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Applying for the German research allowance (FZulG)

The German research allowance is 25 per cent of the assessment base, and anyone qualifying as a small or medium-sized enterprise within the SME definition in Annex I of the General Block Exemption Regulation may ADDITIONALLY APPLY for an increase of ten percentage points (§ 4(1) FZulG). It is not a tax relief that evaporates where there is no profit: the allowance as assessed is credited IN FULL against the tax assessed at the next initial assessment of income or corporation tax, and any resulting surplus is PAID OUT (§ 10(1) sentences 2 and 3 FZulG). The application is made electronically AFTER the end of the financial year (§ 5(1) sentence 1 FZulG) — and it requires a certificate from the certifying body (§ 5(3) sentence 1, § 6(1) FZulG).

Up to date for 2026 — verified on September 22, 2026Official procedure, no printed formGuide: about 60 min

Deadlines

The entitlement arises at the end of the financial year
§ 4(2) FZulG — the year in which the wages were received or the other eligible costs arose
The application is made AFTER the end of the financial year
§ 5(1) sentence 1 FZulG — in the officially prescribed data format through the officially designated interface
Certificate first, application second
A certificate under § 6 for the projects listed is REQUIRED for the application (§ 5(3) sentence 1 FZulG)
Before assessment: the advance instalments can be reduced
Where the return has not yet been filed and the instalments can still be adjusted under § 37(3) sentence 3 EStG, the tax office must on application reduce them by the allowance, but at most to 0 euros (§ 10(2a) FZulG)

Documents to prepare

  • ELSTER access with a certificate or an ELSTER business account
  • A certificate from the certifying body for each research and development project
  • A description of each project, precise enough for verification
  • Payroll records for employees engaged in research and development
  • Provision expenses under § 3 no. 62 EStG
  • For own work: a weekly hours record
  • For partnerships: the written fee agreement
  • For commissioned research: the commissioning date and the fee
  • For affiliated undertakings: the allocation of the maximum eligible assessment base
See the procedure on the official site

No form is attached to this procedure: the link leads to the official page that describes it.

What this page gives you

The guide above and the link to the official site. ActioFin does not produce any document for this page: whatever you fill in or file is done on the official medium.

Who this applies to

  • Businesses with employees on qualifying research and development projects: eligible costs are wages subject to wage tax deduction and the employer's provision expenses under § 3 no. 62 EStG (§ 3(1) FZulG)
  • SOLE TRADERS doing their own research: 100 euros are counted for each documented working hour, up to a total of 40 working hours per week (§ 3(3) sentences 1 and 2 FZulG)
  • Partnerships whose partners have contractually agreed a fee for research work — eligible so far as it does not exceed 100 euros per working hour at a maximum of 40 hours per week, and only where the agreement is legally valid, seriously intended, actually performed and clearly distinguishable (§ 3(3) sentences 3 and 4 FZulG)
  • Businesses commissioning research: for projects commissioned after 27 March 2024, eligible costs are 70 per cent of the fee (§ 3(4) sentence 2 FZulG)
  • Shareholder-directors of a corporation too, where the employment contract meets the conditions for wage tax deduction (§ 3(1) sentence 3 FZulG)
  • Affiliated undertakings: the ceiling on the assessment base applies to them TAKEN TOGETHER (§ 3(6) sentence 1 FZulG)

Worked example

Jana Reichert develops a measurement process on her own in her sole trader business in 2026

Over 40 weeks in 2026 Jana works 30 documented hours a week on a qualifying research and development project she began in January 2026. For a sole trader's own work, 100 euros are counted per documented working hour, up to a total of 40 working hours per week (§ 3(3) sentences 1 and 2 FZulG); 30 hours is below that, so all of them count. 40 weeks × 30 hours = 1 200 hours × 100 euros = 120 000 euros. Because her project began after 31 December 2025, the flat amount for additional overheads and other operating costs is added: a flat 20 per cent of the eligible costs arising in the financial year under subsections 1, 2, 3, 3a and 4 (§ 3(3b) FZulG), that is 24 000 euros. The assessment base is therefore 144 000 euros, well under the ceiling of 12 000 000 euros applying to eligible costs arising after 31 December 2025 (§ 3(5) sentence 2 no. 4 FZulG). The allowance is 25 per cent of that (§ 4(1) sentence 1 FZulG); as an SME within the definition in Annex I of the General Block Exemption Regulation, Jana may additionally APPLY for an increase of ten percentage points (sentence 2), so 35 per cent in all: 50 400 euros. What matters for her cash position is § 10(1) FZulG: the allowance as assessed is credited in full against the tax assessed at the next initial income tax assessment, and if a surplus in her favour remains it is paid out to her as an income tax refund. So if Jana owes little or no tax that year, the allowance is not lost. Without the certificate from the certifying body the application would be incomplete: it is required for the application (§ 5(3) sentence 1 FZulG), and the first certificate of a financial year is free of charge for the applicant (§ 6(5) sentence 1 FZulG).

How to fill it in, step by step

  1. Apply FIRST for the certificate from the certifying body under § 2(1) sentence 2 of the Research Allowance Certification Regulation — it is the basis of the assessment (§ 6(1) FZulG) and required for the application (§ 5(3) sentence 1 FZulG).
  2. Make sure the certificate contains, for EACH project separately, the reasoned finding that the conditions of § 2 FZulG are met (§ 6(2) FZulG).
  3. Document the eligible costs as you go: wages of employees engaged in research and development, provision expenses under § 3 no. 62 EStG, and for sole traders the documented working hours (§ 3(1) and (3) FZulG).
  4. Keep an hours record for your own work — the 100 euros are counted PER DOCUMENTED working hour, and the 40-hour weekly limit applies in total (§ 3(3) sentence 2 FZulG).
  5. For a partnership, check that the fee agreement is legally valid, seriously intended, actually performed and clearly distinguishable (§ 3(3) sentence 4 FZulG).
  6. Wait for the financial year to end: the application is only made afterwards (§ 5(1) sentence 1 FZulG), and the entitlement only arises then (§ 4(2) FZulG).
  7. Log in to Mein ELSTER and select the research allowance application; make it to the tax office competent for your income taxation, or for a partnership to the determination office (§ 5(1) sentences 1 and 3 FZulG).
  8. Describe the projects and costs PRECISELY ENOUGH for verification to be possible, and for affiliated undertakings state the allocation of the maximum eligible assessment base (§ 5(2) FZulG).
  9. Confirm in the application that the facts underlying the certification procedure have not changed (§ 5(3) sentence 2 FZulG).
  10. If the tax return has not yet been filed, apply to have the advance instalments reduced by the allowance assessed, but at most to 0 euros (§ 10(2a) FZulG).

Good to know

  • The ten-percentage-point increase for SMEs must be APPLIED FOR; it does not happen automatically (§ 4(1) sentence 2 FZulG).
  • The allowance works even in a loss year: it is credited in full against the tax assessed, and a surplus is paid out as an income or corporation tax refund (§ 10(1) sentences 2 and 3 FZulG).
  • For partnerships the credit is given proportionately, and the shares are determined separately and uniformly as against the partners, the measure being the agreed profit allocation key (§ 10(2) sentences 1 to 3 FZulG).
  • The flat 20 per cent uplift for overheads and operating costs applies only to projects begun AFTER 31 DECEMBER 2025 (§ 3(3b) FZulG).
  • For commissioned research, 70 per cent of the fee is eligible where the project was commissioned after 27 March 2024, and 60 per cent before that (§ 3(4) sentences 1 and 2 FZulG). A fee passed on to sub-contractors is NOT an eligible cost (sentence 3).
  • The ceiling on the assessment base is staged: 12 000 000 euros for costs arising after 31 December 2025, and 10 000 000 euros before that from 28 March 2024 (§ 3(5) sentence 2 nos. 3 and 4 FZulG).
  • For affiliated undertakings that ceiling applies TAKEN TOGETHER, affiliation being determined by controlling influence within § 290(2) to (4) HGB, and the assessment base of a CALENDAR YEAR being decisive (§ 3(6) sentences 1 to 3 FZulG).
  • Total state aid per undertaking and project, including research allowances, may not exceed 15 000 000 euros (§ 4(3) FZulG).
  • The FIRST certificate of a financial year is free of charge; from the second onwards fees and expenses may be charged (§ 6(5) FZulG). So bundle a year's projects into one certification application where possible.

Common mistakes

  • Applying before the financial year has ended. The application is made AFTER it ends (§ 5(1) sentence 1 FZulG), and the entitlement only arises at that point (§ 4(2) FZulG).
  • Applying without a certificate. A certificate under § 6 FZulG for the projects listed is required for the application (§ 5(3) sentence 1 FZulG), and it is the basis of the assessment (§ 6(1) FZulG).
  • Treating the SME increase as automatic. It must be applied for (§ 4(1) sentence 2 FZulG).
  • As a sole trader, assuming your own time is not eligible. Own work counts at 100 euros per documented working hour, up to 40 hours a week (§ 3(3) sentences 1 and 2 FZulG).
  • Counting more than 40 hours a week. The limit applies IN TOTAL (§ 3(3) sentence 2 FZulG).
  • Relying on an oral fee arrangement in a partnership. The agreement must be legally valid, seriously intended, actually performed and clearly distinguishable (§ 3(3) sentence 4 FZulG).
  • Including a fee passed on to sub-contractors. It is expressly not an eligible cost (§ 3(4) sentence 3 FZulG).
  • Claiming up to the ceiling for each company in a group. The ceiling applies to the affiliated undertakings taken together (§ 3(6) sentence 1 FZulG).
  • Spreading several certification applications across the year. Only the first certificate of a financial year is free of charge (§ 6(5) FZulG).

Frequently asked questions

How much is the research allowance?

It is 25 per cent of the assessment base under § 3(5) FZulG. Claimants qualifying as a small or medium-sized enterprise within the SME definition in Annex I of the General Block Exemption Regulation may additionally apply for an increase of ten percentage points (§ 4(1) FZulG).

Is it worth anything if I am making losses?

Yes. The allowance as assessed is credited in full against the tax assessed at the next initial assessment of income or corporation tax; if a surplus in your favour remains, it is paid out as an income tax or corporation tax refund (§ 10(1) sentences 2 and 3 FZulG).

Does my own time as a sole trader count?

Yes. Eligible costs include a sole trader's own work on a qualifying project; 100 euros are counted per documented working hour, up to a total of 40 working hours per week (§ 3(3) sentences 1 and 2 FZulG).

When do I apply?

After the end of the financial year in which the eligible costs were received or arose, in the officially prescribed data format through the officially designated interface, to the tax office competent for your income taxation (§ 5(1) sentence 1 FZulG). Where a partnership is the claimant, the application goes to the determination office (sentence 3).

Do I really need a certificate?

Yes. The basis for assessing the allowance is, for each project listed in the application, a certificate from the certifying body (§ 6(1) FZulG), and it is required for the application (§ 5(3) sentence 1 FZulG). The first certificate of a financial year is free of charge (§ 6(5) sentence 1 FZulG).

Can I get any benefit before the assessment?

Possibly. Where the return for the next initial assessment has not yet been filed and the advance instalments for the last unassessed period can still be adjusted under § 37(3) sentence 3 EStG, the tax office must on application reduce them by the allowance assessed, but at most to 0 euros (§ 10(2a) FZulG).

Go further

Compute the related amounts

Understand this form: the related course

Related forms

Official sources

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Guide and document provided for information purposes only; they do not constitute personalised legal or tax advice. Check the recipient organisation's requirements and consult a professional if needed.