Description of Incentive
Incentives distributed in the form of non-repayable cash grants are granted on a project basis. Traditionally, collaborative projects are preferred during distribution and there is no legal claim for R&D funding. The rates average at 50% but may fall in a higher bracket for SMEs.
When deciding on eligible projects, considerable factors include level of innovation, technical risk, and economic risk.
However, the German government may instead offer R&D loans to the R&D grants. These loans are not contingent on R&D activities being conducted in specific technology fields and no deadlines for applications.
A R&D tax incentive is not yet offered to businesses in Germany, yet it remains an area of much political discussions and debates.
Eligibility Requirements
Qualifying expenses include:
- personnel costs
- materials
- overhead
- subcontracts
- travel costs
Qualified activities include:
- Fundamental research – experimental or theoretical, purpose of gaining new knowledge
- Industrial research – specific practical objectives aimed to develop new products, processes or services, or improve existing ones
- Experimental research – aimed to provide a draft, plans or prototypes
Other Considerations
An important aspect to note is that R&D activities and costs must be conducted and incurred within Germany – with exploitation of the results (inclusive of IP) to remain for the majority, in Germany.
Swanson Reed offers the following services:
- Advice on tax preparation relevant to claiming the R&D tax credits incentive
- Preparation of documents relating to filing and substantiating a R&D taxation claim
- R&D tax advice and consultations
- R&D tax claim planning and preparation
For a full range of services in relation to the credit, please click here.