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Oct 09, 2025
What is the BSFZ seal? Recognition for R&D in Germany
Innovation is a crucial factor contributing to economic growth and development, especially in a competitive and highly evolving global environment. In Germany, the BSFZ seal acts as a prestigious symbol for organisations that are actively pursuing innovative research and development (R&D). The BSFZ seal is issued by the Research Allowance Certification Office (Bescheinigungsstelle Forschungszulage) and represents innovation capabilities in addition to improving a company's credibility among stakeholders, investors, and customers. The BSFZ seal highlights that the company is a contributor to forward-thinking and futuristic ecosystems, enhancing Germany's position as an international innovation hub.Classification of the BSFZ sealFor a company engaging in research and development, the BSFZ seal is awarded in two different types, indicating the nature of a company's research and development initiatives.Red seal for in-house R&D projectsThe red seal certifies that a company has efficiently carried out its own R&D activities using its internal resources. Involvement of a third party at any stage of the particular R&D project is facultative. It demonstrates the company's ability to initiate and manage the entire R&D process.Orange seal for contract researchThe orange seal is given to a company when they execute a R&D project in collaboration with external partners. Research projects can be outsourced to external parties such as a research institution, university or private organisation. This seal reflects the company's commitment to nurturing innovation and facilitating collaborative R&D projects. Both of these versions of the BSFZ seal act as proof for qualified R&D projects under Germany’s Research Allowance Act (FZulG), which was introduced to financially support companies with eligible R&D projects across industries and sizes. The monetary support is provided for the qualified projects in terms of tax credits on the basis of their eligible R&D expenditure. Criteria for receiving the BSFZ sealTo receive the BSFZ seal, the R&D project must obtain a BSFZ certificate confirming that the project qualifies as research and development. The certificate is issued based on criteria defined in accordance with established international standards, specifically those outlined in the OECD’s Frascati Manual. These criteria include:Novelty: The R&D project must bridge a gap by generating new knowledge or by developing a new product, process or service that is beyond the existing ones.Creativity: The project should have an innovative problem-solving approach that is different from existing standard practices. Systematic approach: The research should be conducted as per a defined and systematic methodology.Uncertainty: The final results or outcome of the R&D project should not be known in advance and should include an element of technical risk. Reproducibility: The results of the R&D project should be documented in a way that allows verification and reproduction of the results, enabling further validation of the outcomes.Once an R&D project meets these standards and acquires the BSFZ certificate confirming its eligibility to claim the research allowance, the company gains access to the BSFZ seal via the application portal. Clear instructions regarding its usage and design guidelines are made available to the company to ensure the correct representation.
Sep 30, 2025
How does the BSFZ assess R&D projects for Forschungszulage certification?
Introduction to the BSFZ and its role regarding ForschungszulageThe Bescheinigungsstelle Forschungszulage (Research Allowance Certification Office) is the official authority designated to determine if a project is eligible to claim the research allowance. The BSFZ evaluates if the activities defined in the research allowance application fall under the category of research and development (R&D). The preliminary decision is then forwarded to the relevant tax office for assessment and settlement with the income tax liability.BSFZ functions under the technical and legal supervision of the Federal Ministry of Research, Technology and Space and is operated by a consortium of experienced project sponsors:VDI Technologiezentrum GmbHAiF Projekt GmbHDLR Project Management AgencyWith the objective of ensuring an optimum and professional review of the applications, an interdisciplinary team is established with staff from various scientific fields who hold extensive experience in validating R&D projects. The application process with the BSFZ is fully digital, which increases convenience. The application is submitted through a web portal that is custom-developed by the BSFZ. BSFZ offices are present in various cities such as Bonn, Berlin, Düsseldorf, and Dresden with the scientific experts from multiple fields evaluating the R&D project applications. The BSFZ review is a key step for applicants as it is the first step in seeking the research allowance and the approval is crucial. Without BSFZ approval the project cannot advance to the tax authority stage.Assessment basisWhile assessing the research project, the BSFZ reviews if it falls into any of the defined categories under the Research Allowance Act (FZulG) and adheres to the EU’s General Block Exemption Regulation (GBER) and the OECD’s Frascati Manual. Criteria for approval involve:Basic research: The experimental or theoretical research project that is focused on acquiring new knowledge without any direct commercial application.Industrial research: The planned research projects aim to gain new knowledge and skills in order to develop new products, processes, or services and also to make significant improvements to the existing ones. Examples of industrial research include prototype construction and validation of technological concepts.Experimental development: Experimental development involves research based on using existing scientific and technological knowledge to develop a new product or improve the existing ones. As per the Frascati Manual, a research project must include the following features:Novelty: The project must generate new know-how that is not available in the state of the art and the research work needs to be original without similarity to existing work.Uncertainty: The outcome of the R&D work should not be known to the public yet. It should be uncertain and not predictable. Additionally, there must be an element of risk involved.Systematic approach: The research work should be conducted according to a systematic plan and methodology.Creativity: The work should consist of an innovative approach and an element of non-obviousness.Reproducibility: The results of R&D work should be verifiable and reproducible with the scope of obtaining the same results. Evaluation processOnce a company submits its application for the certificate from the BSFZ in the process of seeking the research allowance, there are three potential results they can expect.1. ApprovalThe positive response and issuance of the certificate stating that the research project is eligible to claim the Forschungszulage. The BSFZ office validates the R&D nature of projects using the pre-defined criteria and indicates the approval for the company to proceed with the application to tax authorities to claim the research allowance.2. RejectionAn application can get rejected if the BSFZ office finds that the project lacks the necessary characteristics to be considered as R&D. In certain instances, the application of an excellent R&D project may get rejected if the application is not clear due to any of the following reasons:Vague project documentationMissing important information in the project descriptionInclusion of unqualified activities in the application Using vague terminology to describe the project elements.When an application gets rejected, the applicant company has two options as corrective measures:a. Appeal:It is allowed to submit an appeal within 4 weeks after receiving the rejection from the BSFZ. The appeal should be submitted if the company finds that its application is wrongfully rejected due to misunderstanding and incorrect assessment. The objective of the appeal should be to provide additional information and proof supporting its claim and not merely to question the previous assessment result.b. Reapplication:In case an application is rejected due to shortcomings in the application preparation, as a next step it is ideal to submit a revised and well-prepared application instead of submitting an appeal as the BSFZ is obliged to review the reapplication within three months. The revised application should include all the crucial information with clear technical details of the projects. It is important to submit the details supporting the claim and to ensure the project meets BSFZ guidelines and criteria mentioned in the Frascati Manual.3. Request for additional informationIt is common to receive a request from BSFZ to submit certain additional details about the project to continue the review process. This is not a rejection but it occurs when the submitted information does not suffice to make a final assessment. Note: BSFZ application process is done through the web portal and there are different character limits in the sections where the applicant needs to submit the project details. It is necessary to phrase the details clearly and concisely so that all required information can be provided for the review process. Best practices for applicantsTo obtain a positive response from the BSFZ and receive the certificate on the first attempt, the applicant should follow our best practices that include:1. Early documentation of R&D projectsThe documentation and recording of necessary information, technical and financial, helps in the submission of the well-prepared application and increases the chances of approval.2. Defining the innovationClear definition of newness and technical innovation of the project without the use of vague terminology is an important factor for the approval. It is required to mention details of the problem being solved, novelty of the R&D approach, and addressing uncertainties and risks during the project.3. Knowledge of deadlinesIt is possible to claim research allowance retroactively for up to four years. But, early application to the BSFZ and to the tax authorities ensures an early inflow of funds even in the event of stricter assessment guidelines.4. Seeking expert adviceFor companies, especially first-time applicants, the advice of external consultants who have expertise in Forschungszulage guidelines and the documentation process can be effective in submitting a successful application. The external advisors can help with documenting R&D projects and preparing well-structured applications in alignment with the statutory requirements.Considering applying for Forschungszulage? Connect with innoscripta to streamline your documentation with expert guidance and the intelligent software platform.
Sep 22, 2025
Forschungszulage for start-ups in Germany
Growth of start-ups in GermanyGermany is one of the global leaders in terms of innovation, engineering, and manufacturing and therefore termed an industrial powerhouse. In recent years a new wave of innovation and transformation is reshaping the start-up ecosystem and strengthening the entrepreneurial passion, and start-ups are contributing highly towards promoting innovation in Germany just like the bigger enterprises. In cities like Berlin, Munich, Hamburg, and Cologne, start-ups are rapidly growing, with incubators thriving, and entrepreneurs solving complex challenges in evergreen and growing fields like artificial intelligence, biotech, sustainable development, climate tech, and many more. The growth of start-ups promises vast opportunities for innovators who are creative and exploring the unexplored new ways of development. From initiatives like healthcare apps to using robotics in restructuring complex manufacturing processes, start-ups are a significant value addition to Germany's innovative development.The financial challenges start-ups faceDespite having innovative ideas and transformational capacity, start-ups in Germany frequently face financial challenges concerning the funding of R&D projects. Often, R&D projects are expensive and require more investments to acquire experts and special equipment for the R&D work–without the assurance of success. Additionally, a start-up might fail to raise funds on its own. For early-stage start-ups, revenue is limited, and in some instances, it is nonexistent. The traditional method of raising venture capital is helpful to an extent but the heavy competition among start-ups to obtain it puts some start-ups on the losing end, even though they might have excellent innovative projects. The lack of required finance to proceed with the intended work slows down the growth of start-ups and brings down their capacity to innovate even if they have ground-breaking ideas. How can Forschungszulage support start-ups?To promote research and development projects in Germany, the government has initiated the programme Forschungszulage, which provides financial support for companies with qualified R&D projects, in the form of tax credits or a direct cash refund if the company does not have any tax liability. Unlike other grant opportunities, the Forschungszulage is non-competitive and enables companies with eligible projects to acquire the monetary support they need. Following are the reasons why the start-ups in Germany should seek the support under Forschungszulage as part of their financial strategy:Significant financial supportUnder Forschungszulage, a company can claim up to 25% of its total eligible expenses as tax credits and for SMEs, the funding rate of 35% makes it even more helpful. The limit of total eligible expenditure was raised from €4 million to €10 million in the year 2025. An SME that has incurred €2 million as eligible personnel expenses, under Forschungszulage it could receive €700,000 back, and it is non-dilutive. This also helps start-ups to acquire financial support without giving away equity or share of ownership. Cash payouts for start-ups in financial lossIn the early years of a start-up, most of them don't generate any profit but suffer financial losses due to no or less revenue. Forschungszulage supports early stage start-ups who aren't generating profits and do not have any tax liability by granting the research allowance in the form of a direct cash payment. Broader eligibility criteriaAll taxable companies in Germany, irrespective of their size and industry can apply for research allowance if they have a qualified R&D project. Eligible projects can seek research allowance retroactively for up to 4 years and the application process remains the same for ongoing and recently completed projects. In the case of contract research, as per the recent update in 2025, the company can claim 70% of the total eligible cost incurred and the depreciation of movable fixed assets used for R&D is also included in the category of eligible expenses. These opportunities support start-ups engaged in R&D projects to apply for Forschungszulage and obtain monetary support in the case of completed and ongoing projects.Streamlined application process with higher approvalThe application for Forschungszulage involves two steps, namely: obtaining the BSFZ certificate and applying to the Tax Office. The application process in both of these stages has pre-determined criteria and guidelines. When an application for an eligible project is submitted adhering to the specified guidelines, the project gets approved within three months. This streamlined process makes it easier for applicants and lacks the usual bureaucratic nature of other funding programmes.Signal effect for investorsAlong with offering financial support, Forschungszulage also creates a powerful signal effect for investors. When a project receives a BSFZ certificate, confirming the project is genuine R&D under German law, it serves as proof that the start-up is actively engaged in recognised innovation activity. This government-backed validation improves trust, reduces perceived risk among investors and enables start-ups to leverage external funding opportunities from venture capitalists, business angels, or corporate partners.Support for start-ups with early lossesForschungszulage does not automatically exclude “companies in difficulty,” which means young companies with high start-up losses can apply for the allowance without restriction within the first three years. Even if the start-up's balance sheet shows losses, the allowance still applies as long as it has sustainable profit motive. This is a decisive advantage over traditional subsidy programmes, which are often not accessible during the critical growth phase.Practical advantages for start-upsFinancial bridging: The allowance can secure liquidity when other subsidies are no longer available due to a balance sheet that does not meet the requirements for other funding programmes.No proof of creditworthiness or own funds: Unlike loans or some grants, no collateral needs to be provided or own funds need to be proven.Planning security: Since Forschungszulage is enshrined in law and can also be applied for in advance before the projects has even started during the early phase, start-ups can count on this support during uncertain growth phases, regardless of early financial losses. ConclusionFor German start-ups, Forschungszulage is a remarkable opportunity to reclaim a significant part of their R&D expenditures. Early-stage start-ups who are generating low revenue or even incurring loss can also be eligible to seek the research allowance if they have qualified research projects matching the pre-defined criteria and other statutory guidelines from the BSFZ and the Tax Office. Even though the research allowance is primarily given in the form of tax credits, a company without tax liability can also receive it as a direct cash refund, which makes the programme more attractive for start-ups.
Sep 02, 2025
Forschungszulage for large companies in Germany
Germany is recognized as one of the global leaders in research and development (R&D), a status it gained mainly due to the strong industrial presence and the innovative engagements of its large-scale companies. Big companies in Germany view R&D initiatives as a strategic investment aiding innovation, competitive advantage, and long-term growth.Companies in Germany, especially those in sectors like automotive, information technology, and engineering, consider Research and Development the backbone of their business strategy and planning. The substantial investments made by companies every year are proof of their commitment to encourage innovation. Approximately €81.8 billion was invested by the business enterprises in Germany for R&D initiatives in 2022, which accounts for up to 67% of the country's total R&D expenses (€121.4 billion). hese investments are not limited to product development alone, they include digital transformation, innovations in processes, and sustainability projects. Leading companies assign an impressive amount of funds for their R&D budgets, meeting evolving market requirements with innovation and securing technological leadership in the market.Sectors with high R&D investmentsThe R&D investments in Germany are distributed across industries representing the country’s evolving priorities and industrial leadership.Automotive: The automotive sector attracts the largest investments, and the focus on the development of innovative electric vehicles, self-driving technologies, and sustainable transportation solutions are examples of some of the key projects in this vertical.Information and Communication Technology: The transformational and emerging domains such as artificial intelligence, data science, cloud computing, and cybersecurity have experienced a significant flow of investments aimed at innovative advancements. The R&D expenditures in the fields of programming are increasing compared to previous years.Pharmaceuticals and Biotechnology: The recent pandemic has increased the need for biotech research, resulting in an increase in investments in the development of vaccines and other medical technologies.Electrical and Mechanical Engineering: The need for integration of digital technologies, improvement of product efficiency, and optimisation of manufacturing processes attracts a good amount of R&D investments in the traditional engineering domains. Challenges faced by large-scale companies regarding R&D project documentation and accessing government financial supportThe following are some common problems or challenges large-scale companies face in terms of documenting their research projects and finding the right government incentive to support research projects and capitalise on their expenditures. Complex processComplexity in the application process and excessive documentation often cause problems for companies with multiple R&D processes. For programmes like Forschungszulage, external advisors support the companies to accurately document their projects and successfully submit the application.Ambiguity in eligible R&D activitiesUnderstanding which research activities are eligible for R&D incentives can be an extensive process. Each funding programme has its own set of predefined criteria for qualifying a project for research funding, and the companies need to meet these requirements and align their financial strategy and application based on the programme they are planning to apply for. Detailed documentation requirementsMost of the government funding programmes require detailed documentation with a clear project description and the evidence supporting the claim. Documentation involves the accurate and well-explained project description, details of human resources, timelines, milestones, and cost structures. For big corporations with many departments, compiling all the project information can be a tiring task that requires the time of a dedicated team.Problems with retroactive applicationFunding programmes like Forschungszulage provide the opportunity for retroactive application. The companies intending to apply for these programmes need to document the historical data of previous years, and this can be a daunting process for the companies with several internal departments to locate and accurately document the information.Selecting the right programmeGermany offers several funding programmes for R&D projects, each with its own eligibility criteria. The companies are required to select the best programme for them that matches their project and organisation type. For example, Forschungszulage is the best programme for large-scale companies as many other initiatives completely exclude large-scale companies from funding opportunities.Forschungszulage vs ZIM - Selecting the right incentive programme for large-scale companiesTwo of the major funding programmes in Germany are Forschungszulage and ZIM (Zentrales Innovationsprogramm Mittelstand). Both of these programmes focus on providing financial support to R&D projects and innovation but they cater to companies with different sizes and needs. For large-scale companies, Forschungszulage emerges as a suitable funding initiative. The following is a comparison between Forschungszulage and ZIM, highlighting their key differences. ElementsForschungszulageZIMEligibilityAll taxable companies in Germany irrespective of sizeSMEs only (up to 500 employees, and 1,000 in cooperatives)Application timingBefore, during the projects, or retroactively after the project completionApplication must be submitted before the project startsFunding timingAfter all the expenditures of one fiscal year are incurredDuring the projectFunding modeTax creditsNon-repayable grantsEligible activitiesAll types of R&D projectsR&D projects with strong market potentialLegal limitationsThe maximum assessment basis is €10 million per year, and R&D expenses exceeding this limit will not be considered. Additionally, a company can apply for research allowance for multiple R&D projects simultaneously. A maximum of two concurrent projects may be eligible for funding at any given time.Why is Forschungszulage more suitable for large-scale companies?Inclusive eligibilityForschungszulage is open to all corporations including multinational companies in Germany to claim the research allowance in terms of tax credit, unlike ZIM, which only allows financial grants to SMEs.Higher financial aidThe Forschungszulage allows a company with qualified R&D projects to claim up to 25% of total eligible expenditure as research allowance where the maximum eligible R&D expenses are €10 million. This supports the organisation managing the projects with significant monetary relief.Flexibility in application timingUnlike ZIM, under Forschungszulage there is no need to apply for funding before the start of the project. The application for tax credits can be submitted during the project once the expenditures are incurred, or retroactively after project completion.Less bureaucratic burdenThe application process for Forschungszulage is smooth and streamlined compared to ZIM. ZIM includes a pre-approval phase or negotiation with project sponsors, which is absent in the process of applying for Forschungszulage. That makes it less bureaucratic. As long as a project fulfils the BSFZ guidelines and Frascati Criteria, it will get approved. For large corporations in Germany with R&D initiatives, the Forschungszulage is recognised as the best programme providing monetary support. Its broader eligibility and a streamlined application process make it an ideal programme for big companies promoting innovation and leveraging their R&D investments.
Aug 08, 2025
Patents and their impact on Research Allowance in Germany
What is a patent? What could be patented? These are the common questions in the minds of stakeholders of a company with R&D projects and innovations. In Germany, the patent is part of the industrial property right that grants the holder the exclusive right to use their innovation. The answer to what could be patented is broad as it is not limited to any type of invention, sectors of organisations or their size, but will be granted based on the newness, non-obviousness and industrial applicability of the invention. To get an invention patented the application must be sent to the German Patent and Trade Mark Office (Deutsches Patent- und Markenamt, DPMA). The applicant needs to disclose the details of the invention including its technical specifications, and should ensure transparency in a way that a specialist should be able to use or reproduce it without the need for any further information. It is not possible to add additional information after the submission of the application. The application for the patent can be submitted in two ways, either by submitting in writing via a patent information centre or electronically via DPMAdirektPro software.After the application submission, there is a statutory examination process to determine the eligibility of the invention to be patented. The detailed examination process includes compliance assessment, classification under the International Patent Classification (IPC), and validation of the novelty of the invention. Once an invention is patented, it has a validity up to 20 years, subject to the renewal charges starting from the third year. It will be published in the Gazette (Patentblatt) and the information will also be available on websites such as EPATISnet and DPMAregister.The Forschungszulage, is a tax incentive programme focusing on promoting R&D projects and innovations. Here, the financial assistance is given as tax credits to the companies with qualified research projects and it is granted on the basis of the eligible R&D costs incurred for the project. A project's eligibility is defined by analysing its aspects based on criteria outlined in Frascati Manual, which mandates that the features like novelty, creativity, uncertainty, and systematic approach be present in it. The validation to determine whether a project qualifies as R&D is handled by BSFZ (Bescheinigungsstelle Forschungszulage), and it is the first step in the process of claiming the research allowance to acquire a BSFZ certificate which states the qualification of the project as an R&D project. And, the second step being claiming the research allowance by submitting the application to the tax office. Why is a patent important for R&D?A patent is a protection given to the inventor or company to exclusively use their work and avoid the duplication or replication of it by others. Germany follows a strict criteria to grant patents to any inventions and only technical inventions are eligible. To be eligible to receive the patent, an invention is required to meet the following criteria under Section 1(1) of the Patent Act:Novelty: The invention needs to be brand new and delineable to the state of the art. It should not be publicly disclosed before through written or oral descriptions, or exhibitions. Inventive steps: The invention should not be obvious and it must have a technical advancement from what is already known.Industrial applicability: The invention should be usable in any industry with the scope to be reproducible. These aspects closely align with the criteria that defines an R&D project regarding Research Allowance. For example, the Frascati Manual states that R&D work must generate new knowledge, should not be routine work, and include uncertainties.Novelty as a criterion: For patent and Forschungszulage claimNovelty is a common concept in both, patent and Forschungszulage approval. For patents, the way novelty is defined is very strict and global. The application of a particular invention for patent will be denied if the same type of knowledge is available to the public anywhere in the world by any means before the date of filing the application.In the Forschungszulage application process, the novelty is assessed in the framework of business enterprise. Based on the specifications in the Frascati Manual, an R&D project must generate novel knowledge which is not already present in the industry and new to the business. Reproducing existing work and known results and reverse engineering are not considered novel. A new application or use case for an existing technology with all its associated risks and uncertainties could be eligible for the Forschungszulage, even if it is not patentable. Overall, the eligibility standards for the Forschungszulage are lower than those for patents.How does a patent add value during the BSFZ review process?Even though a patent is not mandatory in the process of claiming the Forschungszulage, it can add significant value to the project during the BSFZ review. Following are a few reasons:Proven novelty: A patent proves the novelty of an invention satisfying a core R&D criterion. There will not be any room for doubt of the newness of the project that has received a patent by fulfilling all the complex requirements. Inventive step confirmation: One of the conditions to receive the patent for an invention is its non-obviousness. This closely aligns with the criteria of creativity and systematic approach, proving the project is qualified as R&D. Evident systematic documentation: The application for the patent itself requires detailed and accurate documentation and this reflects positively while seeking research allowance and resulting in a successful application. Note: The cost incurred to apply for a patent is not eligible to be added under the expenses in the Forschungszulage claim. The eligible expenses are purely the ones incurred for research and development activities and not any administrative costs. Practical recommendations for companies regarding patents and Research AllowanceTo leverage the best out of patent and research allowance, the companies can consider these practical steps:1. Maintaining the confidentiality of the invention: Before filing for the patent, the details of the invention need to be kept confidential including in presentations or internal meetings with all stakeholders to maintain its novelty and avoid duplication due to early disclosure. At this stage, applying simultaneously for the research allowance and a patent can be beneficial, as it helps companies to navigate the complex documentation in a single process, saving a considerable amount of time. 2. Using patent documents to support Forschungszulage claim: Similar to Research Allowance application, patent application needs detailed technical documentation and this structured information can be strong evidence while claiming the allowance as it reflects the systematic approach and reproducibility of the research work during BSFZ review. 3. Applying early for the Research Allowance:Even though it is possible to claim the research allowance retroactively for up to four years, applying early has its own advantages, such as faster approval. This can help a company maintain liquidity and budget for new innovation.Conclusion: A patent is a strong ally but not a requirementAlthough a patent is not mandatory to claim Forschungszulage, it can add substantial value during the application process by demonstrating the eligibility of the R&D project highlighting elements such as novelty and systematic approach. Ultimately, companies need to consider patents as a strategic ally to research allowance, not essential, but potentially can contribute value when integrated carefully with research objectives and timelines.
Jul 30, 2025
How to document R&D hours for a successful Forschungszulage claim
Forschungszulage (Research Allowance) is the tax incentive launched by the government of Germany to promote innovation by providing financial assistance to R&D projects. The programme allows companies with qualified research activities to claim up to 25% (35% for SMEs) of their eligible expenses, mainly the personnel expenditures through the R&D tax credits. To substantiate the claims, it is mandatory to produce accurate and transparent documentation of working hours using the timesheets meant for the R&D activities. Suggested reading: To learn more about how the Research Allowance works and who is eligible, see our comprehensive Research Allowance guide for 2025.Maintaining a timesheet is not just a formality, it is a significant document that depicts the time spent by the human resources on the project while claiming the research allowance. As per the Federal Ministry of Finance (BMF) and BSFZ, only the hours logged in the documents are eligible for the claim, and the data which is omitted or misrepresented will not be considered during the Forschungszulage application.To ensure the compliance of the applications with guidelines and aid auditing, the BMF has established an official timesheet template. The template is designed to give transparent guidelines for the applicant in order to log their data in the correct format by checking all the mandatory fields. The statutory requirements do not mandate the applicant to follow this template but it is designed with alignment to GoBD. In case the company has multiple projects running simultaneously, it is needed to maintain separate timesheets for each of them.Components of the official timesheetThe timesheet outlines the documentation of the effective working hours in a standardised structure for the companies. There are two main sections in the timesheet showing annual working hours and monthly working hours.1. Annual time calculationThe various aspects of the yearly time recording are ascertained on the basis of the following main points.Contractual working hours: The total effective hours for the year are calculated as weekly hours x 52 weeks. Deductions: Public holidays, vacation days taken by personnel, sick leave, and maternity or paternity leave are subtracted when calculating the effective working hours, as a basis for calculating the percentage of hours spent on R&D out of the total annual working time.2. Documentation of R&D activitiesMonthly data: Over the course of the month, the time spent on each day by each individual performing the tasks should be recorded separately.Project identification: If a company runs multiple R&D projects simultaneously, it is required to maintain different timesheets for the projects. One timesheet is meant for one particular project certified by BSFZ.Details of human resources: While entering the data, the details of the personnel performing the activities need to be recorded clearly including their names, designations, type of R&D work they conducted.Excluded activities: The activities such as administration, management, and logistics are not qualified to be added in the timesheet meant to claim research allowance.Approvals: The data mentioned in the timesheets need to be confirmed and approved by the personnel and project lead by verifying the information and authorised with their signatures.3. Additional guidelinesThreshold: Of the total hours spent on R&D project activities, only up to 40 hours per week, i.e., 2080 hours per year for an individual is eligible, even if the employee works overtime on the project.Retention of documents: Timesheets need to be stored and produced on request of verification of claim and future audits. Reasons why to maintain an accurate timesheetMaintaining an authentic and verifiable timesheet confirms the claim from the company is:Transparent with traceable documents and is audit-proofClarity in terms of the claim based on qualified expenses and effective application.Compliance with the claim and process with the guidelines of BSFZ and Tax office.ConclusionThe Forschungszulage programme offers the financial advantage to the small and large organisations alike, and it's in the hands of the company to make the best out of this government initiative. Following accurate documentation with transparency and verifiable records is one of the important steps in the application process. The timesheet provides clarity to the companies about what information needs to be recorded with regard to the human resources involved in the R&D project and how it is processed under the claim for research allowance. Having an authentic documentation process and effective application helps a company to acquire financial aid in the form of tax credits and elevate their R&D efforts to promote innovation. Connect with innoscripta to know more about the efficient R&D project documentation process and explore user-friendly time tracking software platform to successfully apply for Forschungszulage.
Jul 17, 2025
Forschungszulage application rejected? What to do next?
Overcome a rejected German Forschungszulage application: understand denial reasons, appeal vs reapply tips, and get innoscripta's expert software support.
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 research 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.
