public funding

Affiliated companies are companies that are legally or economically connected, for example through shareholdings, control, group structures or dominant influence. In funding programmes, they matter for SME classification, state-aid law, funding limits and possible double funding. Applicants therefore should not assess only their own company in isolation. Shareholding and group structures should be checked early so that the application and cost logic remain formally robust.

Basic research is an R&D category focused on general knowledge gain, where a concrete economic application does not necessarily need to be foreseeable yet. For typical company projects, it is less often the right classification. Nevertheless, the term is important because many funding logics distinguish between basic research, industrial research and experimental development. Applicants should use basic research only when the research character is truly central.

The BSFZ certificate is the technical proof that a project has been recognized as an R&D project. Without a positive certificate, the later tax claim through the tax office cannot be properly processed. The certificate refers to the technical eligibility of the project, not automatically to every individual cost item. For companies, it is therefore a central element, but not the full completion of the R&D tax incentive procedure.

ZIM stands for Central Innovation Programme for SMEs. It is a grant programme for innovative R&D projects by medium-sized companies. Unlike the R&D tax incentive, ZIM is typically applied for before project start and processed as a grant after approval. For applicants, ZIM is especially interesting when there is a clearly innovative development project with technical risk, market relevance and a plausible exploitation plan.

BSFZ stands for Certification Office for the Research Allowance. It assesses whether a described project qualifies as research and development under the German Research Allowance Act. The BSFZ does not determine the exact tax amount of the allowance, but decides on the technical R&D recognition. For applicants, the BSFZ is often the first decisive step in the two-stage R&D tax incentive procedure.

The degree of novelty describes how new a project, product, process or technical solution approach is compared with existing solutions. It does not necessarily need to be revolutionary, but should be technically traceable and specifically justified. In funding applications, a marketing statement such as “innovative” is not enough; technical differences from the state of the art are needed. Novelty can result from a new function, improved performance, a new combination of technologies or a previously unresolved technical implementation.

Eligibility answers the question of whether a project can generally be funded under the rules of a funding programme. It concerns R&D character, technical uncertainty, project type, applicant, cost types, deadlines and formal programme criteria. For the R&D tax incentive, the technical R&D eligibility of the project is central; for ZIM, the programme logic of an innovative SME R&D project is also important. Eligibility does not automatically mean that an application will be approved or that every cost item will be accepted.

Eligibility to apply describes whether a company or organization is allowed to submit an application in a specific funding programme. Depending on the programme, it can depend on legal form, company location, tax status, company size, sector, creditworthiness, group structure or project role. Eligibility to apply must be distinguished from project eligibility. A company can be eligible to apply while the specific project is not eligible, or a project can appear technically suitable while the applicant does not fit the programme target group.

Experimental development is the most common R&D category in company projects. It refers to the development of new or significantly improved products, processes or services under technical uncertainty. It can include prototypes, simulations, tests, iterations and technical validation. For applicants, it is important to show the difference from routine development: it must be uncertain whether and how the technical objective can be achieved.

BMFTR stands for Federal Ministry of Research, Technology and Space. The term is relevant in research and funding contexts because federal ministries can shape funding programmes, research strategies and political frameworks. For concrete applications, however, project management agencies, granting authorities, the BSFZ or the tax office are often more important than the ministry itself. In a glossary, BMFTR should therefore be explained as an institutional context term, not as the standard contact for every funding application.

The funding amount is the concrete amount expected, applied for or approved as a grant, allowance or other funding. It results from the cost basis, funding rate, funding caps and possible deductions or state-aid rules. The funding amount is not identical with the total project costs. In communication, it should always be clear whether the applied, expected, approved or paid funding amount is meant.

The funding landscape describes the overall set of available funding programmes, authorities, project management agencies, guidelines and application routes. For companies, it often appears confusing because tax incentives, grant programmes, state programmes, federal programmes and EU funding follow different logics. A good funding strategy therefore starts with the project idea, development risk and company situation. Only then should it be decided whether the R&D tax incentive, ZIM or another funding programme is the best technical and economic fit.

Funding merit describes whether a project is technically, economically and substantively convincing enough to justify public support. The term is especially relevant for grant programmes with evaluation, competition or quality assessment. A project can be formally eligible but still appear weak in merit if innovation level, market relevance, benefit or technical risk are poorly justified. Good applications therefore show not only that funding is allowed, but why the project deserves funding.

A funding programme is a specific public programme with defined objectives, target groups, funding rates, eligible cost types and procedural rules. Examples include the R&D tax incentive and ZIM, both of which support R&D but work very differently. A funding programme defines who is eligible, which projects can be funded and which documents are required. For applicants, it is crucial to choose the programme that fits the project logic, not simply the programme with the highest funding rate.

The funding rate describes the percentage share by which eligible costs, expenses or an assessment basis are supported. It is not automatically identical to the share of total project costs because only certain cost items may be recognized. Applications must therefore clearly define what the funding rate is applied to. A high funding rate may sound attractive, but without a clean cost basis it says little about the actual funding amount.

The granting authority is the body that decides on a funding application or issues the approval notice. Depending on the funding programme, it may be identical with the project management agency or separate from it. For applicants, it is important that the granting authority is responsible for the formal funding decision. The approval notice then defines rights, obligations, funding amount, auxiliary provisions and documentation requirements.

The Growth Opportunities Act is a legislative package that introduced changes related, among other things, to the German R&D tax incentive. For applicants, it is relevant because such legal changes can affect assessment bases, eligible expenses, funding amounts or administrative details. The term therefore often appears in connection with the attractiveness of the R&D tax incentive. In a glossary, it should not be understood as a separate funding programme, but as a legislative amendment framework.

Industrial research is an R&D category with a stronger focus on knowledge and technology than pure product development. It aims to create new technical foundations, cause-effect relationships or solution concepts for later products, processes or services. In funding applications, industrial research is relevant when a project is not only focused on implementation, but on generating new technical knowledge. The distinction from experimental development should be technically well justified.

The level of innovation describes the strength of the technical novelty and the distance from the previous state of the art. In ZIM, it is especially important because not only R&D eligibility, but also the quality and market relevance of the innovation are assessed. A high level of innovation exists when a project contains significant technical improvements, new operating principles or demanding development steps. Applicants should always justify the level of innovation technically and support it with concrete comparison metrics, target values or competitive differences.

Product development is the engineering development of new or improved products, assemblies, software, processes or services. It is not automatically eligible for funding because many product developments are normal design, integration or adaptation of known solutions. Product development becomes funding-relevant when it contains genuine R&D elements with technical uncertainty, novelty and systematic knowledge gain. The application must therefore make clear which parts are routine and which parts go beyond the state of the art.

A project management agency supports funding applications on behalf of a ministry from a technical and administrative perspective. It reviews documents, communicates with applicants, supports approval and project implementation and often checks reports and documentation. For applicants, the project management agency is usually the operational contact in the funding process. It is not necessarily the political funding authority, but the implementing organization in the procedure.

R&D stands for research and development. The term is central to the R&D tax incentive, ZIM and many other funding programmes. Not every product development activity is eligible; a project must involve traceable knowledge gain, technical uncertainty or an innovative development component. For applicants, R&D is therefore the key distinction from routine design, serial adaptation, pure procurement or normal contract work.

An R&D project is the specific research and development project intended for funding. It needs a technical objective, technical uncertainties, a systematic solution path, work packages and traceable project results. For the R&D tax incentive and ZIM, it must be clear what is being developed, why the technical path is not trivial and where the knowledge gain or innovation lies. A clearly defined R&D project is the basis for the application, cost allocation and later documentation.

The R&D tax incentive is a tax-based support scheme for research and development in Germany. It is not paid upfront like a classical grant, but is determined or credited through the tax process afterwards. Eligible projects must contain technical or scientific uncertainty and must be addressed systematically. It is attractive for companies because it is open to industries and can also support internal development projects if the R&D logic is well justified.

FZulG is the abbreviation for the German Research Allowance Act. The law defines who can apply for the R&D tax incentive, which R&D projects are eligible and which expenses can generally be considered. For applicants, the act is important because it provides the legal framework for the tax incentive. In practice, the technical project description must therefore be written so that it clearly satisfies the R&D characteristics required by the law.

Routine development describes normal development work without significant technical uncertainty. It includes typical adaptations, variant creation, series maintenance, standard optimization, reverse engineering or the application of known methods. Such work is usually not eligible in R&D funding programmes because it does not contain true research or development character in the funding sense. A project can become eligible only when a non-trivial technical solution path with an uncertain outcome is systematically addressed.

SME stands for small and medium-sized enterprise. In funding programmes, SME classification is important because many programmes define special target groups, higher funding rates or bonuses for SMEs. The classification often depends not only on the individual company, but also on affiliated or partner companies. For applicants, the SME check is therefore a formal but often decisive step before defining the funding strategy.

An SME bonus is an additional funding advantage for small and medium-sized enterprises. It can take the form of a higher funding rate, increased subsidy rate, better access to funding or an additional benefit in the assessment basis. For the R&D tax incentive and grant programmes, SME status can therefore directly influence the economic attractiveness of an application. The SME bonus applies only if SME classification is properly documented according to the programme rules.

The state of the art describes which solutions, methods, products or processes are already known and available at the start of a project. It is the technical baseline for justifying novelty, technical uncertainty and level of innovation. An application must show what is already known in the market, literature, competitors or the applicant’s own company. Only then does it become clear how the planned project goes technically beyond existing solutions.

The subsidy rate is closely related to the funding rate and describes the percentage of support. In grant programmes, it is often applied to eligible costs; in tax incentives, it is applied to a defined assessment basis. Applicants should not view the term in isolation, but always together with cost type, programme rule and funding cap. The subsidy rate determines the calculation, but the accepted cost basis determines the real effect.

The tax office application is the tax-related application in the second step of the R&D tax incentive. After the technical BSFZ certificate, the company applies to the responsible tax office for the actual allowance based on eligible expenses. This step focuses more strongly on costs, documentation, allocation and tax determination. For applicants, it is important to keep the technical project logic and cost logic consistent.

Technical risk describes the possibility that the planned technical solution path will not work or that target values will not be achieved. It is closely related to technical uncertainty, but focuses more on failure or deviation from the development objective. In funding applications, technical risk is important because it shows why the project is not merely routine work. Good applications explain where the risk lies and how it will be reduced through work packages, simulation, testing or iterations.

Technical uncertainty means that, at the start of a project, it is technically unclear whether or how a technical objective can be achieved. It is a core criterion for R&D funding. Simply applying known methods, normal design work or straightforward variant development is usually not sufficient. The application should describe specifically which physical, design-related, software-related, process-related or methodological questions are still unresolved.

The two-stage procedure describes the R&D tax incentive process with technical assessment and tax determination. First, the BSFZ checks whether the project technically qualifies as R&D. Afterwards, the tax office assesses the tax claim and the specific eligible expenses. Many companies confuse these two levels, even though they have different roles and require different documentation.

An undertaking in difficulty is a state-aid term for companies in a critical economic situation. Depending on the funding programme, this status can exclude a company or trigger additional checks. Relevant factors can include insolvency, significant equity losses, inability to pay or other economic warning signs under the applicable rules. For applicants, the term is important because economic eligibility and technical project quality can be assessed separately.

A ZIM application is the complete funding application for a ZIM project. It typically includes a technical project description, state of the art, level of innovation, work plan, schedule, cost planning, market or exploitation section and financing logic. The application must show why the project goes beyond routine development and why public funding is justified. Good ZIM applications are technically specific, economically plausible and formally well structured.