The German Government supports companies with an incentive to promote research and development (“R&D”) activities. 25% of qualifying expenditure, up to €1 million, can be claimed via the R&D Tax Incentives Act (“FZulG”)
The R&D Tax Incentive
CAN I CLAIM
25% of the qualifying expenditure, up to a maximum of €1 million, can be granted as a tax incentive per financial year.
The incentive is offset against the company’s tax liability. Any portion of the incentive that exceeds the company’s tax liability is paid out as a refund.
WHAT IS FUNDED
Your organisation’s eligible R&D expenditure is limited to €4 million per year, and includes:
- Personnel costs of employees involved in R&D activities;
- 60% of the fees paid in the case of contract research / outsourced research; and
- Own work carried out by a sole proprietor or co-entrepreneur (with limitations).
The incentive can be applied for retrospectively to 1 January 2020 and be claimed over multiple years.
WHERE MUST I
R&D projects must be carried out by companies within Germany. In the case of outsourcing of R&D activities, contractors may be based either in Germany, the EU or the EEA.
WHO IS FUNDED
All German taxpaying organisations, regardless of size or industry.
This incentive is jointly administered by the Certification Body for the Research Allowance (BSFZ) and the local tax offices (Finanzamt) who oversee the eligibility of the R&D activities and expenditure respectively.