Is the research allowance a success?

Aug 5, 2022 | Research allowance FZulG

Is the research allowance a success? – ARTTIC Innovation takes stock

Understandably, all stakeholders wonder if the research grant is a success. For a comprehensive evaluation, however, all stakeholders must wait until 2025, when the evaluation by the federal government is planned. However, two small questions in the Bundestag allow first conclusions about the acceptance of the research allowance and the underlying dynamics (Drucksache 19/31672 and 20/724) [1] [2]. Given the estimate that approx. 5.6 billion research allowance could and should be drawn down between 2021 and 2024 [3] (see R&D/GDP target of 3.5% by 2025) [2], as well as the formulated ambition to play in the premier league in research funding [4], the following questions arise for the success to be evaluated:

Is the volume of research grant applications growing rapidly?

How much research allowance has been approved so far and will the €5.6 billion be reached?

This question is more complex even at first glance, as no figures are available on the average amount of project costs submitted/claimed per project. The 28th subsidy report cannot help in this regard either, as the underlying calculation was not disclosed and only 2 calendar years were used to determine the expected tax revenue reduction [5]. Therefore, a number of auxiliary assumptions must be attempted.

  • The average project amount is to be € 260,000 (≈ annual R&D expenditure of a German SME [3]).
  • The project sum covers an average project duration of approx. 3 years.
  • Distribution key project amount previous year-application year-subsequent year 25:50:25

These simplifications can be made, based on your own data. Using the additional data available from the minor inquiries in the form of the number of approved applications (4,209 by January 31, 2022), the success rate (79%, of approved applications by January 31, 2022), and the project rate (an average of 1.38 projects per application), we arrive at the following estimate for the total research grant entitlement acquired by January 31, 2022 (but extending beyond that date), beginning in 2020 in the amount of 437 million.

If the pace of proposal submission does not increase and the average project size and length do not change, a value of €1.3 billion can be forecast for the entire period 2021-2024 (call of research allowance for 2020-2023), assuming a stable distribution of expenditures (25:50:25). This would not even correspond to a quarter of the planned funding amount for this instrument compared to the estimate mentioned at the beginning. However, if the volume of applications submitted doubles each year from 2022 onwards compared with the previous year, the total amount of the research allowance could be as much as €2.4 billion. However, even this value would not be half as much as hoped for. However, the entitlements calculated in the 28th subsidy report are €3.77 billion for 2020 and 2021, which would already represent overfulfillment.

In the meantime, thanks to the 2022 federal budget, there is certainty about how much revenue shortfall the research grant actually caused in the federal government’s coffers – and thus in the coffers of the states – in 2021 [6]. As a result, the federal government suffered a €9 million shortfall in revenue. This means that all companies in Germany will have drawn down just €18 million in research grants in 2021 (distribution key of corporate income tax federal government:Länder 50:50). The discrepancy between the calculations in the subsidy report and actual figures in the budget is glaring.

There may be several reasons for this. From our point of view, however, three factors in particular are decisive:

  • Companies take an incremental approach to requesting certifications and belatedly discover that this approach does not work by limiting them to a single retrieval per fiscal year,
  • Projects can be pre-approved and, more importantly,
  • the research allowance can still be called up four years after the end of a business year

Do small and medium-sized enterprises in particular benefit from the research allowance?


All three aspects examined show that the research allowance has not yet fully arrived in the German economy at the moment. It will continue to take the help of companies like ARTTIC Innovation GmbH to safely and successfully navigate companies to your legal right to research allowance. However, the flexibility demonstrated so far by the certifying body is a good prerequisite for the research allowance to make the intended contribution in achieving the target of R&D expenditures amounting to 3.5% of GDP.

Dr. Daniel Pawliczek
Funding Consultant at ARTTIC Innovation


[1] Printed Paper 19/31672 (
[2] Printed matter 20/724 (
[3] 2020-02-new-research-subsidy-in-germany.pdf.
[4] BMWK – Altmaier on the adoption of tax-based research funding in the Bundestag: Finally first league in research funding!
[5] 28th subsidy report (
[6] BHH 2022 total.pdf (