Research and Development
Research and development (R&D) projects can count on financial support. There are programs that allocate R&D grants as well as public loans and partnership programs.
Innovation is an important precondition for ensuring Germany's international competitiveness - strengthening its resilience and expanding economic strength. Research and development is essential to the development of the German economy and is supported by numerous incentive programs.
Research and development grants generally provide money for R&D project personnel expenditure. Other costs for instruments and equipment may also be eligible if they can be clearly assigned to the relevant R&D project (only the depreciation costs for the duration of the R&D project are considered eligible where instruments and equipment are used beyond the lifetime of the R&D project).
How to Profit from Public R&D Spending
To participate in R&D funding programs, companies must define an R&D project with clear objectives and a designated timeline. The project application should highlight the innovative character of the project and the technological risks involved.
An application for R&D funding also has to set out a commercialization plan, detailing how research results will be transformed into products, processes or services which generate additional turnover and/or employment in the region where the R&D project is located.
The total amount of incentives a project may receive depends on the size of the company (small, medium-sized, or large), whether the project is conducted in cooperation with other companies or research institutes and the research category of the project. The research category expresses the scope of the intended project.
There are three basic research categories:
|
Germany’s Future Strategy Research & Innovation
All research programs financed by the German federal government are part of the federal Future Strategy Research & Innovation.
The Future Strategy Research & Innovation defines six priority areas for tackling specific challenges anticipated in the upcoming years.
Under each of these missions a number of different R&D programs with specific R&D topics are available. The federal government periodically calls for R&D project proposals followed by a competition of the best project ideas. The selected R&D projects benefit from the financial support in the form of non-repayable project grants.
For example, companies can rely on grant rates up to 50 percent of eligible project costs for R&D projects from the experimental devolopment category. Higher rates may be possible for SMEs.
Focus: SME Participation
A specific funding scheme called "KMU-innovativ" focuses on the participation of small and medium-sized companies (SMEs) to support cutting-edge research. Funding applications within the framework of the "KMU-innovativ" scheme are possible on an ongoing basis and are connected to specific research areas.
In addition, a number of national programs without a specific technological focus also exist. The "Central Innovation Program for SMEs" (Zentrales Innovationsprogramm Mittelstand, ZIM) is the most important of these. Application for incentives within these programs is possible at all times and without any prior calls for proposals or application deadlines. Please contact Germany Trade & Invest's incentive experts for more information.
R&D Tax Credits in Germany
Companies with tax status in Germany and performing R&D activities are eligible for a tax credit of up to EUR 2.5 million annually.
Germany's Research Allowance Act allows for tax credits for companies performing R&D activities.
The eligible expenditure is the salary cost companies pay to employees working on the project, with the tax credit set at 25 percent of eligible costs (35 percent for SMEs) to a maximum of EUR 10 million.
Companies wishing to benefit from the Research Allowance Act must obtain a certificate from the certifying body for R&D projects determining whether the project is eligible. The tax office responsible for the company taxation will process the certification and the financial aspects of the application along with the company's financial reports.
EU R&D Grants
The European Union (EU) offers support to R&D projects in the current 2021-2027 funding period through its "Horizon Europe" research and Innovation funding program. With a budget of more than EUR 95 billion, Horizon Europe is the world's largest research and innovation funding program.
Horizon Europe support is usually provided to R&D projects operating on a transnational level with project partners from different European countries.
Application Procedure
The application procedure is clearly structured and completed online. The European Commission or authorized bodies publish calls for proposals on its Funding & Tenders Portal. The calls for proposals announce the research area, eligibility guidelines and the available budget.
Applications are submitted in the form of a proposal by all transnational project partners ("consortium").
Please contact Germany Trade & Invest's incentives experts for more information.
