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.

An amendment request is submitted when key aspects of an approved project change. This can concern project duration, cost plan, work packages, project partners, technical objectives or exploitation planning. It is important to report changes early before they become problematic under funding rules. A well-justified amendment request is usually better than explaining later why the project was carried out differently from what was approved.

Ancillary provisions are additional rules that form part of a grant notice or approval notice. They often regulate documentation, changes, procurement, notification duties, deadlines, retention duties and possible recovery of funds. For applicants, ancillary provisions are important because they strongly influence practical project execution. They should not be treated as a formality, but reviewed carefully before project start.

The assessment base is the calculation basis to which a percentage rate is applied. It is especially important for the R&D tax incentive because the allowance is calculated from a legally defined base and a funding rate. The assessment base is not automatically identical with total project costs or the total development budget. For applicants, it is crucial which expenses may be included in this base and how they must be documented.

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 application is the technical application within the R&D tax incentive process. It describes the R&D project, technical uncertainty, state of the art, solution path and systematic knowledge gain. The BSFZ uses it to assess whether the project can technically be recognized as research and development. The tax office application follows at the tax level and concerns the actual determination of the research allowance. It focuses on eligible expenses, allocation, documentation and tax treatment. A positive BSFZ certificate therefore does not automatically mean payment or final tax recognition of all costs. Conversely, without technical recognition by the BSFZ, the tax office cannot properly determine the allowance. Companies should build the technical project logic and cost logic consistently from the start. Good funding practice separates both steps clearly, but connects them through the same traceable R&D story.

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.

Clarification request management describes the structured handling of questions from the BSFZ, a project management agency, a granting authority or the tax office. It includes sharpening technical project arguments, adding documentation and answering formal questions consistently. Especially in technical R&D projects, the quality of the response can determine approval, further requests or rejection. Good clarification request management remains precise, consistent and closely aligned with the original project logic.

Conditions are requirements that the applicant must comply with as part of the approval. They can relate to project duration, costs, reports, documentation, procurement, notification duties or technical project objectives. If conditions are not met, this can cause problems during disbursement, audit or proof of use. In the worst case, reductions, recovery of funds or loss of funding may result.

Contract research means that R&D services are commissioned externally from another company, research institution or service provider. It is relevant for the R&D tax incentive and ZIM, but is treated and documented differently depending on the programme. The commissioned work must have a genuine R&D connection to the project and should not be merely a normal service or standard procurement. Contracts, service descriptions, work results and cost allocation should therefore be documented properly.

Creditable costs are costs that may actually be included in the funding calculation. The term is easy for applicants to understand, but legally less precise than “eligible”, “grant-eligible” or “allowable” costs. It is important to distinguish between incurred costs, generally eligible costs and actually creditable costs. Only the creditable cost basis ultimately leads to funding.

Cumulation describes the combination of multiple funding sources or state aid measures for a company, project or cost areas. It is not automatically prohibited, but must be permissible under the relevant programme and state-aid rules. The decisive question is whether the same costs are affected and which maximum aid limits apply. In a funding strategy, cumulation should be checked early so that programmes can be combined sensibly and risks avoided.

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.

De minimis aid is a small amount of state aid that can be granted in a simplified manner within defined limits. For applicants, it is important because de minimis aid already received often has to be declared or documented through certificates. Even if the individual amount seems small, the total over several years can become relevant. Companies should therefore collect their de minimis certificates systematically and check them for new applications.

Disbursement describes the actual payment of funding to the applicant or funding recipient. It occurs only when the respective programme requirements are fulfilled. In grant programmes, disbursement can be linked to drawdowns, documentation, checks or project progress. For liquidity planning, it is important to clearly distinguish approval, drawdown and disbursement.

Double funding means that the same cost item is funded inadmissibly through multiple funding programmes. This is generally not allowed and can lead to reductions or recovery of funds. Multiple funding programmes can in principle be combined if costs, work packages, periods and technical contents are clearly separated. For applicants, a clear cost centre logic and documentation are therefore especially important.

Drawdown of funds is the request for payment of already approved funding. It is typical for grant programmes where funds are not automatically paid in full, but requested in instalments or after costs have been incurred. The drawdown must match the cost plan, project progress, supporting documents and approval notice. Approval alone therefore does not replace the formal request for payment.

Early start of measure is an exception or authorization allowing a project to start before formal approval. The term is especially relevant in grant programmes where an incorrect early start can endanger funding. Permission for early start usually does not mean that funding has been approved, but only that the applicant may start at its own risk. Applicants should treat this point very carefully and avoid triggering binding project starts before the programme logic is clarified.

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.

Eligible costs is the more general term for costs that can in principle be considered under a funding programme. Eligible costs under grant law is the more administrative term used in classical grant programmes such as ZIM. The two terms sound similar, but they depend strongly on the specific programme context. In ZIM, funding typically refers to eligible costs within the approved project. In the R&D tax incentive, the terminology is more often eligible or allowable expenses. Applicants should not equate total project costs with the eligible cost base. A cost item can be real and incurred, but still not eligible under the funding rules. Project relevance, time period, documentation, programme guideline and separation from non-eligible work are decisive. In consulting, the key question should always be: which cost base does the specific programme really mean?

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.

Eligible costs are costs that can generally be considered under the rules of a funding programme. Depending on the programme, personnel costs, external services, materials, investments or other cost types may be treated differently. Eligible costs are not automatically approved or fully creditable. Programme guidelines, project relevance, documentation, time period and separation from non-eligible activities are decisive.

Eligible costs under grant law is a typical term used in grant programmes such as ZIM. It describes the cost basis to which a funding rate is applied under the relevant grant rules. The term is more administrative than “eligible costs” and can be less intuitive for applicants. In practice, it defines which project costs may be accepted in the financing plan and which may not.

Eligible expenses is a term that fits especially well with the R&D tax incentive. It refers to expenses that can generally be included in the tax incentive under the Research Allowance Act. These can include certain internal R&D personnel costs, contract research or other legally creditable positions. Applicants must distinguish between technical R&D recognition and tax recognition of expenses.

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 financial proof of expenditure is the financial accounting of project costs or expenses. It shows which costs were incurred, how they are documented and how they are allocated to approved cost items. It must match the cost plan, project duration, drawdowns, receipts and, where applicable, time records. For applicants, continuous clean documentation is much easier than reconstructing records after the project has ended.

Funding amount is a general term for the economic level of support. It can be understood as an absolute amount of money or as a relative rate. Applications and advisory work should therefore clarify whether funding rate, subsidy rate, funding amount or maximum possible funding is meant. Unclear usage often leads to misunderstandings, especially when comparing the R&D tax incentive and ZIM.

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.

A funding consultant supports companies with funding strategy, programme selection, application structure, project description, cost logic and clarification requests. They help translate technical project content into a funding logic and avoid typical formal mistakes. A funding consultant is not the same as a tax advisor, project management agency or granting authority. Good consulting combines technical understanding, funding logic and a clean documentation strategy.

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.

GBER stands for General Block Exemption Regulation. It is an EU framework that allows certain types of state aid if defined conditions are met. In funding practice, it appears in relation to funding rates, SME rules, eligible costs, cumulation and exclusions. Applicants do not need to interpret the GBER in detail, but should understand that many funding rules are based on this state-aid framework.

A grant approval notice is the official document confirming that funding has been approved. It typically contains the funding amount, project duration, cost framework, conditions, ancillary provisions and documentation duties. For applicants, it is the central legal reference for later project execution. Approval does not automatically mean that the money has already been disbursed.

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.

A grant notice is the administrative notice granting public funding. In practice, the term is often used similarly to grant approval notice, but it is more strongly rooted in classical grant law. It defines what the funds may be used for and which obligations the recipient must fulfil. For programmes such as ZIM, the grant notice is the basis for project start, drawdown of funds, reporting duties and proof of use.

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.

Own contribution is the part of the project costs that the company must bear itself. It is especially important in grant programmes because funding usually covers only a share of eligible costs. The own contribution must be financially viable and fit the company’s liquidity planning. A high funding amount is of limited value if the required own contribution is not secured.

Own funds are the financial resources used by a company to cover its own contribution or additional project costs. They can include available liquidity, internal financing, shareholder funds or other internal financing sources. Own funds are not the same as own work contribution because they describe money, not internal labour. In funding applications, own funds can be important to show that the overall financing and project implementation are plausible.

Own work contribution describes the internal work performed by entrepreneurs, shareholders or internal personnel in the project. It must be distinguished from own funds because it refers to work time or project work, not available liquidity. Depending on programme, legal form and cost logic, own work contribution is treated differently. Applicants need clean time recording and clear allocation to the R&D project if own work is to be considered.

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.

Project duration is the period during which a funded project is carried out. It must fit work packages, cost planning, documentation, reporting periods and, where relevant, fiscal years. In grant programmes, project duration is often linked to approval, payment requests and proof of use. For the R&D tax incentive, it is also important to allocate R&D activities and expenses cleanly to the correct period.

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.

Project start describes the point at which a project or measure is considered to have started under funding rules. The term is critical in grant programmes because a project often must not start before approval or authorized start of measure. Depending on the rules, not only technical work but also binding orders, contracts or assignments can count as project start. For the R&D tax incentive, the logic is different because retrospective assessment can be possible if the legal requirements are met.

Proof of use shows that public funding was used correctly for the approved purpose. It often consists of a technical report and a financial proof of expenditure. The technical report describes project execution, while the financial proof shows how the funds were used. A clean proof of use is essential to avoid reductions or recovery of funds after project completion.

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.

The R&D tax incentive and ZIM both support research and development, but they follow different funding logics. The R&D tax incentive is a tax-based R&D support scheme handled through the BSFZ certificate and the tax office. ZIM is a classical grant programme for innovative R&D projects by SMEs. For the R&D tax incentive, the main question is whether the project technically qualifies as R&D under the Research Allowance Act. For ZIM, level of innovation, market relevance, exploitation plan, work plan and programme fit are also important. The R&D tax incentive can be attractive for internal R&D projects, even if no classical grant application was submitted before project start. ZIM is more strongly linked to approval, project duration, drawdown of funds, reports and proof of use. Applicants need to decide whether the project should be treated mainly as tax-based R&D support or as an approved grant project. In practice, both programmes can be useful, but cost separation, double funding and procedural logic must be checked carefully.

Recovery of funds means that already disbursed funding must be repaid fully or partially. Reasons can include failure to meet the approved purpose, incorrect information, unmet conditions, non-accepted costs or faulty documentation. Recoveries are especially critical because they often arise during audits or after project completion. Good application structure, clear documentation and clean project separation significantly reduce this risk.

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.

State aid is an EU law term for public advantages granted to companies. Funding programmes often have to comply with state-aid rules, for example on aid limits, SME classification, undertakings in difficulty or cumulation. For applicants, the term may seem abstract, but it has practical consequences for funding amount and eligibility. State-aid law helps determine whether and to what extent public support may be granted.

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.

Subsidy-relevant facts are pieces of information that are material for approval, amount, disbursement, audit or recovery of funding. They can include project content, costs, company data, group structures, project start, own contribution or aid already received. Incorrect or incomplete information can become legally and economically serious. Applicants should therefore check such information carefully and report changes early.

A tax advisor is especially important for the R&D tax incentive because the tax claim is handled through the tax office. They support tax classification, accounting treatment, expense allocation, tax returns and communication with the tax office, for example. However, they do not automatically replace the technical R&D justification, which requires technical project argumentation. In practice, funding consultants and tax advisors ideally work in coordination.

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.

The technical report describes project progress, project results and achievement of objectives. In technical funding projects, it must show which work packages were carried out, which results were achieved and how these results relate to the approved objectives. It should not merely list activities, but explain the technical development traceably. For R&D projects, uncertainties, solution paths, findings and deviations should be presented clearly.

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.