSFZ systematically examines whether submitted projects meet the statutory criteria for eligible research and development activities. These include basic research, industrial research, and experimental development. Three core criteria are decisive for a positive assessment: the novelty of the planned work, the presence of a technical or scientific risk, and a planned and systematic approach.
The BSFZ plays a crucial role in Germany’s innovation system. It ensures that public funding is directed toward genuine research and development rather than routine activities or already established processes. At the same time, it provides companies with legal certainty and a clear, transparent benchmark for evaluating their R&D activities.
The two-stage application process: from BSFZ certification to the research allowance
The procedure for obtaining the tax-based research allowance is deliberately designed as a two-stage process to ensure a technically sound evaluation of R&D projects. In the first stage, the company submits an application to the BSFZ for certification of the project’s eligibility. The BSFZ assesses exclusively the content quality and scientific-technical substance of the proposed project.
After receiving a positive certification from the BSFZ, the company can proceed to the second stage and submit the actual application for the research allowance to the competent tax office. The tax office then reviews the formal and tax-related aspects, while the substantive technical assessment has already been completed through the BSFZ certification. This division of responsibilities ensures both technical expertise in evaluation and efficient processing within the tax system.
As a rule, the BSFZ transmits its positive certifications directly to the responsible tax office, reducing the administrative burden for companies. The BSFZ’s basic assessment notice is legally binding for the tax office and therefore provides planning certainty for applicants.
Assessment criteria and evaluation standards of the BSFZ
The BSFZ applies strict but transparent criteria in its assessments. The key question is whether the planned activities genuinely qualify as research and development within the meaning of the law. Basic research aims to expand general knowledge, industrial research focuses on developing new products, processes, or services, and experimental development targets the practical application of research results.
Particular attention is paid to the criterion of novelty. The BSFZ examines whether the planned work goes beyond the current state of the art and generates new knowledge or applications. Pure adaptations of existing technologies or standard development work do not qualify for funding. At the same time, there must be a genuine technical or scientific uncertainty, meaning that the outcome is not predetermined from the outset.
The third core criterion concerns the planned and systematic nature of the project. The BSFZ expects a structured approach with clear objectives, defined work packages, and traceable milestones. Accidental discoveries or unsystematic experimentation do not meet these requirements.
BSFZ research allowance: financial benefits and funding rates
The tax-based research allowance, for which BSFZ certification is mandatory, offers substantial financial incentives for R&D-active companies. The standard funding rate is 25% of eligible expenses, and 35% for small and medium-sized enterprises (SMEs). These allowances are paid out as tax refunds and can therefore improve liquidity even for companies with low tax liabilities.
The maximum funding amounts are tiered: general companies can receive up to €2.5 million per year, while SMEs can receive up to €3.5 million. These caps apply per company and per year, not per project, which is particularly relevant for research-intensive businesses.
Eligible costs include all direct personnel expenses for R&D activities, contract research with external service providers, material costs, and proportionate overheads. Excluded are administrative tasks, sales activities, or the mere market launch of already developed products. Clearly distinguishing between these cost categories is essential for a successful application.
The Research Allowance as a Strategic Instrument of Innovation Financing
Enabled by BSFZ certifications, the research allowance has become a central pillar of Germany’s innovation funding landscape. Unlike project-based funding programs such as ZIM, it is not subject to quotas and is generally available to all tax-resident companies that conduct genuine R&D. This creates planning certainty and enables a long-term financing strategy for innovation projects.
The research allowance offers particularly attractive advantages for start-ups and technology-oriented SMEs. It is non-repayable, does not require co-financing, and can be paid out as a refund even in cases of low tax liability. This makes it an ideal financing instrument for early stages of company development, when significant profits are often not yet generated.
The combination of different funding instruments is explicitly permitted. Companies can benefit simultaneously from the research allowance, ZIM funding, and other programs, provided the respective rules are complied with. This multiple funding approach can significantly reduce the financing gap between equity capital and market entry.
Research funding in Germany: overview and strategic classification
Germany has a multifaceted research funding system in which BSFZ-certified research allowances play a key role. In addition to indirect tax-based funding, there are direct funding programs such as the Central Innovation Programme for SMEs (ZIM), EU programs, and topic-specific initiatives from federal ministries.
The strategic importance of the research allowance lies in its technology- and industry-neutral design. While many funding programs focus on specific priorities or favor certain technology fields, the research allowance is generally open to all areas of R&D. This promotes a broad innovation base and prevents one-sided steering of private research activities.
International comparisons show that Germany has taken an important step toward strengthening its innovative capacity with the introduction of the research allowance. Many leading industrial nations have relied on similar tax incentive systems for years. The German approach stands out for its solid institutional anchoring via the BSFZ and its clear, transparent evaluation criteria.
The BSFZ seal: making innovation competence visible
An additional benefit of BSFZ certification is the authorization to use the BSFZ seal. This official quality mark is available to companies whose R&D activities have been positively certified by the BSFZ at least once. The seal serves as a credible proof of the company’s innovation capability in external communications.
There are two variants of the BSFZ seal: the red seal for companies with in-house R&D projects, and the orange seal for full contract research. This differentiation allows companies to transparently communicate their specific R&D strategy. The seal can be used in marketing materials, on company websites, and in business documents.
The significance of the BSFZ seal goes beyond mere external visibility. It can serve as an objective proof of innovation capability in customer acquisition, investor discussions, and partnership negotiations. Particularly in B2B sectors, where technical competence is a decisive factor, the seal provides additional credibility and trust.
Practical tips for a successful BSFZ application
A successful application to the BSFZ requires careful preparation and a strategic approach. The most important success factor is a clear presentation of the planned R&D activities and their scientific and technical challenges. Companies should explicitly describe what new knowledge they aim to gain and which technical risks are involved.
Clearly distinguishing the project from routine development and already known processes is especially critical. Applicants should research the current state of the art and precisely explain how their project goes beyond it. A superficial or incomplete presentation of these aspects often leads to rejection.
When structuring the project, a clear division into work packages with defined objectives and success criteria is recommended. The BSFZ evaluates it positively when companies consider alternative solution approaches and transparently address potential risks. A realistic timeline and adequate allocation of resources further underscore the credibility of the project.
Avoiding common mistakes in BSFZ applications
Many BSFZ rejections result from avoidable mistakes in the application process. One of the most frequent weaknesses is an insufficient distinction between R&D and other business activities. Pure adaptations of existing products, quality improvements without technical innovation, or standard implementations do not qualify for funding.
Another critical issue is the inadequate presentation of scientific and technical risk. Projects whose outcomes are predetermined or that merely apply known methods do not meet the funding criteria. Applicants must convincingly demonstrate that genuine technical uncertainties exist and that innovative solution approaches are required.
Formal deficiencies—such as incomplete documentation, contradictory information, or missing evidence, can also lead to rejection. Thorough quality control before submission is therefore essential. Particularly important is the correct delineation of eligible personnel costs and their transparent allocation to R&D activities.
Conclusion: BSFZ as a key to innovation financing
The BSFZ plays a central role in Germany’s innovation funding system. As a technically competent evaluation body, it ensures that tax-based research allowances are directed toward genuine R&D activities, thereby strengthening the innovative capacity of the German economy. Its transparent assessment criteria and established procedures provide planning certainty for research-driven companies.
For start-ups and SMEs, the BSFZ-certified research allowance offers especially attractive financing opportunities. The combination of high funding rates, predictable payouts, and the possibility of combining multiple funding instruments makes it an ideal component of innovation financing. The additional BSFZ seal further enhances external visibility and documents innovation competence to customers and partners.
To fully realize the potential of the research allowance, early professional advice is recommended. Felsaris supports you in the strategic planning of your R&D projects and the successful application for BSFZ certifications. Contact us for a personal consultation at info@felsaris.com or +49 171 9466327.
Frequently Asked Questions about the BSFZ
What does a BSFZ application cost?
Submitting an application to the BSFZ itself is free of charge. Companies only pay an administrative fee if the certification is positive. The amount depends on the claimed expenses and ranges between €150 and €16,000.
How long does the BSFZ process take?
Processing usually takes three to six months from receipt of complete documentation. For more complex projects, the review period may be longer. Early submission is therefore recommended.
Can start-ups apply for BSFZ certification?
Yes. BSFZ certification is generally available to all companies subject to taxation in Germany, regardless of size, age, or legal form. Start-ups benefit in particular from the attractive SME funding rates.
What happens if the BSFZ issues a negative decision?
In the event of rejection, an objection can be filed within one month. Alternatively, companies can revise their R&D activities and submit a new application. A professional analysis of the reasons for rejection is helpful in this context.
Can the research allowance be combined with other funding programs?
Yes. In principle, the research allowance can be combined with other funding instruments, provided that the same costs are not funded twice. Combining it with ZIM funding or EU programs is therefore possible and strategically sensible.