The Forschungszulage isn't open only to corporations. Sole traders and actively involved co-entrepreneurs in a partnership can claim their own working time on qualifying research and development at a notional hourly rate, with no payslip and no employment contract.
Who can claim own work
The Research Allowance Act (FZulG) is neutral as to legal form. All businesses taxable in Germany are entitled to claim, from sole traders through partnerships to a GmbH. Sole traders are expressly included.
The special mechanism for sole traders and actively involved co-entrepreneurs is in § 3 (3) FZulG: because these people receive no wage that could feed into the assessment base as staff cost, the Act values their working time at a notional hourly rate. The condition is that the person themselves, not just their employees, is actively working on a qualifying R&D project.
Actively involved co-entrepreneurs in a partnership benefit from the same mechanism where an employment or service contract expressly provides for remuneration for the R&D work and the time records evidence that work.
Hourly rate and cap from 2026
Since 1 January 2026, own work is valued at a notional rate of €100 per working hour. For hours worked before 1 January 2026 the earlier rate of €70 applied. The increase comes from the 2025 immediate tax investment programme, promulgated in the Federal Law Gazette of 18 July 2025.
The cap is unchanged: a maximum of 40 working hours a week. A sole trader working 48 weeks a year fully on a qualifying R&D project can therefore claim:
- 40 hours × 48 weeks × €100 = €192,000 (from 2026)
- 40 hours × 48 weeks × €70 = €134,400 (until the end of 2025)
Anyone not spending the full 40 hours a week on R&D claims only the R&D hours actually recorded. No estimates, no flat rates.
Calculating the assessment base
Own work feeds into the assessment base under § 3 FZulG as one item among several. From 2026 the maximum assessment base is €12m per financial year per group of companies. For most sole traders that limit is not a real constraint.
For financial years beginning after 31 December 2025 the 20% overhead flat rate is added: with no itemised evidence, a flat uplift of 20 per cent may be claimed on the remaining eligible expenditure. That applies to sole traders too, and the flat rate raises the assessment base on top of the own-work costs.
An example for a sole trader working 30 hours a week over 48 weeks on a qualifying R&D project (financial year 2026):
- Own work: 30 h × 48 weeks × €100 = €144,000
- Overhead flat rate (20%): €28,800
- Assessment base: €172,800
- Forschungszulage at 25% (standard): €43,200
- Forschungszulage at 35% (SME uplift on application): €60,480
Under § 4 FZulG the funding rate is 25% of the assessment base. Small and medium-sized companies (SMEs) as defined in Annex I of the General Block Exemption Regulation (GBER) can obtain an uplift of ten percentage points on application, giving 35%.
Time records: the decisive obligation
The biggest practical hurdle for sole traders is the time record. During assessment the tax office only accepts hours that can be robustly attributed to a specific, BSFZ-certified R&D project.
Reconstructions after the fact are regularly challenged. Anyone who waits until the year end and then estimates how many hours went into which project won't reliably discharge the burden of proof. The tax office assesses the records independently, regardless of what the BSFZ certified.
The following sources can serve as evidence or supplement the time record:
- Daily or weekly timesheets with project attribution
- Git commit histories with timestamps and author attribution
- Calendar entries with a description of the work
- Project journals or lab books
- Ticket systems (Jira, Linear) with time booking
What matters is the combination of timing and description of the work. A calendar entry with no link to the project isn't enough; nor is a Git history with no recognisable R&D link. Anyone keeping several of these sources in parallel is on safer ground in a tax audit.
The BSFZ certificate and the tax office
The Forschungszulage follows a two-stage procedure, regardless of legal form.
Step 1 — BSFZ: the R&D project is registered with the Bescheinigungsstelle Forschungszulage (BSFZ). The BSFZ assesses only whether it qualifies on the merits, against three criteria: novelty, technical and scientific uncertainty, and systematic method (the Frascati criteria). It does not assess cost levels or time records. Typical processing time is 2–4 months.
Step 2 — the tax office: with the BSFZ certificate, the sole trader applies to their tax office for assessment of the Forschungszulage. The tax office assesses the assessment base: own-work hours, the hourly rate and all other eligible expenditure. The Forschungszulage is credited against income tax; if it exceeds the tax burden, the excess is paid out.
The BSFZ certificate is a basic assessment notice that binds the tax office on whether the project qualifies. A positive BSFZ decision is a necessary but not sufficient condition for assessment: the tax office can reduce or reject the own-work costs if the time records aren't robust.
The R&D project has to have started after 1 January 2020 and must not be complete at the time of application. In addition, no other public funding may be claimed for the same expenditure (the ban on cumulation under § 7 FZulG).
FAQ
Can a sole trader claim the Forschungszulage? Yes. All businesses taxable in Germany are entitled to claim regardless of legal form, expressly including sole traders. Own work is valued under § 3 (3) FZulG at a notional rate of €100 an hour (from 2026), capped at 40 working hours a week.
What is the hourly rate for own work in 2026? From 1 January 2026 a notional rate of €100 per working hour applies, limited to 40 hours a week. For hours up to 31 December 2025 the previous rate of €70 applied. The change comes from the 2025 immediate tax investment programme.
What evidence do I need for own work under the Forschungszulage? The tax office requires complete, contemporaneous time records attributing every working hour to a specific R&D project. Reconstructions after the fact are regularly challenged. Calendar entries, commit histories or project journals can supplement the record but don't replace it.
Does the 20% overhead flat rate apply to sole traders too? Yes. The flat recognition of 20 per cent on the remaining eligible expenditure applies for financial years beginning after 31 December 2025, regardless of legal form. Sole traders can apply the flat rate to their own-work costs without evidencing overhead items individually.
Can a sole trader claim the Forschungszulage retroactively? Yes, within the four-year assessment period under § 169 (2) no. 2 AO. The conditions are a BSFZ certificate for the financial year in question and robust time records. For retroactive years up to the end of 2025 the old rate of €70 applies.
Forschungszulage 2026: the complete guide
A €12m assessment base, a 35% SME rate, a two-stage procedure: an overview of the Forschungszulage in 2026, and where to find the detail.
Forschungszulage: keeping time records properly
Without complete time records the tax office won't accept the staff costs. How the documentation has to be structured, which formats work, and what a tax audit looks for.
Forschungszulage: which staff costs are eligible
Which pay components feed into the assessment base, how the 20% overhead flat rate works from 2026, and why time records decide the payout.
Forschungszulage 2026: amounts, rates, caps
25% or 35% on an assessment base of up to €12m: what the Forschungszulage is actually worth in 2026 and which rates apply to your company.
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]§ 4 FZulG — the amount of the Forschungszulage— 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]The immediate tax investment programme and its effect on the Forschungszulage— Bescheinigungsstelle Forschungszulage (BSFZ), 2026 Source
- [5]Fiscal Code § 169 — limitation of assessment— Federal Ministry of Justice · gesetze-im-internet.de, 2024 Source
- [6]FAQ — assessment criteria and application procedure for the Forschungszulage— BSFZ, 2026 Source