The planned Wachstumschancengesetz (growth opportunities act) will make the Forschungszulage (research tax allowance) even more attractive. It is intended to incentivise companies liable to tax in Germany to invest in climate-friendly technologies. The draft bill also contains updated, improved regulations on the research tax allowance, which are to apply from 2024. Even if the adoption of the growth opportunities act is currently (as of December 2023) delayed, we will outline the most important planned changes in this blog article.

The Bundestag had already approved the growth opportunities act on 17 November 2023. Its adoption by the Bundesrat is expected to be postponed until 2024 due to the lack of a budget. If it goes ahead as planned, the following changes to the Forschungszulage are expected from 2024:

 

The assessment basis increases to EUR 12 million per year.

The assessment basis comprises the eligible expenses incurred in the financial year and is generally EUR 2 million, but can be extended. The maximum assessment basis has now been increased from EUR 4 million to EUR 12 million.

Investments in assets are eligible for funding as part of R&D projects.

The research allowance has been extended to depreciable movable fixed assets such as machinery. This includes acquisition and production costs, provided these assets were acquired or manufactured after 31 December 2023. These assets may only be used in the beneficiary R&D project for the company's own purposes and must be necessary for its implementation.

Own work increases to EUR 70 per working hour.

Previously, an individual entrepreneur's own work in a subsidised R&D project could be taken into account as eligible expenditure in the amount of EUR 40 per working hour up to a maximum of 40 hours per week. In order to make the research allowance more attractive for sole traders, the eligible value of own work will be increased to EUR 70 per working hour. The same should now also apply to own work by co-entrepreneurs.

70% of external development services are eligible.

For research and development projects commissioned after 31 December 2023, the eligible expenses will increase from 60% to 70% of the remuneration incurred in the beneficiary R&D project. This provides slightly greater relief for companies with regard to the external services required.

The funding rate for SMEs increases to 35%.

Eligible companies that are considered small or medium-sized enterprises (see Annex to the research allowance law) can also apply for an increase in the research allowance of 10 percentage points. For these SMEs, the rate increases from 25% to 35%.

The research allowance is credited earlier.

In future, the research allowance will already be taken into account in the advance payment procedure in order to achieve faster crediting of the allowance against the tax liability. Under certain circumstances, you can have your tax prepayments adjusted to up to EUR 0: This is possible if the tax return for the next initial assessment of income or corporation tax is not yet available at the time the research allowance is assessed.

 

The law on tax incentives for research and development (Forschungszulagengesetz) has been in place since 2019 and is intended to improve the liquidity situation of companies in order to facilitate innovation. We have a lot of experience in applying for this funding instrument. Its great advantage: It can still be used in view of the current uncertain budgetary situation – and many of our customers receive their grant within 14 days of submitting their application.

Read everything you need to know about the research allowance on our topic page Forschungszulage (in German). We will be happy to advise you without obligation: We will identify eligible projects and help you to apply for the research allowance.

 

 Text: Birgit Miriam Hering

Tobias Kübler

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Tobias Kübler

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