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Germany

The German R&D tax incentive scheme is new and was introduced in January 2020 and offers a 25% reduction in tax liability, or a cash credit.

The scheme is retrospective and the first applications can be made on 1 January 2021. Some aspects of the regime are still to be decided and implemented and are expected to be finalised by the end of Q1 2020.

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germanyGermanyGenerosityEase of ApplicationLevel ofreview or enquiryexpected?Are other R&D Incentivesavailable?Isforeign-owned R&D eligible?R&D must occur in thecountryIs preapprovalrequired?Previous financial years claimable425%
All Companies
25% reduction in tax liability, or cash credit paid.
Benefit Overview
25% on labour and contract research costs, to a maximum claim of €500k per company (or group/holding if the company is part of a larger organisation). The tax benefit is taken as a reduction on the corporate tax owed or, if there is insufficient tax liability, a credit is payed out.
Eligible Claim Period

This is a retrospective regime – the first application can be made in 1 January 2021.

There is a possibility to claim more than 1 year back on any eligible R&D activity, although this has not yet been confirmed.

Historical Background
This is a very new regime, started on 1 January 2020. Law has been accepted and the eligible claim period started the 1st of January 2020. All other aspects of the regime (application process, playing rules, involved bodies etc.) still have to be decided and implemented. This is expected to be finalised at the end of Q1 2020.
Ease of Application

This is a retrospective regime. However, the eligibility of a project(s) can be checked and confirmed upfront, which need to be submitted electronically.

Since it is a.) a new regime that impacts and involves a lot of governmental bodies (at least two ministries, one granting body and the local finance authorities and b.) these bodies strongly refer to the European GBER and follow their regulations, we expect a lot of difficulties at least for the first two years.

Regulating Body Policies

Regulation is managed by the Ministry of Finance, the Ministry of Economic Affairs and the Ministry of Research and Education and a separate, granting body (existing or new) is being set up to handle all R&D claims. The assumed budget is € 1,25 Billion per year.

Eligible Costs
Labour and (60% of) external contract research.
Issues to Consider
As this is such a new regime, the finer details of the claim process and benefit calculations are still being ironed out (these are expected to be confirmed by the end of Q1 2020)

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