Since March 28, 2024, the annual assessment base has been increased to up to EUR 10 million. This results in a maximum R&D tax allowance of EUR 2.5 million at 25% (non-SMEs) or EUR 3.5 million for SMEs at 35% (including the SME bonus of +10 percentage points).From January 1, 2026, the assessment base will increase to EUR 12 million. This allows a maximum R&D tax allowance per fiscal year of EUR 3.0 million (25%) or EUR 4.2 million (35% for SMEs).

Eligible costs include, among others, R&D personnel costs (gross wages and salaries), 70% of contract research costs incurred within the EU/EEA, and depreciation of certain movable assets, provided they are required for the R&D project.From 2026 onwards, an additional flat-rate allowance for overhead and operating costs of 20% of the other eligible expenses can be claimed, provided the project starts after December 31, 2025.

Own services are calculated using an hourly flat rate. From 2026, this rate amounts to EUR 100 per hour, limited to a maximum of 40 working hours per week.This applies to activities started or performed after December 31, 2025, even if the R&D project itself began earlier.

The application to the tax office is submitted on a fiscal-year basis and only after the end of the respective fiscal year. For multi-year R&D projects, an application must therefore be submitted separately for each fiscal year.The BSFZ certificate, however, does not need to be applied for annually. It is valid for the fiscal years specified in the application, provided that the underlying facts and circumstances do not change.

The application to the tax office can be submitted up to four years after the end of the respective fiscal year.Important: Even though the tax office application may be filed later, the application for the BSFZ certificate must also be submitted within this four-year period. Otherwise, claiming the R&D tax allowance for that fiscal year is effectively excluded.

Yes. In principle, the R&D tax allowance is industry-neutral and therefore also available to companies in the defense industry, provided that the project qualifies as eligible research and development.Decisive factors are the substantive R&D criteria and compliance with state aid regulations, including the exclusion of companies in difficulty. In addition, despite potentially high confidentiality requirements, the project description must remain technically assessable.

The R&D tax allowance is not paid out immediately after approval. Instead, it is fully offset against the next initial assessment of income tax or corporate income tax.Any surplus amount is refunded as an income tax or corporate tax refund, meaning the allowance can be used regardless of the company’s profit situation.From an economic perspective, the R&D tax allowance is a subsidy integrated into the tax procedure. Regarding the question of whether it is tax-free, the legal situation is not conclusively and legally certain according to the German Federal Court of Auditors. The Court assumes that the R&D tax allowance may generally be taxable as operating income.For the specific income tax treatment, a tax advisor should therefore determine the correct classification on a case-by-case basis.