R&D Tax Credit for Medical
Technology

Industry-Specific Requirements in Medical Technology

The medical technology sector benefits from a unique synergy between regulatory documentation and R&D evidence. The Medical Device Regulation (MDR 2017/745) requires extensive technical documentation – clinical evaluations, risk analyses per ISO 14971, usability tests per IEC 62366 – much of which can be repurposed as evidence for the R&D tax credit. Companies that already maintain MDR-compliant product files therefore have a significant advantage when applying to the BSFZ.

Clinical studies and biocompatibility testing are prime examples of eligible experimental development. Biocompatibility tests per ISO 10993 (cytotoxicity, sensitization, irritation, systemic toxicity) require systematic test series with uncertain outcomes – exactly the criterion the BSFZ demands for R&D recognition. The same applies to sterilization validations, aging tests and performance testing as part of clinical evaluation. Personnel costs for regulatory affairs staff involved in scientific evaluation can be included proportionally.

The CE marking process for medical devices of Classes IIa, IIb and III encompasses numerous R&D-relevant activities. Developing and validating test methods, creating clinical investigation plans, conducting verification and validation protocols (V&V), and collaborating with Notified Bodies all generate eligible personnel costs. Particularly for Software as a Medical Device (SaMD) per IEC 62304, R&D shares typically range from 50–70% of total development costs.

Our consultants with medical technology backgrounds identify eligible projects where generalists overlook them: in the further development of existing products (e.g. new materials for implants, improved algorithms for imaging systems, miniaturized sensors for patient monitoring). The development of combination products (drug-device combinations) and in-vitro diagnostics also offers substantial funding potential.

Eligible Medical Technology Projects in Detail

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Class II and III Medical Device Development

The development of medical devices in risk classes II and III under MDR Annex VIII represents one of the most common funding subjects under the research allowance. Class IIa and IIb products such as active therapeutic devices, implantable sensor systems, or diagnostic imaging equipment require extensive research and development before entering the regulatory phase. Technical uncertainty often lies in developing new mechanisms of action, miniaturizing assemblies, or integrating novel materials. Class III products — such as active implants, drug-eluting stents, or novel pacemakers — involve particularly intensive R&D phases due to their high-risk profile. The iterative design development, prototype manufacturing, and preclinical validation are typically fully eligible for the research allowance.

Software as a Medical Device (SaMD) under the MDR

Software as a Medical Device (SaMD) has become one of the most dynamically growing categories in the research allowance. Under the Medical Device Regulation, standalone software that performs diagnostic or therapeutic functions is classified as a medical device. Developing such software solutions under IEC 62304 encompasses numerous R&D-relevant activities: designing and training AI models for diagnostic imaging, developing algorithms for clinical decision support systems (CDSS), validating predictive models against clinical datasets, and creating new data processing architectures for real-time patient monitoring. The R&D share in SaMD projects typically ranges from 50 to 70 percent of total costs, making them particularly attractive candidates for the research allowance.

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Novel Diagnostic Imaging Algorithms

Developing innovative imaging algorithms for medical diagnostics is a prime example of eligible experimental development. This includes deep learning models for automated detection of pathological changes in CT, MRI, or ultrasound images, algorithms for three-dimensional reconstruction from two-dimensional scans, and methods for image enhancement and noise reduction in low-dose X-ray imaging. Technical uncertainty manifests in whether the developed algorithms achieve sufficient sensitivity and specificity to support clinically relevant decisions. The development of multimodal fusion algorithms that combine different imaging modalities also regularly qualifies for the research allowance.

Implant Material Research

Research and development of new implant materials represents a highly eligible R&D area. This includes developing bioresorbable polymers and ceramics for orthopedic implants, surface functionalization of titanium implants to improve osseointegration, researching antimicrobial coatings to reduce postoperative infections, and developing shape-memory alloys for self-expanding stents. Systematic material characterization under ISO 10993 — including cytotoxicity testing, hemocompatibility assessments, and long-term degradation studies — generates substantial eligible personnel costs. The development of patient-specific implant designs using additive manufacturing (3D printing) opens new funding opportunities, as it merges materials science research with applied product development.

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