Blog
Ideas & Updates from innoscripta
Explore stories, insights, and innovations from the people building the future of R&D and digital tax technology.
Jun 30, 2025
Contract Research under the German Research Allowance (Forschungszulage)
The Research Allowance is a top funding initiative by the German government providing monetary support to companies investing in and performing R&D projects. The objective of this programme is to encourage innovation and the eligible research projects that match pre-defined criteria can obtain financial support from the government in terms of tax reduction or cash refunds.The Research Allowance has a wider eligibility criteria where companies across industries including corporations, SMEs, partnerships, sole proprietorship and early-stage start-ups can benefit. The eligibility of the project to receive allowance is decided based on the defined criteria namely, Frascati Criteria, that include elements such as newness, uncertainty in expected outcomes and structured methodology. The expenditures incurred for the purpose of salaries or wages, materials and consumables used directly in the research, depreciation of movable fixed assets and contract research (up to 70% of the total value) are categorized as the expenses based on which the allowance will be issued, and costs for routine software updates, market research and test marketing are in the list of excluded expenses.A two-step application process is followed for the research allowance, the first step is to obtain a BSFZ certificate that implies the particular project is eligible to receive funding and the second step is the application is to be sent to the tax office seeking the financial support. It calls for carefully drafting the application at each stage with all needed information and proofs to avoid rejections or delay in approvals. The applicant needs to produce documentation, particularly including a project description with proof of innovation and uncertainty in the expected results, details of timesheets and payroll, details of contract research, depreciation details of movable fixed assets used for the research purpose, and details of other funding received if any.Out of these expenses, contract research catches attention regarding its definition, how it is funded, the eligible amount, and the criteria for the application. Contract research means a research project in which the principal researcher outsources the research activity to the third party research institution. The third party research institution could be an academic institution, research institution or another company. In the year 2025, as per the recent update, up to 70% of the total expenses are allowed to claim the research allowance. The research allowance application is to be submitted by the commissioning party and not the contractor as the former is entitled to receive the financial support.Contract Research vs In house ResearchWhat is Contract Research?Contract Research takes place when the R&D project is outsourced to a third party, for example, a research institution, university or private organisation. In the case of contract research, the company (not the service provider) is eligible to apply for the research allowance.Eligibility criteria:The official contract between the parties is mandatoryThe contractor is not eligible to claim the research allowance, the commissioning party alone can apply.The contract research should meet the pre-defined criteria of an R&D project.Note: The application for the research allowance must always be submitted by the client (commissioning party) – not by the commissioned research institution (contractor). Only the client is entitled to apply for and claim state funding for the costs incurred in the context of contract research.Funding details for Contract Research as per new updates:70% of the total contract value is eligible (previously it was 60%)17.5% is the effective funding rate; it is 24.5% in the case of SMEsSample Calculations:1. Calculating the eligible amount to claim the research allowanceTotal cost - 10,000,000Percentage of eligible expenditure - 70%Eligible expenditure = 10,000,000 x 70% = 7,000,0002. Calculating the research allowance for companies with standard rate of 25%7,000,000 x 25% = 1,750,0003. Calculating the research allowance for SMEs with the rate of 35%7,000,000 x 35% = 2,450,000The effective funding rate will be 17.5% for the companies and 24.5% will be for the SMEs.The effective funding rate is derived as the following,4. For the companies with standard rate:Eligible amount x Subsidy rate/Total expenses7,000,000 x 25% / 10,000,000 = 17.5%5. For the companies with SMEs rate: 7,000,000 x 35% / 10,000,000 = 24.5%What is In-House Research?The R&D activities conducted using their own resources throughout the project are termed as internal research or in-house research. Here, 100% of the expenditure is considered while applying for the research funding and 25% is the standard funding rate, and for SMEs, it is 35%.Sample Calculations:1. Calculating the eligible amount to claim the research allowanceTotal cost - 10,000,000Percentage of eligible expenditure - 100%Eligible expenditure = 10,000,000 x 100% = 10,000,0002. Calculating the research allowance for companies with standard rate of 25%10,000,000 x 25% = 2,500,0003. Calculating the research allowance for SMEs with the rate of 35%10,000,000 x 35% = 3,500,000Overview of key differencesElementsContract ResearchIn-House ResearchEligibility70% of the total eligible R&D costs100% of the total value of the total R&D costsEffective funding rate17.5% for other companies and 24.5% for SMEs25% standard rate and 35% for SMEsIdeal forCompanies without the R&D teamCompanies with an expert R&D teamFunding received byCommissioning party (not the contractor who works on the project)The same organisationConclusionContract research is an option taken by the companies venturing into an R&D project but do not have a strong internal R&D team. The research project should meet all the pre-defined criteria to be eligible for the financial support from the government in the form of research allowance. The application process to obtain research allowance remains the same as for in-house research in the case of contract research, first to apply for the BSFZ certificate and upon receiving the certificate one should proceed to apply to the tax office seeking the monetary benefits in terms of tax reduction or cash refund.
Jun 17, 2025
Founders Plan Selective Share Purchases to Support Share Price
Munich, June 17, 2025 — The two primary innoscripta SE shareholders, Michael Hohenester (through Hohenester Beteiligungs-UG) and Alexander Meyer (through Meyer Beteiligungs-UG), have announced their intention to purchase a limited number of innoscripta SE shares through the stock exchange. The total volume is planned to be up to €12 million, with €10 million from Hohenester Beteiligungs-UG and €2 million from Meyer Beteiligungs-UG.The acquired shares are subject to existing lock-up obligations and may be sold no earlier than after the respective periods following the IPO have expired. Any subsequent sale will only be considered if there is a substantial and sustained recovery in the share price compared to the IPO placement price of €120. Attention will be paid to a market-compatible increase in the free float.This initiative is exclusively financed from the shareholders’ private funds and demonstrates their long-term confidence in innoscripta SE’s business model and prospects.
Jun 10, 2025
Cabinet draft provides for 20% flat-rate surcharge and increased funding cap for R&D tax incentive starting in 2026
On 4 June 2025, the German Federal Cabinet adopted a draft bill for an investment stimulus package. Among the proposed measures are changes to the R&D tax incentive scheme, expected to come into force in 2026:Introduction of a 20% flat-rate overhead surcharge on eligible R&D expenditures under the tax incentive,Increase in the annual funding cap from €10 million to €12 million per company.Both measures are intended to apply to R&D projects starting on or after 1 January 2026, and are currently scheduled to run until 2030. If adopted in its current form, the legislation could result in a higher average funding volume per client based on Innoscripta SE’s existing customer base. This creates a potential for additional revenue within the current business field, without requiring a broader client base. As the bill is still in draft form and must pass through both the Bundestag and Bundesrat, no final assessment of its economic impact can be made at this time. Innoscripta SE will continue to monitor the legislative process closely. About Innoscripta SEInnoscripta SE is a leading provider of cloud-based software solutions for research-related funding programs. Through its platform Clusterix, the company supports over 1,700 businesses with the application, documentation, and management of Germany’s R&D tax incentive. Innoscripta SE has been listed in the Scale segment of the Frankfurt Stock Exchange since May 2025 (Ticker: 1INN). Contact:Innoscripta SE · Arnulfstraße 60 · 80335 Munichpresse@innoscripta.com · www.innoscripta.com
Jun 05, 2025
Documents required to apply for Forschungszulage (Research Allowance)
Forschungszulage (Research Allowance) is the financial aid in the form of tax credit or cash refund given to the companies with eligible Research and Development projects. The Research Allowance Act was introduced in the year 2020 with the aim to promote innovation and give opportunities to companies across sectors to receive financial support for their R&D projects.The application process to apply for the Research Allowance is classified into two stages,Application to receive a BSFZ certificate, which states whether the project meets eligibility criteria to receive the allowanceApplication to the tax office, where the project receives financial aid from the government in the form of tax deduction or cash refund.Application for BSFZ certificateThe first step to complete for obtaining the Research Allowance is to acquire the BSFZ certificate which certifies that the project falls under the category of R&D and is eligible to receive monetary benefits.Documents required to apply for BSFZ certificateThe BSFZ application needs the applicant to produce the following,1. Detailed project description:It is mandatory to describe the projects, including all the information and the points indicating the project is from the R&D category. The project description should include,Objectives of the particular R&D projectMethodology employedUncertainty in the results or scientific challenges in the outcomeNewness in the expected result of the project2. Details of the organisation:It is required to submit all the necessary information about the organisation in the application and it involves:Legal name and official registration number of the organisationOfficial Tax IDManagement or ownership structureDetails of the line of business3. Details of timelines:The information regarding the actual timelines for the completed projects and scheduled timelines for the ongoing ones needs to be given in the project description for obtaining the BSFZ certificate. The timelines consist of,Start and end datesStages of the project and milestones achieved4. Details of human resources:The BSFZ needs the information about the number of people involved in the projects, the hours or time they've worked for the project, and the remuneration. The information should be given about,Total number of human resources and their rolesCost incurredDetails of work packages or tasks and any other equipment or infrastructure involved in the project5. Details of collaboration or contract (if any):If the R&D project is done along with another institution or if it is outsourced to another organisation under a contract, every detail regarding that needs to be presented in project details while applying for the BSFZ certificate. This is one of the key factors against which the eligibility of the project will be measured. The details involve,Name of the partners and the roles they handled in the project (e.g., research institutions, academic institutions or universities)Full information of the legal agreements and contract details to validate the eligibility6. Details of other funding (if any):The applicant must provide the details if any part of the project received funding previously, especially if from the European Union, similar to the Research Allowance. In this instance, subsidizing the same costs twice is not allowed.Note: The application with all the required information is to be submitted to the BSFZ portal online. The ELSTER certificate is needed to proceed with this application to receive the BSFZ certificate stating the eligibility of the project for the Research Allowance.Application to the Tax OfficeAfter obtaining the BSFZ certificate, the applicant needs to file an application with the tax office in order to acquire the research allowance. This application process is online and is done via ELSTER.Documents required for the application to the tax office1. Details of the company:It is required to clearly mention all the information about the company including Tax ID, details of representatives, legal form of business and headquarters.2. Details of project:This includes,BSFZ certificate numberProject titleID as issued by BSFZ3. Details of expenses:The clear and authentic information regarding the expenses incurred for the particular R&D project should be given on the basis of given elements,Human Resources expenses such as salaries or wagesDepreciation on movable fixed assets which are used for the purpose of the research projectDetails of contract research, if any, and applicant should note that only the 70% value of outsourced contract research is eligible to be considered for the research allowance4.Timesheets:The documents that show the accurate number of hours logged per person should be presented for the Research Allowance application with the tax office. The document should be GoBD compliant and it is used to verify personnel efforts for the particular project.5. Information of other funding received (if any):Any other funding received from the state or EU for the same expenses incurred should be avoided to prevent double fundingWhy rigorous documentation matters?Rigorous application is the foundation of successful Forschungszulage (Research Allowance) application in Germany. The application for the BSFZ certificate and tax office gives deep value to the clarity of information submitted, transparency, consistency and traceability of the projects' expenses related documents.1.Validation of R&D eligibility:The BSFZ certificate will be issued to those projects which match the eligibility criteria as per German definitions and EU. These are not vague statements and the project should meet the absolute criteria containingNewness (Innovation and novelty)Technical uncertainty in expected outcomesSystematic methodologiesNote: When the project fails to show its technical uncertainty in results and risk, there is a high chance that a BSFZ certificate might be denied even for an excellent research project.2. Financial validation:Once the BSFZ certificate is granted, in the second step, the tax office will verify all financial aspects of the application including,Records of payrollTimesheetsDepreciation schedulesContract research3. Restraining delays and rejection:Ambiguous documentation may cause problems such as,Delays in acquiring the BSFZ certificate or approval from the tax officeRejection of applicationA lower amount of funding received due to only partial expenses could be validated. 4. Legal obligation:Applicants mandatorily affirm that all submitted information is correct, accurate, possess documents that support the claim and no other funding has been received for the exact expenses previously.5. Consistency of information:Since the application for Research Allowance is mainly done through online portals like BSFZ and ELSTER, it is crucial to maintain uniformity of project details across all these platforms to avoid any discrepancies.
May 21, 2025
A Step-by-Step Guide to Applying for Germany’s Forschungszulage (R&D Tax Allowance)
The Forschungszulagengesetz (FZulG) is the leading Research and Development tax incentive programme in Germany, providing monetary support to companies in the innovation and research space. From an established company investing in novel experimental development to a deep-tech start-up, the Forschungszulage can be a platform to receive financial assistance and obtain cost-efficiency. The application for Forschungszulage is a two-step process, which requires the applicant to have a strong understanding of eligibility, documentation of project details and submission of application along with administrative discipline.This article educates readers on how to make a successful Forschungszulage application and gives comprehensive and clear details about obtaining a BSFZ certificate and receiving financial aid from the tax office.Eligibility and TimingWho qualifies (Who can apply)One of the highly beneficial features of the Forschungszulage is its broad inclusiveness. Any business entity in Germany which is taxable can submit the application to seek financial support in terms of tax reduction or refunds, regardless of its size, industry, or legal form. It includes:1. GmbHs, AGs, UGs2. Partnerships (GbR, OHG, KG)3. Sole proprietorships4. Early-stage start-ups earning lower revenue or facing financial loss.Note: The application is not validated based on the revenue the company has generated, so there is no minimum revenue bar to apply, and any R&D project matching the requirements across industry can apply, as it is not only limited to any certain industry.What Types of Projects Qualify?The projects must align with the pre-defined criteria mentioned under Frascati Criteria, that classify research activities into1. Basic research: The ones that have no immediate or commercial application of research findings.2. Applied research: Applied research conducted to solve a certain problem or to obtain specific objectives as results. 3. Experimental research: The research aimed at developing a new or enhanced product, service, or process.Note: The costs incurred during the activities such as market research or routine system updates are not eligible to seek financial support or apply for Forschungszulage, and all the projects eligible should possess the elements of newness and uncertainty in the project’s desired results. Retroactive Application & DeadlinesIt is now possible for the projects that meet the eligibility criteria to apply for Forschungszulage retroactively from 1 January 2020. This is generally helpful for companies that have already started with innovation or research and development before the initiation of subsidies.There is no rigid deadline to apply for Forschungszulage, and it is best practice to align the BSFZ application with the present financial year and submit the application to ensure timely review and approval by the tax office.BSFZ Certificate ApplicationThe first requirement for the successful Research Allowance application is to receive the BSFZ certificate issued by Bescheinigungsstelle Forschungszulage (Research Allowance Certification Office). This certificate verifies that the project is qualified as a Research and Development project under the German subsidy law.The following is a step-by-step guide to applying for the BSFZ Certificate.Step 1: Acquire an ELSTER CertificateTo access the BSFZ portal, it is required to authenticate the identity of the applicant using an ELSTER organisational certificate.What is ELSTER?Electronic Tax Return (ELSTER) is the official platform employed by the tax authorities of Germany for online communication with taxpayers.How to obtain ELSTER? Go to www.elster.de and register. Once registered, an ELSTER certificate is provided.Why is ELSTER needed?ELSTER confirms that the Research Allowance is applied only by the authorised representatives of the company and not by any other parties.Step 2: Register on the BSFZ PortalAfter acquiring the ELSTER certificate, applicants need to follow the steps given below to register on the BSFZ portal.Visit https://portal.bescheinigung-forschungszulage.deLog in to the portal with the ELSTER credentialsRegister the organisation by creating the BSFZ user profile that is tied to the ELSTER loginNote: This BSFZ user account allows the applicant to begin and manage applications for BSFZ certificates for Research and Development projects.Step 3: Preparation of the ApplicationThe application for the BSFZ certificate primarily focuses on validating the R&D nature of the projects, and minimal or no focus is given to the commercial value of the project during this stage.During the preparation of the application, the applicant is required to:1. Explain the project details, inclusive of the following information:Project title and durationObjectives of projects and their characteristics showing innovationDetailed scientific and technical details of the project including the challengesMethods or processes employedTimelines and work packageDetails of human resources involved in the project2. Categorise the type of R&D projectIt is important to categorise the research projects as basic research, industrial research, or experimental development based on its features and outcome clearly while submitting the application for the BSFZ certificate.3. Highlighting information or reference to support the claimThe applicant can mention the references they used such as OECD Frascati Manual to support the claims they have made in the application.Note: A sample of BSFZ certificate is available on their official website which could be referred to structure the project description to ensure the higher acceptability.Step 4: Submitting the applicationThe application is submitted on the BSFZ portal using online mode and it is possible to submit the application during the start, on an ongoing basis, or after the completion of the project. The retroactive applications are also allowed for any costs that were incurred after January 1, 2020.Once the application is submitted, the BSFZ starts with the assessment of the project mainly based on whether the project qualifies as R&D or not. The BSFZ might get back to the applicant if any further information or clarifications are needed about the project.Step 5: Issue of BSFZ certificateOnce the BSFZ office accepts the project as eligible, the applicant will receive a formal certification on their BSFZ portal. Plus, this certificate will be automatically sent to the local tax office for the further process involved in granting financial aid.The BSFZ certificate alone does not yet imply any financial grant but states that the project is eligible to receive funding.Application to the Tax Office for Forschungszulage (Research Allowance)After receiving the BSFZ certificate the next step is the application to the Tax office to receive Forschungszulage (Research Allowance). The application for the monetary aid will be sent to the local tax office along with the annual tax return.The process to submit the application involves the following steps:Use the ELSTER to login to the tax portalNavigate to the tax return formUpload BSFZ certificateGo to the 'Forschungszulage' section of the tax return formFurther, the applicant will be asked to provide the following details:The cost incurred for materials and the human resources as verified by the BSFZThe details of project timeline and project categoryDetails of subcontractors if anyNote: The applicant should be careful that the values or amounts they mentioned are the same as the ones they submitted to the BSFZ office. The differences in them could lead to the rejection of Research Allowance.Common Mistakes to AvoidForgetting to upload the BSFZ certificateSubmitting partial or incomplete informationMentioning the unapproved expenses which are incurred for processes other than R&DLack of uniformity in given information due to minimal internal coordination with the finance team or tax advisorsCalculation and PayoutThe funding or subsidy rate is calculated using the following bases,For the general companies: 25% of eligible R&D expensesFor the Small and Medium Enterprises (SMEs): 35% of the eligible R&D expensesAs per the new updates for the year 2025, the maximum eligible R&D costs for the business is €10 million per year and the subcontractor expenses are eligible up to 70% of the total approved value.The Forschungszulage (Research Allowance) is given as a reduction to the companies. In case of no tax liability or the tax liability is less than the allowance, a cash refund would be given to the business.Post-Submission ExpectationsGeneral timelinesBSFZ will generally take 2 or 3 months to provide an update either in terms of approval of BSFZ certificate or the rejection of the application. Tax office typically takes further 3 to 6 months to validate the application, so the total turnaround period will be 4 to 9 months from the date of first application submission.Record keeping guidelinesBased on GoBD rules, all the files and documents need to be maintained for the period of 10 years. The documents involve:BSFZ certificateTax filing documentsInformation about the cost analysis and timesheetsUpdates on the projects and the outcomesConclusionWith several options like broader eligibility criteria, retroactive application, and cash refund, the Forschungszulagengesetz (Research Allowance Act) is one of the significant R&D funding initiatives across the European Union. Understand the process and ensure a timely submission of the application in each stage to obtain the financial support to scale up the innovation.
May 20, 2025
Research Allowance: Everything you need to know (2025)
Research Allowance (Forschungszulage) continues to be a hot topic for the stakeholders involved in various Research and Development projects across Germany. The initiative intended to strengthen innovation, the Research Allowances from the government give an opportunity to reduce the R&D expenses through tax credits or refunds. The environment around Research Allowance is changing and evolving with a high funding rate for Small and Medium Enterprises, expansion in the eligibility criteria, and changes in the application process making it easier to access.Here is a glimpse of information you need to know about Research Allowance in Germany in 2025.What is Research Allowance (Forschungszulage)The Research Allowance is a government funded initiative meant for promoting and accelerating R&D projects. Businesses receive monetary benefits or relief in terms of tax credit or direct refund from the german federal government on their research expenses. The objective of Research Allowance is to make innovation more affordable and it complements other funding opportunities at the national level and from the European Union making it a key player in Germany's Innovative initiatives.Unlike the traditional funding methods, there is no competition in getting Research Allowance. The projects meeting predefined criteria are eligible to receive this monetary assistance from the government.Quick Facts:ElementDetailsLaunch Year2020Total Claimed (2024)Over €2.5 billionType of SupportTax credit or cash refundMaximum Eligible R&D Costs (2025)€10 million per company per yearWho can benefitSMEs and Large Scale Enterprises: SMEs and large scale enterprises across industries are eligible to seek Research Allowance. This ensures that the innovation is promoted in each scale and level of business among multinational companies and regional companies.Individual Innovators/Researchers and Partnerships: Independent researchers or partners, entrepreneurs, freelance R&D professionals are fully eligible to apply for Research Allowance. The partnerships or sole owners benefit equally similar to SMEs and larger scale enterprises with the rate of allowance varying based on the project criteria.Start-ups: The start-ups focusing on transformative fields like technology, biotech, healthcare, sustainable development and manufacturing are given substantial importance. The government identifies the start-ups facing high costs involved with R&D with scope of limited revenue in early stages and emphasizes on assisting them with financial allowances.Is your company classified as a 'firm in difficulty'? Special rules may apply if the company is termed a 'firm in difficulty.' Check our guide now to learn how it could impact your eligibility for Research Allowance.Types of Eligible ResearchBasic research: The research with the objective of acquiring more knowledge on subject matter without particular application and which are theoretical and experimental in nature.Industrial research: The research conducted to acquire new knowledge or knowhow, to develop a new product, process or service methodology, or significant enhancement of existing ones that are planned and executed.Experimental development: The systematic and application oriented research aimed at developing new products. Creating a new device with market requirements using the existing knowledge will be an example.The broader eligibility establishes that both innovators and scientists can claim the financial support from the government for their R&D endeavours.The routine product or software updates, research done to assess market conditions, and test marketing or commercial production trials are the exclusions in claiming the financial support from the government.Special Focus: SMEs and Higher RatesSmall and Medium Enterprises which account for a wider part of German Enterprises contribute around 54% of the country's Research and Development investment and presently receiveHigher funding rates (up to 35%)Simpler documentation requirementsPriority in certification processes.Application ProcessThe application for Research Allowance is a two-stage process:Technical project application stage:The researcher should prove that the project meets the set criteria and qualifies as an R & D project by submitting a project description to the Certification Office for Research Allowance (BSFZ). Projects must display the actual research features as per the Frascati Criteria, which act as the international standard to define the activities considered Research and Development. Upon the project being accepted, a certification will be issued for the R&D project and forwarded to the Tax Office for further processing to receive the funding.What is required at this stage:● Clear details and articulation of the project with the technical problem it is solving ● Description of scientific uncertainties involved in the project outcome ● Methods and milestones of the project ● Expected results or outcomes from the projectExplore our detailed guide to the complete list of documents required to apply for Research Allowance (Forschungszulage).General timelines:● 6 to 8 weeks of review time. ● Approval rate is approximately 80 to 85% for the well-prepared applications.Tax Authority Stage:When the first stage is about proving the project falls under the R&D project category, the second stage is about the project costs.The project's costs are annually claimed with tax returns, it is needed to submit the project cost details through the annual tax declaration. It could be claimed as a reduction in tax payable and in case of no tax liability, the cash refund will be given.Note: It is also possible to claim the Research Allowance retroactively for the project started on or after 1st January 2020, which means along with ongoing projects the completed ones are eligible to receive the monetary benefits.Funding and BenefitsIn the year 2025, the Research Allowance provides significant financial assistance.CategoryAmountBase Rate25% of eligible expensesSME Enhanced RateUp to 35%Maximum Eligible R&D Costs€10 millionWhat costs are coveredEligible R&D expenses include,Human Resources cost: Costs incurred as salaries and wages of research personnel, both internal and external human resources.Contract Research: Costs incurred in outsourcing of eligible research activities to another company based in EU (up to 70% contract value)Materials and Consumables: If they have been directly used in the research process.The costs incurred for the activities such as marketing, administrative costs and customary testing are not covered under Research Allowance.Example Calculation: If a company spends €2 million on R&D: Base Funding (25%): €500,000 tax credit. SME Rate (35%): €700,000 tax creditWhat is new in 2025 (Key updates in 2025)The German government introduced notable updates to the Research Allowance Act (Forschungszulagengesetz, FZulG) intended to accelerate innovation among businesses of all sizes. The updates were presented through the Growth Opportunities Act (Wachstumschancengesetz) and published in the Federal Law Gazette (Bundesgesetzblatt Teil I Nr. 108, 27.03.2024) officially.Following are the key updates that were brought into effect on January 1, 2025.Increase in the maximum eligible R&D costs:The maximum R&D costs eligible to receive the monetary support were raised from €4 million to €10 million per year.Example calculation with Standard rate and SME rate, Standard rate (25%): €2.5 million per year SME rate (35%): €3.5 million per yearLegal reference: Article 27, Wachstumschancengesetz BGBl. I 2024 Nr. 108 – Page 399Increased funding rate for the SMEs:Small and medium enterprises now enjoy an increased funding rate of 35%. It was increased from the old rate of 25% and it aims at promoting innovation and R&D growth in the German SME sector.Legal reference: Article 27, Amendment to § 3 (3) FZulG BGBl. I 2024 Nr. 108 – § 3Depreciation of Tangible Assets now included:Depreciation on movable, self-produced fixed assets used for R&D projects is now eligible. It is applicable to assets acquired after March 27, 2024, for the sole purpose of R&D projects.Legal reference: Article 27, new § 3 Abs. 4a FZulG BGBl. I 2024 Nr. 108 – Page 399, § 3 (4a)Updated rate for Contract Research:Previously only 60% of the costs of the contract research were eligible to receive research allowance and now it is increased to 70%.Legal reference: Article 27, change to § 3 Abs. 4 Satz 2 FZulG BGBl. I 2024 Nr. 108 – Page 398Increased hourly rate:The sole proprietors and partners working on the R&D project actively are now eligible to claim a flat hourly rate of €70. The older rate was €40 per hour.Legal reference: Article 27, § 3 Abs. 6 Satz 2 FZulG BGBl. I 2024 Nr. 108 – Page 399Faster reimbursement of the Research Allowance:Starting from 2025, companies can offset their research allowance against the quarterly corporate tax prepayments which does not require to wait till the annual tax return. It is beneficial for start-ups in need of crucial funding.Legal reference: Article 26, § 11 Absatz 1 FZulG (new version) BGBl. I 2024 Nr. 108 – Page 400Note: The German Federal Cabinet has approved a draft bill that would increase the maximum eligible expenses for the Research Allowance (Forschungszulage) from €10 million to €12 million, effective for research projects starting on or after 1 January 2026, and expected to be applicable till 2030.Common mistakes to avoidWhen the application for Research Allowance is now simple, there are still the elements one should be aware of to avoid rejection. They are,Insufficient information: Not including clear information and technical details on project description often leads to rejection.Misinterpretation: When the activities mentioned as ‘research' does not actually fall in the category of R&D, the application gets rejected. Regular software updates, changes in designs don't qualify for the process.Delays: Missing out on deadlines and late application could lead to rejection even for excellent research projects.Pro tip: Presenting a BSFZ application like a mini-research proposal by displaying the scientific uncertainty the project has, helps the applicant to avoid rejection.ConclusionThe Research Allowance gives numerous opportunities for the companies to pursue and invest in R&D projects and innovation in Germany. The individual researchers, start-ups, SMEs and large scale enterprises, all are entitled to receive the monetary benefits for the able research projects in terms of tax credits or cash refunds. A clear application process and generous amount of funding, it is now the right time to initiate impactful research projects. Elements to keep in mind when you start,Documenting R&D activitiesApplying on timeSeeking expert support when required.Ensure your research projects receive the support it deserves and convert your innovation to a rewarding one.
Apr 24, 2025
innoscripta SE Achieves ISO 27001 Certification
innoscripta SE Achieves ISO 27001 Certificationinnoscripta SE is now officially certified according to ISO/IEC 27001 - the internationally recognized standard for Information Security Management Systems (ISMS). This certification highlights our ongoing commitment to the highest security standards and the responsible handling of sensitive information.What Does ISO 27001 Mean for innoscripta SE?ISO 27001 defines globally recognized requirements for establishing, implementing, and continuously improving an ISMS. For innoscripta SE, this means that all security-relevant processes are systematically reviewed, documented, and regularly optimized. The certification confirms that we actively protect the confidentiality, integrity, and availability of data while minimizing risks in a structured manner.Benefits for Customers and PartnersWith ISO 27001 certification, our customers benefit from a high level of data security, effective risk prevention, compliance with relevant data protection regulations, and increased trust in our transparent and secure operations.ConclusionBy achieving ISO 27001 certification, innoscripta SE meets internationally recognized standards in information security. It ensures that sensitive data is systematically protected, risks are identified early, and legal requirements are reliably fulfilled. Our customers and partners can rely on a high level of security and dependability.
Feb 05, 2025
External Invoices as a Success Factor
Strategically Leveraging External Invoices – Optimizing Balance Sheets and Liquidity!In times of economic uncertainty, strategic financial planning is essential. Decision-makers face the challenge of securing liquidity, making optimal use of investments, and maximizing tax benefits. One often underestimated opportunity is the research allowance—a legally regulated tax refund that innovative companies can leverage to optimize their financial strategy. By integrating external invoices, significant advantages can be achieved without increasing administrative workload.Optimizing Balance Sheets and Liquidity Through External InvoicesThe research allowance enables companies to receive a tax refund of up to 35 %* of eligible costs. Decision-makers have the opportunity to strategically incorporate external invoices into their financial planning. Through precise documentation and correct allocation of these expenses, companies can not only improve their liquidity but also strengthen their balance sheet in the long run.The advantage: Research and development (R&D) expenses can be classified as investments for tax purposes, creating additional financial flexibility. Moreover, precise documentation ensures maximum security and smooth approval by tax authorities.Which External Costs Are Eligible?External invoices related to research and development (R&D) are eligible under certain conditions. These may include:External development services – such as software development, engineering, or technology consulting.Prototype costs – production of sample models.Research partnerships – commissioning universities or research institutes to develop or implement innovative concepts.Technology investments – acquisition and use of specialized equipment for production.By strategically planning and correctly allocating these costs, companies can benefit from significant tax advantages, which directly contribute to financial stability.Avoiding Pitfalls – Minimizing RisksDespite the attractive funding opportunities, companies need to be aware of certain challenges. Missing or inadequate documentation can lead to the rejection of expenses. A clear distinction between regular business expenses and research-related costs is essential to avoid repayment demands.Additionally, large funding amounts are often subject to detailed tax audits, requiring audit-proof documentation. Decision-makers must also consider the personal liability risks if research expenses are incorrectly declared.innoscripta as a Strategic Partner for Secure ImplementationTo help companies maximize their research allowance, innoscripta offers Clusterix, a digital solution for transparent and audit-proof documentation. The automated recording and archiving of relevant documents ensures compliance with all tax requirements. Clusterix also enables the creation of customized reports for tax authorities and auditors, ensuring risk-free approval of applications.With extensive experience from numerous successful tax audits, innoscripta understands the specific requirements of tax authorities and helps companies efficiently and securely leverage tax benefits. Integrating external invoices into the research allowance serves as a key tool for optimizing financial strategies with minimal effort and maximum impact.Companies looking to enhance their liquidity and fully utilize tax incentives should not overlook the opportunities offered by the research allowance. With the right strategy and an experienced partner, businesses can unlock the full potential of this funding.*Applies to SMEs as of March 28, 2024.
Dec 12, 2024
Frascati Criteria: R&D Funding Eligibility & Tax Incentives
Which projects are eligible for funding under Germany's R&D tax allowance (Forschungszulage)? What criteria must R&D projects meet in order to be eligible for funding?These are two of the most frequently asked questions by our customers. The so-called Frascati criteria may provide more clarity.The Frascati Criteria are an internationally approved set of rules which were developed by the OECD (Organisation for Economic Co-operation and Development) to systematically define, measure and classify research and development (R&D). They were first published in 1963 in the Frascati Manual, named after a meeting of OECD experts held in Frascati, Italy.Since then, the criteria have been revised several times in the light of changing scientific and technological circumstances. The latest edition of the Frascati Manual dates back to 2015 and has expanded the definitions by including new fields of research, such as digital technologies or interdisciplinary approaches.By applying the Frascati criteria, tax authorities and reviewers can check more efficiently whether a project is eligible for funding. The criteria provide a clear guideline that gives both companies and authorities orientation.The Frascati criteria are a global framework developed for evaluation and discernment purposes, distinguishing research from other activities. They provide a basis for classification and are applied worldwide, including for statistical surveys, funding programs and tax incentives for research. For instance, statistics on research expenditure or the innovative strength of a country are often based on national standards. Organizations such as the OECD or Eurostat apply the Frascati criteria during their reportings such as the OECD Science, Technology and Industry Scoreboard, thus ensuring international comparability.Furthermore, countries also make use of the Frascati criteria when evaluating their national innovation systems. For instance, governments can examine which proportion of gross domestic product (GDP) accounts for R&D, or compare the ratio of R&D activities in different industries.In addition, the Frascati criteria provide a solid foundation for data-based political decisions, by highlighting the sectors which may require additional investment, or to evaluate the effectiveness of existing support measures. Beyond the evaluation opportunities, the criteria also assist with prioritization: funding agencies use the Frascati Criteria to establish focus areas. For example, they can determine whether to place greater emphasis on basic research (e.g., in physics) or application-oriented research (e.g., in medical technology) in terms of funding.The Frascati Criteria are particularly relevant regarding the application process for the german research tax credit or similar funding programs, since they establish the framework for evaluating eligibility for funding.In order to avoid a “rude awakening” during the application process by discovering that submitted projects are not eligible for funding, the following section provides a detailed explanation of the key aspects of the Frascati Manual.Core Elements of the Frascati Criteria1. Which criteria must R&D fulfill?According to the Frascati Criteria, R&D activities are systematic efforts aimed at acquiring new knowledge or developing new applications. R&D must meet five key criteria:● Novelty: The activities generate new knowledge or insights.● Creativity: The work is original and requires innovative approaches.● Uncertainty: The outcome of the work is uncertain.● Systematic Approach: The research is planned and documented.● Reproducibility: The results must be verifiable and replicable.2. Which activities qualify as R&D?The Frascati Criteria classify research and development into the following three categories:● Basic Research: The primary aim is to generate knowledge without focusing on direct practical applications.● Applied Research: This focuses on solving specific practical problems.● Experimental Development: This includes activities aimed at creating new products, processes, or services.3. What does not qualify as R&D?Not every activity that requires knowledge qualifies as R&D. Activities such as market research, quality assurance, or system maintenance are explicitly excluded, as they lack novelty or research-oriented nature.Examples of Non-R&D Activities:Despite potentially involving expert knowledge or advanced technologies, the following activities are explicitly classified as non-R&D:● Routine Testing and Inspection Procedures○ Examples: Quality controls in production, standardized product tests (e.g., material testing).○ Rationale: These activities do not generate new knowledge or innovations but ensure adherence to existing standards.● Market Research and Consumer Analysis○ Examples: Customer satisfaction surveys, analysis of market trends or consumer preferences.○ Rationale: These activities aim to improve understanding of market conditions but do not produce scientific insights or technical innovations.● Quality Assurance and Maintenance○ Examples: Machine calibration, maintenance of laboratory equipment, monitoring of existing production lines.○ Rationale: These are supportive tasks that sustain existing processes but do not lead to advancements or new applications.● Education and Training Activities○ Examples: Employee training sessions, professional development on new technologies.○ Rationale: While these activities promote knowledge, they do not contribute to the creation of new knowledge or applications.● Acquisition of Know-How or Technologies○ Examples: Purchasing patents, licenses, or existing technologies.○ Rationale: The act of acquisition itself is not R&D unless the acquired technology is further developed or used in a way that creates new insights or applications.● Technical Support and Consulting○ Examples: Technical assistance in implementing existing technologies or systems.○ Rationale: Such services rely on existing knowledge and are not primarily aimed at research objectives.Many national and European funding programs, such as Horizon Europe, evaluate applications based on the Frascati criteria. Applicants must demonstrate that their projects meet the criteria for R&D, with a focus on novelty, creativity and uncertainty.Why are these activities not considered R&D?For an activity to be classified as R&D, it must meet all five central criteria of the Frascati definition: novelty, creativity, uncertainty, systematic approach, and reproducibility. The examples mentioned above typically fail to meet one or more of these criteria:● No Novelty: Routine tasks and standardized processes do not generate new knowledge or technological advancements.● No Creativity: These activities follow predefined procedures and do not require original or innovative approaches.● No Uncertainty: The outcome is predictable, as established methods are used.● No Systematic Research: The activities are often not planned or structured as research projects.● No Reproducibility: Routine or maintenance tasks are not designed to produce documentable scientific findings.Why is clear differentiation important?The definition and promotion of R&D are closely tied to the limited resources of companies, funding programs, and tax authorities. A precise differentiation helps prevent misuse and misclassification, ensuring that routine tasks are not mistakenly declared as research. Additionally, clear boundaries ensure the effectiveness of funding by directing resources exclusively towards innovative and research-intensive projects. Another significant benefit is that clear differentiation supports the creation of comparable statistical data, which can be applied in terms of national and international analyses.What is the importance of the Frascati Criteria for companies?The differentiation between R&D and non-R&D activities has direct implications for companies aiming to apply for funding or benefit from tax incentives, such as the German R&D tax allowance: ● Documentation: Companies are required to document their R&D activities in detail and in compliance with GOBD (Generally Accepted Principles for Keeping and Storing Accounting Records in Germany) in order to demonstrate that these activities meet the Frascati criteria.● Evaluation Process: Funding bodies and tax authorities are responsible for assessing whether the proposed projects include eligible R&D activities or if parts of them should be classified as non-R&D.● Strategic Planning: Companies can utilize the criteria to optimize their research strategies and focus specifically on activities that qualify for funding.Opportunities and challenges during application processesOne significant advantage of the Frascati criteria is the aspect of standardization: universal definitions facilitate the comparability on a national and international level. By simultaneously offering flexibility, the criteria can be adapted to new scientific and technological developments. In terms of decision-making, the Firscati criteria also offer substantial benefits regarding their practical applicability. The criteria can be drawn upon as a solid basis for decision-making in terms of funding programs and tax incentives.However, some of these benefits also provide sources of error.For instance, one difficulty accounts for the given flexibility, since in some cases there is scope for interpretation. Despite the clear definitions, the criteria can be interpreted differently, particularly in the case of complex projects. In addition, borderline cases can occur. Some activities, such as software development, lie at the conceptual intersection of the subject areas ‘R&D’ and ‘routine work’ and are marked by ambiguity. Another aspect is bureaucracy: companies often have to submit extensive documentation in order to meet the R&D criteria, which can be a hurdle for small and medium-sized enterprises (SMEs) in particular.Frascati criteria and the future of research policyIn an increasingly knowledge-based economy, the Frascati criteria certainly play a crucial role. Not only do they promote the transparency and comparability of R&D data, but also the efficient use of funding.However, with the growing importance of interdisciplinary research and disruptive technologies, their continuous development and refinement may be regarded as imperative. Areas such as artificial intelligence, climate research and biotechnology impose new demands on the definition and evaluation of R&D.ConclusionThe Frascati criteria are more than just a theoretical concept - they are a practical tool that forms the basis for numerous decisions with regards to research and innovation. Whether in the allocation of funding, the compilation of statistics or the granting of tax incentives - their significance can hardly be overestimated.It may be viewed as essential for companies and research institutions to know and apply the Frascati criteria in order to benefit from the various funding opportunities and to simultaneously contribute to the further development of science and technology.
