Anyone contracting R&D work out to external providers can include those costs pro rata in the Forschungszulage assessment base. The claimable share depends on when the contract was awarded: for contracts before 28 March 2024, 60 per cent of the fee applied; from then on it is 70 per cent.
What counts as contract research?
Contract research within the meaning of § 3 (4) FZulG exists where you have a qualifying R&D project carried out wholly or partly by an external contractor. The contractor has to make an independent research contribution: they research on the client's behalf, not merely to the client's specification. What matters is whether the commissioned company or institution itself carries out industrial research or experimental development in order to reach a result that isn't yet settled at the time of the commission.
Contracts with contractors based in an EU member state or an EEA state are eligible. That includes companies, universities and non-university research institutions in Germany and other EU countries. Contractors based outside the EEA are not eligible.
60% or 70%: which rate applies?
The claimable share depends on the date the contract was awarded, not on when payment was made or the financial year in which the invoice arrives.
- Contracts up to and including 27 March 2024: 60 per cent of the fee feeds into the assessment base. That was the original FZulG rule, in force until the Growth Opportunities Act took effect.
- Contracts from 28 March 2024: 70 per cent of the fee is eligible. The Growth Opportunities Act raised the rate to relieve companies that contract R&D work out.
The cut-off is the date the contract was awarded, normally the conclusion of the contract or the binding order. Anyone who concluded a framework agreement before the cut-off but issues call-offs afterwards has to check whether the call-offs are legally independent awards or merely call-offs under the existing contract.
The conditions in detail
For the cost share to be recognised, three conditions have to be met at the same time.
- An eligible project: the project for which the contract is awarded has itself to meet the requirements of §§ 2 and 3 FZulG, meaning basic research, industrial research or experimental development within the meaning of the Frascati Manual. The BSFZ certificate relates to the project, not to the individual subcontract.
- The contractor's location: the contractor has its registered office in the EU or an EEA state (Iceland, Liechtenstein, Norway). Sites in EU or EEA states belonging to a company based elsewhere aren't enough if the contracting party itself is based outside the EEA.
- Contractual attribution: the contract has to be attributed contractually to the R&D project. Invoices and contracts have to make the R&D link clearly recognisable. The tax office won't accept attribution after the fact with no documentary basis.
Distinguishing it from an ordinary service
The critical question in practice is: is the external contract genuine contract research or merely a development service? As part of certifying the project, the BSFZ assesses whether the external element belongs to R&D. During assessment, the tax office checks whether the expenditure claimed can be attributed to the certified project.
An ordinary development service exists where the contractor implements a specification without carrying research uncertainty themselves. Examples: programming a clearly defined software interface to a requirements document, manufacturing a prototype from supplied design documents, or running tests to a supplied test plan. Those services don't feed into the assessment base as contract research; they are simply not eligible under § 3 (4) FZulG.
Contract research, by contrast, requires the contractor to work on an open technical or scientific question themselves. Examples: an institute develops a novel measurement algorithm for a jointly defined problem; a research provider trials a new synthesis process with an uncertain outcome. In both cases the contractor carries their own research uncertainty.
Documentation and evidence requirements
The BSFZ issues the certificate for the project, without looking at individual invoices or contracts. The tax office, at the second stage, assesses whether the contract research costs claimed can be attributed to the certified project. For that you need the following documents ready:
- The contract or order, clearly naming the R&D project and the subject of the research
- The contractor's invoice with a project-related description of the work, not a collective invoice with no breakdown
- Evidence that the contractor is based in the EU or EEA (a commercial register extract or comparable document)
- The date the contract was awarded, showing whether the 60% or the 70% rate applies
Invoices that mix R&D services with other services without a clear breakdown lead, in experience, to reductions or to the whole contract being rejected. The separation has to be built into the quote, not supplied later when the tax office asks.
Typical failure patterns
Four situations regularly lead to contract research costs being recognised only partly or not at all.
- A mixed invoice with no breakdown: contractors issue an invoice containing both development and manufacturing or service work without separating the items. The tax office then cuts the whole contract, not just the ineligible part.
- Wrongly classified as contract research: pure programming or engineering work to a requirements document is declared as contract research. The BSFZ and the tax office assess the substantive character and don't recognise implementation work as eligible.
- A contractor outside the EU/EEA: contracts with companies in Switzerland, the United Kingdom or third countries are not eligible, even where the work would substantively qualify as R&D.
- No link to the BSFZ-certified project: the contract doesn't name the project for which the BSFZ issued the certificate. During assessment the attribution then can't be evidenced robustly.
FAQ
What percentage of the contract research fee is eligible for the Forschungszulage? For contracts awarded before 28 March 2024, 60 per cent of the fee is eligible. For contracts from 28 March 2024 an increased rate of 70 per cent applies, introduced by the Growth Opportunities Act.
Can I claim contract research at universities or research institutes for the Forschungszulage? Yes. The contractor has to be based in an EU member state or EEA state. Universities and non-university research institutions in Germany or the EU meet that condition. What matters is that the subject of the contract is contractually attributed to an eligible R&D project.
What is the difference between contract research and an ordinary development service? Contract research within the meaning of the FZulG exists where the contractor makes an independent R&D contribution, meaning they carry out research or experimental development themselves. Pure implementation or programming work based on supplied specifications doesn't count as contract research and doesn't fall under § 3 (4) FZulG.
Does the contract research fee count towards the €12m assessment base limit? Yes. The eligible share of the contract research fee feeds into the same assessment base as staff costs and own work. The overall limit of €12 million per financial year applies to all types of expenditure together and per linked group of companies.
What happens if an invoice shows development and series production work together? Mixed invoices that don't separate R&D from operational work regularly lead to the whole contract being rejected during assessment. The separation has to be built into the quote and the contract, not first appear in the invoice.
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All the detail, eligibility and pitfalls:
- [1]§ 3 FZulG — eligible expenditure and the assessment base— Federal Ministry of Justice · gesetze-im-internet.de, 2026 Source
- [2]Research Allowance Act (FZulG) — consolidated version— Federal Ministry of Justice · gesetze-im-internet.de, 2026 Source
- [3]Act on an immediate tax investment programme to strengthen Germany as a business location (BGBl. I no. 161, 18 July 2025)— Bundesgesetzblatt, 2025 Source
- [4]Assessment guide of the Bescheinigungsstelle Forschungszulage (as at October 2025)— Bescheinigungsstelle Forschungszulage (BSFZ), 2025 Source
- [5]The Growth Opportunities Act — changes to the FZulG (in force since 28 March 2024)— Bescheinigungsstelle Forschungszulage (BSFZ), 2024 Source
- [6]Ministry of Finance circular of 7 February 2023 on granting the Forschungszulage under the FZulG (AEFZulG)— Federal Ministry of Finance, 2023 Source