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 timesheet
The 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 calculation
The 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 activities
Monthly 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 guidelines
Threshold: 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 timesheet
Maintaining an authentic and verifiable timesheet confirms the claim from the company is:
Transparent with traceable documents and is audit-proof
Clarity 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.
Conclusion
The 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.
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Jul 17, 2025
Forschungszulage application rejected? What to do next?
In Germany, Forschungszulage (Research Allowance) is the program dedicated to providing financial support for companies that focus on innovation, research, and development. Companies across industries and various sizes can claim Research Allowance based on the eligible expenditures of their qualified R&D projects. The Research Allowance is usually given to the companies in the form of a tax credit and if a certain company's tax liability is less than the research grant, the amount would be issued as a cash refund to them. The Research Allowance application process consists of two steps, first obtaining a BSFZ certificate that confirms the project is eligible for research allowance and second, sending an application to the Tax Office seeking the actual financial support.What happens if the application gets rejected? This question often gets a lot of attention from the companies applying for the allowance from the initial stage and even after the submission of the application. The rejection might be from the BSFZ (Bescheinigungsstelle Forschungszulage) or in the second stage from the Tax Office (Finanzamt). The important point the applicant needs to understand is that the rejection is not ultimate. Here, the rejection could be reversed or pave the road for a well-prepared reapplication. When an applicant receives feedback from the BSFZ or Tax office, the first thing they should do is to understand the feedback and analyse it carefully to confirm whether it was an application rejection or they are asking for further information about the project before proceeding to the next stage. Here's the comprehensive information about reasons for rejection, corrective steps, and strategic elements to acquire the approval for the application.Reasons for the rejection of the Forschungszulage applicationThe rejections do not always come from a point of the R&D projects being completely unworthy to get the allowance but due to the lack of compliance with the predefined criteria such as the Frascati Criteria or any specific BSFZ guidelines.The main causes for the rejection of Forschungszulage application include:Absence of technological uncertainty:The project should aim at achieving unexpected outcomes which aren't obvious to the existing knowledge and it should have an element of uncertainty as defined under Frascati Criteria which is a core factor that distinguishes a research project from others.Ambiguous project documentation:BSFZ gives a lot of weightage to the precise and transparent project documentation. If the documents required for Forschungszulage application are unclear or inconsistent, it can result in application rejection or follow-up queries from the BSFZ office.Missing information:Along with the need for clear documentation, BSFZ also considers some mandatory points to be present in it. Information about project timelines, personnel costs, clear breakdown of work packages, and project milestones are some of the examples of areas which need top-level clarity. This information needs to be definitive and justifiable with valid evidence and failure to adhere to this, the application may lead to disqualification even for an excellent research project.Unqualified research activities:There is a pre-set eligibility for the projects to apply for research allowance. The research projects should fall under the category of either basic research, industrial research or experimental development. When there is a misalignment with the eligible activities and project types, it results in rejection. The projects or activities such as test marketing, market research, UI/UX activities, or integration of known technology are not eligible to claim research allowance.Vague terminologies:The project description needs to be drafted with clear terminologies that express the research nature of the project and give clarity to its details. Adding vague terms or wordings may not be successful since it does not demonstrate the core values of the R&D project.What is the next step if a Forschungszulage application is rejected? Following the rejection of an application, there are two options the applicant can pursue.Filing an appealThe appeal could be filed within one month after receiving the rejection and it should be done if the applicant company finds that the application was wrongfully rejected due to a misunderstanding or incorrect assessment. The focus on appeal should be mainly on providing additional explanation and evidence supporting the claim and not on questioning the rejection.The applicant should analyse and adhere to the following factors in this process:Examining why the application was rejected and its rationale point by point.Compare the application against the statutory standards to understand where the information provided is vague and insufficient.File a well-structured appeal addressing the issue and submitting any additional evidence supporting the claim. Resubmitting an improved applicationIf the application is rejected in terms of any structural shortfalls without enough required information, then it is effective to submit a revised application instead of appealing. The revised application needs to be well prepared ensuring all the crucial elements are mentioned accurately in project documentation. Merely adding more details to existing ones would not be successful. Elements to be considered while reapplying:Rewriting the project descriptionProvide accurate and transparent details supporting the claimConfirming the alignment of the project with BSFZ guidelines and Frascati Criteria.Note: When an appeal is filed, the BSFZ office might take 6 months to a year to review the appeal and make a decision. However, in the case of reapplication, BSFZ has an approval deadline of 3 months, which can be a tremendous advantage for applicants.Measures to avoid application rejectionThe rejection of the application majorly indicates deficient application process and not the flawed research project. The following depicts measures to strengthen the application:Evaluation of the project:One of the effective measures to ensure the successful application is to have the project evaluated by an external advisor with expertise in Forschungszulage. This audit helps to uncover the eligibility of the projects and defines the eligible expenses to claim the research allowance.Accurate internal documentation:Documenting each aspect of the project holds a key value if the company is seeking research allowance. Accurate records of timesheets, human resources, work packages, costs incurred, milestones, and prototypes are very useful during the application process as it serves as a clear reference to build the project description and also works as the supporting evidence to the claims. Providing clear information:For the explanations, it is important to use clear scientific terms that show the quality of the research projects. It is an ideal practice to refrain from using ambiguous terms and buzzwords in the project description.Proactive planning:Planning ahead by considering the Forschungszulage (research allowance) as a funding strategy, and ensuring the alignment of the documentation, financial planning, and other relevant internal processes of the project can help the company to submit an error free and successful application.How can innoscripta help you?innoscripta provides a one-stop solution involving an excellent R&D management software platform that manages each aspect in the process of applying for research allowance and the advisors who guide you through each and every step in the process strategically. The software platform offers the end-to-end solution from documenting the multiple research activities including time tracking and the costs incurred until the application submission and archiving all the documents for any future requirements including the tax audit. The top-tier software tool combined with expert advisors at innoscripta enables the company to strategically plan and successfully apply for research allowance.Connect with innoscripta to evaluate your research projects and determine their eligibility for research allowance.
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.
