R&D Tax Credit Is an Asset for Germany’s Innovation Landscape // Study on tax incentives for R&D in the chemical and pharmaceutical industry

Study on tax incentives for R&D in the chemical and pharmaceutical industry

The German tax credit for research and development ("research allowance") has been well-received in the chemical and pharmaceutical industry. This is the result of a study jointly conducted by ZEW Mannheim and the Center for Economic Policy Studies (CWS) at the Leibniz University Hanover, on behalf of the German Chemicals Industry Association (VCI). Ulrike Zimmer, director of Science, Technology and Environment at VCI, says: "The R&D tax credit is an asset for Germany's innovation landscape. We anticipate additional positive impacts from the Growth Opportunities Act, providing a tailwind for our industry."

As of March 2023, nearly 400 applicants from the chemical-pharmaceutical industry submitted over 1,300 proposals for the R&D tax credit. In total, 6.3 per cent of all applications were from the chemical and pharmaceutical industry. "This means that these two industries together are among those with the highest number of applicants. This ranks them fourth in terms of the highest number of applicants across all industries," explains co-author Dr. Christian Rammer, deputy head of ZEW's "Economics of Innovation and Industrial Dynamics" Unit. "Only information services, mechanical engineering, and the electrical industry have submitted more applications for the tax credit."