The VDMA describes tax incentives for research as a tailor-made instrument for SMEs. It enables SMEs in particular to keep up their pace of innovation and remain competitive in the global market. The association therefore draws a positive interim conclusion after the first few months since the introduction of this instrument. "The tax incentives for research have been well received: Every fifth application for funding comes from the mechanical and plant engineering sector," says Hartmut Rauen, Deputy Managing Director of the VDMA. Taking the entire manufacturing industry as a benchmark, one in three applications came from the mechanical engineering sector. The success rate also speaks for itself: more than 80% of projects from the mechanical and plant engineering sector were approved. This figure is far higher than the chances of success for other funding instruments, explains Rauen: "Innovation funding has never been as reliable as the open-topic and unbureaucratic research grant!"

Companies have four years to apply

As the legislator has rightly given companies a longer period of four years to familiarize themselves with this instrument and submit an application, the criticism that arose during the parliamentary election campaign is misguided in the opinion of the VDMA. "Anyone who is now prematurely breaking the baton on tax incentives for research with reference to an alleged lack of demand is either misinformed or interested in technologies continuing to be steered by the state. But this leads to a technological dead end," emphasizes Dr. Ralph Wiechers, Head of the VDMA Tax Department. The instrument is new and companies first have to familiarize themselves with it. For good reason, they have up to four years to apply to the certification body for project eligibility and then to the tax office for the allowance. "The coronavirus pandemic was and is an unprecedented feat of strength for many companies. In this context, applying for the research allowance often had to wait, and thanks to generous application deadlines, it could," explains Wiechers.

Strengthening Germany as a location for innovation

The VDMA is calling on the future German government to further strengthen the instrument of tax incentives for research. "The competitiveness and technological performance of our industry must be the maxim of every new federal government from the autumn," emphasizes Rauen. "Good things like the research allowance can always be improved." According to ZEW estimates, doubling the assessment basis would mean an additional 200 million euros in future funding for mechanical and plant engineering alone. "This additional potential will help companies to tackle transformation processes even faster, for example towards climate-neutral production and a sustainable economy," explains the Deputy Managing Director of the VDMA. The joint commitment to a broad use of the research allowance must not be allowed to slacken now. Politicians, the certification body and the VDMA are pulling together here with a broad range of information and advice for companies, emphasizes Rauen.

Federal government's response allows industry comparison for the first time

The Federal Government's answer to a minor question from the FDP parliamentary group (printed matter 19/31672) shows that as of June 30, 2021, a total of 2417 applications for certification had been received by the certification body. Of these, 491 came from the mechanical and plant engineering sector. The manufacturing sector is followed by electrical engineering/IT with 268, chemicals/pharmaceuticals with 186 and motor vehicles/motor vehicle parts with 58 applications. Across all economic sectors, the proportion of positively approved projects to date is 83%, including in mechanical engineering. There are relatively few differences between individual company sizes or sectors.