Overview of the Growth Opportunities Act
The German parliament had already approved the Growth Opportunities Act on November 17, 2023. Its adoption by the Bundesrat is expected to be postponed until 2024 due to the lack of a budget. The following amendments are to be adopted for 2024:
Basis of Assessment and eligible assets
1. The basis of the assessment will therefore increase to EUR 12 million per year from 2024. The assessment basis comprises the eligible expenses incurred in the financial year and generally amounts to EUR 2 million, but can be extended. The maximum assessment basis has now been increased from EUR 4 million to EUR 12 million.
2. Investments in assets are eligible for funding as part of R&D projects. The research allowance is extended to depreciable movable fixed assets such as machinery. This includes acquisition and production costs if these assets were acquired or manufactured after December 31, 2023. These assets may only be used in the subsidized research and development project for the company's own purposes and must be necessary for its implementation.
On work and third-party development services
3. Own work by a sole proprietor in a subsidized R&D project in the amount of EUR 40 per working hour for a maximum of 40 hours per week is taken into account as eligible expenditure. In order to make the research allowance more attractive for sole traders, the eligible value of own work will be increased to EUR 70 per working hour. The same should now also apply to personal contributions by co-entrepreneurs.
4. 70% of third-party development services are eligible. For research and development projects commissioned after December 31, 2023, the eligible expenses will increase from 60% to 70% of the remuneration incurred in the beneficiary R&D project. This provides companies with slightly greater relief with regard to the external services required.
Funding rate for SME's and early recognition
5. The funding rate for SME's increases to 35%. Eligible companies that are considered small or medium-sized enterprises (see Annex to the Research Allowance Act) can also apply for an increase in the research allowance of 10 percentage points. For these SME's, the rate increases from 25% to 35%.
6. The German R&D Tax Credit will be recognized earlier. In future, the research allowance will already be taken into account in the advance payment procedure in order to achieve faster crediting of the allowance against the tax liability. Under certain circumstances, you can have your tax prepayments adjusted to up to EUR 0: This is possible if the tax return for the next first assessment of income or corporation tax is not yet available at the time the research allowance is assessed.
Your next steps
Our experts at nxt milestone will be happy to advise you on all aspects of the research allowance. We identify eligible projects and help you to apply for the research allowance. Fill out our questionnaire (LINK) and our experts will contact you immediately to review the project in detail.
