Why Is Time Tracking for the Research Allowance So Important?
Time tracking is the backbone of every successful Forschungszulage application under the Forschungszulagengesetz (FZulG). The reason is simple: eligible personnel costs – i.e., the gross wages and salaries of employees working in research and development – constitute by far the largest share of the assessment base. And these personnel costs must be determined and documented proportionally based on the actual time spent on R&D projects.
When assessing the Forschungszulage, the Finanzamt checks whether the claimed personnel costs can be plausibly and verifiably allocated to the certified R&D projects. Without proper time tracking, the basis for this allocation is missing – with the consequence that the Finanzamt reduces the assessment base or, in the worst case, rejects the application entirely.
Besonders relevant wird die Zeiterfassung in folgenden Situationen:
What the Tax Office Expects from Time Tracking
The Forschungszulagengesetz itself does not contain detailed requirements for the form of time tracking. The requirements arise instead from general tax documentation obligations, guidance from the BMF (Federal Ministry of Finance), and the audit practices of tax offices. The following principles have become established as standard:
Projektbezogene Erfassung
The most important requirement: every recorded working hour must be allocable to a specific R&D project. The project must correspond to the project submitted to and certified by the BSFZ. A blanket statement such as “40% of working time for R&D” without project allocation is insufficient.
Daily or Weekly Recording
Ideally, time should be tracked on a daily basis. In practice, weekly recording is also accepted by most tax offices, provided it is consistent and plausible. Purely monthly or quarterly recording, however, is considered too imprecise and carries significant risks during an audit.
Separation of R&D Activities and Routine Work
It must be clearly identifiable which activities are classified as R&D and which belong to normal business operations. This distinction is particularly important for employees who are only partially involved in R&D projects. Typical examples of the distinction:
- R&D activity: Development of a new image recognition algorithm, construction of a prototype with novel material combinations, conducting test series to validate a new process
- Not R&D activity: Routine software maintenance, quality control following standard procedures, customer support, administrative tasks
Plausibility Check
The Finanzamt compares the reported R&D hours with the total working time of each employee. If an employee works 40 hours per week according to their employment contract but 45 hours of R&D projects are claimed, this will be flagged. Likewise, it is checked whether the number of claimed employees is plausible relative to the company size.
Signature and Confirmation
Time tracking records should be confirmed (signed or digitally approved) by the respective employee and ideally also by the project leader or supervisor. This significantly increases the credibility of the documentation and is an important aspect during tax audits.
R&D Time Tracking Methods Compared
In practice, three basic methods of R&D time tracking have become established, differing in accuracy, effort, and acceptance by the Finanzamt. The choice of the right method depends on the company size, existing IT infrastructure, and whether current or retroactive periods need to be documented.
1. Projektbezogene Stundenerfassung
With this method, each employee records daily or weekly the hours worked on a specific R&D project. Recording is done via a time tracking tool, project management software, or a structured Excel template with project codes.
- Genauigkeit: Hoch – exakte Zuordnung jeder Stunde zu einem Projekt
- Acceptance by the Finanzamt: Very good – the best basis for audit-proof documentation
- Effort: Medium to high – requires employee discipline and regular review
- Suitable for: Companies with structured R&D departments, multiple parallel projects, medium and large enterprises
2. Estimation Method with Plausibility Check
With the estimation method, the R&D share of an employee is set at a flat rate, e.g. “60% of working time for Project X”. However, this estimate must be substantiated with plausibility evidence – such as project plans, milestone reports, meeting minutes, or progress reports.
- Genauigkeit: Mittel – weniger detailliert als die Stundenerfassung
- Akzeptanz beim Finanzamt: Akzeptabel bei konsistenter und nachvollziehbarer Dokumentation
- Effort: Low to medium – less effort for employees, but additional effort for plausibility substantiation
- Suitable for: Small companies with few R&D employees, companies with clearly defined R&D roles
3. Retroactive Reconstruction
For retroactive applications for past fiscal years (2020–2025), project-related time tracking often does not exist. In this case, the time allocation must be retroactively reconstructed. Sources include:
- Project plans and milestone reports
- Email histories and calendar entries
- Git-Commits, Jira-/Confluence-Tickets, Versionsverwaltung
- Protokolle von Projektmeetings
- Reisekostenabrechnungen zu Projektterminen
- Sworn statements from involved employees
Retroactive reconstruction requires particular care and experience, as the documentation must be complete and internally consistent. NOVARIS Consulting handles the entire time tracking for companies – including retroactively. Using GoBD-compliant software, we create complete, audit-proof documentation, ensuring you are fully protected in the event of a tax audit.
Recommended Tools for R&D Time Tracking
The choice of the right tool depends on the size of your company, existing IT infrastructure, and the number of your R&D employees. Three categories can be distinguished:
ERP-Systeme mit Projektmodul
Companies already using an ERP system such as SAP, Microsoft Dynamics, or DATEV can often use the integrated project time tracking. The advantage: the data is directly linked to payroll, which greatly simplifies the subsequent calculation of the assessment base. Time tracking is automatically consistent with salary data – an important plus during Finanzamt reviews.
Dedizierte Zeiterfassungstools
Specialized solutions such as Clockodo, TimeTac, Personio, or Toggl offer project-based time tracking with detailed reporting capabilities. Many of these tools feature export functions, audit trails, and approval workflows that are particularly useful for FZulG documentation. When selecting, pay attention to:
- Project reference: Ability to allocate time to specific projects (and ideally BSFZ project numbers)
- Export function: Structured data export (CSV, PDF) for submission to the Finanzamt
- Audit trail: Traceability of when entries were created or modified
- Approval workflow: Option for confirmation by supervisors/project leaders
Simple Solutions for Small Companies
For companies with few R&D employees, a structured Excel template with project codes can also be sufficient. The key is that the template contains all required information: employee name, calendar week/day, project name (matching the BSFZ certificate), number of hours, and a signature line. NOVARIS handles complete time tracking for you – GoBD-compliant and with specialized software that meets all FZulG requirements. You receive the finished documentation that withstands tax audits.
Regardless of the chosen solution, four criteria must be met: (1) Project-based allocation of working hours, (2) immutability or versioning of entries after the fact (audit trail), (3) ability to export data in a structured format for the Finanzamt, and (4) archiving capability for at least 10 years. If your existing tool meets these criteria, you do not need to introduce a new system.
The 5 Most Common Mistakes in Time Tracking – and How to Avoid Them
From our many years of consulting experience, we know the typical pitfalls. We see the following five mistakes repeatedly – and they can all be avoided.
The most common mistake: employees record their total working time, but without distinguishing between R&D activities and routine work. The Finanzamt, however, requires a clear distinction. If a software developer works on both a new AI algorithm (R&D) and bug fixes in ongoing operations (not R&D), these activities must be recorded separately.
Purely monthly recording (“In January I worked approximately 80 hours on Project X”) is increasingly viewed as insufficient by tax offices. The coarser the recording, the greater the risk that plausibility will be questioned.
Manche Unternehmen erfassen zwar F&E-Stunden, ordnen sie aber keinem spezifischen Projekt zu. Stattdessen wird pauschal „F&E“ oder „Entwicklung“ als Kategorie verwendet. Die Zeiterfassung muss auf die einzelnen, bei der BSFZ bescheinigten Vorhaben heruntergebrochen werden.
Many companies only track the R&D hours of their full-time employees and forget that part-time employees, working students, apprentices, and temporary employees are also eligible – provided they work on R&D projects. Working students and doctoral candidates in particular often make a significant contribution.
Especially with retroactive applications, we see that companies have maintained no project-based time tracking for years and now want to create it after the fact. While this is possible, it requires significantly more effort and carries the risk of lower accuracy.
Checklist: Is Your Time Tracking FZulG-Compliant?
Use the following checklist to verify whether your current time tracking meets the requirements for the Forschungszulage. If you can answer all points with “Yes”, you are on the safe side.
Frequently Asked Questions about Time Tracking
Further Resources
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