Why is the SME definition important for the Forschungszulage?

If your company is classified as an SME, this can lead to higher funding rates under the Forschungszulage (Public Funding). You must check and document whether you qualify as an SME yourself – the classification depends not only on headcount and financial metrics, but often also on ownership and control structures (e.g., holding structures, sister companies, investors, family shareholders).

You can also find more about the funding and the practical application process directly at dieforschungszulage.de (internal info and entry point): https://www.dieforschungszulage.de/

The EU SME criteria: Thresholds at a glance

A company qualifies as an SME if it:

• has fewer than 250 employees (as full-time equivalents, FTE) and
• either
  • annual turnover ≤ €50m or
  • annual balance sheet total ≤ €43m

Important in practice:

• The employee threshold is strict: If you exceed it, you generally fail the SME criterion.
• For turnover vs. balance sheet total, it is sufficient if one of the two financial limits is met.
• As a rule, SME status only changes if thresholds are undercut or exceeded in two consecutive financial years.
• For newly founded companies without annual financial statements, the values are estimated.

What counts as an "enterprise"?

For the SME definition, an "enterprise" is any entity, regardless of legal form, that carries out an economic activity (e.g., selling products or services on the market). This includes, for example, self-employed persons, family businesses, partnerships, or associations with regular economic activity.

How the headcount is calculated (full-time equivalents)

More on calculating personnel costs for the Forschungszulage.

The headcount corresponds to the full-time equivalents (FTE) over a year:

• part-time and seasonal workers count pro rata
• apprentices as well as employees on maternity/parental leave are not included
• included, among others, are wage and salary earners, employee-like persons, as well as working owners/partners with regular activity

Caution: Shareholdings often determine SME status

More on this in detail: Forschungszulage in corporate groups.

Before checking turnover/balance sheet total/employees, you must clarify your company status:

1. Autonomous enterprise
2. Partner enterprise
3. Linked enterprises

Depending on the status, metrics must be included only from you, proportionally from partner enterprises, or in full from linked enterprises – including indirect shareholdings.

1) Autonomous enterprise: below 25% participation

A company is considered autonomous if:

• it holds < 25% of the shares/voting rights in another company and
• < 25% is held in it

Then, for the SME assessment, only your own figures count.

Exceptions: Even if the 25% threshold is reached/exceeded, the company can still be considered autonomous under certain conditions, e.g., with certain investor groups (including public investment corporations, venture capital companies, business angels up to certain limits, universities/non-profit research centres, institutional investors, small local authorities) – provided that no link arises within the meaning of the SME rules.

2) Partner enterprises: 25% to 50% (proportional attribution)

Partner enterprises exist when shareholdings between 25% and up to and including 50% exist (in either direction).

Consequence:

• You additionally include proportionally (quota-based) the figures of your partner enterprises.
• The relevant quota is based on capital share or voting rights – the higher value applies.
• In addition, figures from companies that are linked to your partner enterprise can become relevant (also pro rata via the participation quota).

Remember: Partner enterprises of the partner enterprise (i.e., "one level further") do not have to be taken into account in certain constellations – the exact delineation is decisive here.

3) Linked enterprises: dominant influence (full attribution)

Linked enterprises are constellations involving control/dominant influence, e.g.:

• obligation to consolidate (consolidated accounts)
• majority of voting rights
• right to appoint/remove the majority of management/supervisory bodies
• dominant influence via contract or articles of association
• sole control over voting rights via an agreement with other shareholders

Important: A link can also arise through natural persons or groups of natural persons acting jointly if multiple companies operate (in whole or in part) in the same or adjacent market.

Consequence:

• For linked enterprises, the figures of the linked enterprises are attributed at 100%.
• Partner enterprises at the level of linked enterprises are in turn taken into account proportionally.

Public ownership: When do I lose SME status?

A company is not an SME if 25% or more of its capital or voting rights are directly or indirectly controlled by public bodies (with certain narrowly defined exceptions).

Which figures count – and from which year?

The thresholds refer to the annual financial statements of the financial year for which the Forschungszulage is applied for. In group structures, consolidated accounts may also be relevant.

If you want to apply for the Forschungszulage (Public Funding), it is worth doing a clean preparation of the documentation (structure, shareholdings, evidence). On dieforschungszulage.de you get a structured process and support that typically saves time and avoids mistakes.

Benefits with dieforschungszulage.de (numbers):

• 100% digital process for preparing the application
• Experience from 1,000+ supported innovation projects
• Up to €4m funding per year possible (depending on your project and the eligible expenses)

More here: https://www.dieforschungszulage.de/

Official aids and guidelines (for your own assessment)

For detailed assessment and calculation logic, these official documents are particularly helpful:

• European Commission: User guide to the SME definition (German): https://op.europa.eu/de/publication-detail/-/publication/79c0ce87-f4dc-11e6-8a35-01aa75ed71a1/language-de
• KfW: Review and calculation schemes/calculation sheets (SME definition): https://www.kfw.de/PDF/Download-Center/F%C3%B6rderprogramme-(Inlandsf%C3%B6rderung)/PDF-Dokumente/6000000196_M_F_KMU-Definition.pdf

Frequently Asked Questions (FAQ)

Check out our guides about applications and funding

What are the SME thresholds for the Forschungszulage?

In the SME assessment, do turnover and balance sheet total both count at the same time?

What does "full-time equivalent" (FTE) mean in the SME definition?

When do I have to include partner or linked enterprises in the calculation?

Does SME status change immediately if I exceed a threshold?

Where can I find support for the Forschungszulage—including classification of the corporate structure?