Utilization of research allowance for companies below expectations
- Research allowance of up to €1 million p.a. for the period 2020 to 2025
- Stifterverband estimates: only around two-thirds of R&D-active companies are aware of research grants
- Applications submitted fall short of expectations
- Challenging hurdles for applications
Research allowance: up to €1 million p.a.
On 01.01.2020, the Law on Tax Subsidies for Research and Development (FZulG; BGBl I p. 2763) came into force. This law enables every company to claim a research allowance of up to €1 million p.a. of their allowable research expenses in the period 2020 to 2025 and can be offset against and paid out by tax assessment.
German companies can apply for the tax allowance for research expenditures regardless of size, legal form and industry. The application can be made retroactively – provided that the research and development project was started in 2020.
The aim of the research allowance is to strengthen Germany as an investment location and to stimulate research activities, particularly among small and medium-sized enterprises.
Many researching and innovative companies do not know about research allowance
In an inquiry by the consulting firm Kloepfel Consulting, Dr. Gero Stenke, head and managing director of science statistics at the Stifterverband, explains: “I assume that around two-thirds of R&D-active companies are aware of the research allowance. Awareness of the research allowance is steadily increasing and, indeed, varies according to the size and sector of the company. This is shown by figures from our R&D survey. We currently have such a survey back in the field, but the data will not be available until towards the end of 2022. In general, it can be said that the allowance is much better known among large companies than among small ones. Certainly, the applications made are below expectations. However, it must be considered that the research allowance can only be applied for R&D projects carried out from 2020 onwards. An application can only be submitted since spring 2021 because funding is only granted retroactively. Measures have already been taken to make the research allowance more attractive and more suitable. For example, regarding the amount of the assessment basis.”
The Stifterverband estimates that around 30,000 German companies regularly conduct research and development, across all size categories and industries. In addition, there are sporadic companies that conduct research on an ad hoc basis. This amounts to another 20,000 to 25,000 German companies.
Help with applications
Duran Sariakaya, CEO Kloepfel Consulting and funding expert, explains: “The application process can be carried out by the companies themselves. However, our experience has shown that not only the actual research topic, but also the scientific description and the terminology used have a significant impact on the evaluation by the authorities and the financial authorities. In this respect, Kloepfel Consulting cooperates with EPSA Group, which supports companies with its 30 years of experience in the field of grants. For EPSA, 300 scientific consultants work on description, evaluation and monetization of research projects.”
Contact
Kloepfel Group
Christopher Willson
Tel.: 0211 941 984 33
Pempelforter Str. 50
40211 Duesseldorf
Mail: rendite@kloepfel-consulting.com