A dedicated research department is not required to qualify for the research tax credit. The decisive factor is whether a project meets the requirements for eligible research and development. In surface technology, this may include, for example, new coating and pretreatment methods, the replacement of processes containing chromium(VI), PFAS-free processes, or adaptations to new substrates for e-mobility and hydrogen technology.
Further developments aimed at improving corrosion protection, adhesion, or process reliability may also be relevant if they meet the criteria for research and development. The Research Allowance Act distinguishes between basic research, industrial research, and experimental development. Factors such as novelty, technical risks or uncertainties, and a systematic approach play a role in the technical assessment of a project.
“Many companies in the surface technology sector associate research and development exclusively with large research departments or university collaborations. In practice, however, R&D very often takes place directly within process development—for example, when a new coating process is being tested or an existing process is being adapted to meet new regulatory or technical requirements,” explains Inna Engel, energy and grant consultant.
Two-Step Process for the Research Allowance
The process consists of two stages. First, a certificate for the relevant R&D project is requested from the Research Tax Credit Certification Office (BSFZ). Subsequently, the application for the research tax credit is submitted to the responsible tax office. For expenses incurred in 2022, a funding rate of 25 percent of the eligible assessment basis applies. The increase to 35 percent for small and medium-sized enterprises, which has been in effect since March 28, 2024, does not yet apply to these expenses.
A technical adjustment or process change does not automatically qualify as an eligible R&D project. The content and scope of the specific project are decisive. Activities that serve solely to ensure the smooth operation of an already established production system do not fall under the eligible R&D categories.
Prepare technical documentation for older projects
For projects from 2022, technical documentation takes on particular importance. Relevant information may include, for example, development goals, technical objectives and uncertainties, test series, sample coatings, employees involved, and results achieved or targeted.
The BSFZ certificate must be submitted to the tax office before applying for the research tax credit. Companies with a fiscal year that aligns with the calendar year should therefore identify potential R&D activities from 2022 in a timely manner and coordinate the necessary procedural steps.
“Anyone who worked on new coating processes, substitution solutions, or technically challenging process adjustments in 2022 should have it reviewed now to determine whether this could have resulted in an eligible R&D project. Whether an actual entitlement exists can only be assessed on a case-by-case basis,” says Engel.