How to: When the Finanzamt (tax office) comes knocking – Betriebsprüfungen (tax audits) for the Forschungszulage (R&D tax credit)
What really happens during a Betriebsprüfung (tax audit) involving the Forschungszulage (R&D tax credit) – practical experience and advice for affected startups
As of: September 2026
Pierre Ostrowski
Co-Founder & Managing Partner
Contents
Why Betriebsprüfungen (tax audits) are becoming a problem for many startups
01 The roadmap: How does a Betriebsprüfung (tax audit) work?
Chronological procedure
02 The subtle problem: Auditor psychology
03 Tax audit strategy: The three pillars of truth
04 Tax office focus: Critical audit points
05 The Finale: Why results can be negotiated
06 The most common pitfalls at a glance
07 Lessons learned: What startups should do now
Why Betriebsprüfungen (tax audits) are becoming a problem for many startups
It is every founding team’s nightmare: after years of developing innovative technology, the company has applied for the Staatliche Forschungszulage (government R&D tax credit), received the Bescheide (official notices) and gratefully invested the money in growing the startup. Everything feels secure. Then, seemingly out of nowhere, an unremarkable letter from the Finanzamt (tax office) arrives: an order for a Betriebsprüfung (tax audit).
Anyone who assumes that with the approval by the Bescheinigungsstelle Forschungszulage BSFZ (Certification Authority for Research Allowances) and the subsequent Festsetzung (formal assessment) by the Finanzamt (tax office) nothing can go wrong could be mistaken. About five years after the Forschungszulage (R&D tax credit) was introduced, Finanzämter (finance offices) are now carrying out comprehensive and serious audits, with the aim of reclaiming as much of the funding as possible. The grace period is over – and with funding rates having increased again and the new Gemeinkostenpauschale (flat-rate overhead allowance), there is now even more money at stake, making these audits all the more attractive for the tax authorities.
The growing number of current cases shows that concerns about these audits are justified. It makes no difference whether companies applied for and received the funding themselves or were supported by specialists such as zebra embassy (ZE). Nor does the amount of funding make a difference. In response to the growing number of Betriebsprüfungen (tax audits) and the general uncertainty surrounding them, ZE has established the law firm ZE Tax & Legal, where Stefan Höhn (one of ZE’s founders), also advises companies during Betriebsprüfungen (tax audits). As a lawyer, he specialises in matters relating to the Forschungszulage (R&D tax credit). The effort ZE is currently putting into supporting its clients through this wave of audits also makes one thing clear: when a Betriebsprüfung (tax audit) is pending, the quality of professional advice really matters. For ZE, support does not end when the Forschungszulage (R&D tax credit) is paid out.
Practical Examples
Stefan Höhn can report of numerous cases – including that of a young company supported by zebra embassy that suddenly found itself facing what was, quite literally, a “€1 million cliff edge”. The Finanzamt (finance office) challenged the project start date – in its view, the project had already begun before 1 January 2020, i.e. before the cut-off date from which the Forschungszulage (R&D tax credit) became available. It therefore initially demanded repayment of the entire amount. The order for a Betriebsprüfung (tax audit) gave the startup’s founder and CEO the impression that the company would have to repay the full Forschungszulage (R&D tax credit): one million euros.
The psychological pressure was enormous.
Stefan Höhn recalls: “Our client genuinely thought that if the entire funding amount had to be repaid, he would be facing insolvency. That is why he immediately took measures such as moving support operations to India and reducing staff.”
The problem was that an audit can drag on for many months – in this case, it lasted nine months, Höhn recalls. But he also knows that Betriebsprüfungen (tax audits) can affect anyone – not just companies that have received exceptionally large amounts of funding.
In another case, the auditor criticised a company for allocating all newly hired employees fully to the funded project from their very first day. “Her argument was that the new employees first had to be onboarded – for which she allowed two working days per employee,” Stefan Höhn reports. “In total, this meant that the company had to repay about €3,500 out of a funding amount of €180,000.” This example makes two things clear: a Betriebsprüfung (tax audit) does not automatically result in financial disaster. And professional support can have a significant positive impact on how an audit unfolds.
The focus of a Betriebsprüfung (tax audit) can also vary considerably. “Around two thirds of audits are heavily dominated by legal questions: How are the costs of future provision properly calculated? What is the legal basis? Questions like these can often be resolved without any reduction,” Stefan Höhn explains from his experience. Things become more complex when individual documents are examined in depth. The Intercompany Agreement, i.e. the contractual relationship between affiliated companies where one conducts research on behalf of the other, is frequently scrutinised. If the provisions contained in this agreement have not been carefully examined and the findings have not been incorporated into the application for the Forschungszulage (R&D tax credit), this can create a significant risk. As with the project start date, determining whether a company was acting as a contractor for a third party or conducting research on its own behalf can be decisive for overall eligibility, explains the lawyer at ZE Tax & Legal.
“Moreover or conversely, there are also audits that conclude without any disputes or findings – and we often see identical or very similar circumstances being treated completely differently by different Finanzämter (finance offices), not even necessarily in different Bundesländer (states),” Höhn explains. It is difficult to tell from external circumstances when particular caution is required and when a company can approach an audit with confidence. His concise summary: “The only thing you can really rely on is your own good documentation and preparation for the audit!”
IMPORTANT: For founders, receiving the Steuerbescheid (tax assessment notice) often feels like the end of the process – in reality, this is where a Betriebsprüfung (tax audit) really begins. Companies that were too casual about documentation when applying may now find that negligence coming back to haunt them.
01 The roadmap: How does a Betriebsprüfung (tax audit) work?
Anyone expecting a Betriebsprüfung (tax audit) to follow a digitised, standardised process across Germany will quickly discover otherwise. In reality, the procedure resembles a bureaucratic patchwork.
Chronological procedure
The Prüfungsanordnung (formal audit order): Everything starts with an official letter from the responsible Finanzamt (finance office). It requests the first set of data and supporting documents.
Format chaos: The format in which this data must be provided varies completely from one Bundesland (state) to another – and sometimes even from one Finanzamt (finance office) to another.
Document review & interviews: Once the auditor has reviewed the documents, there are targeted follow-up questions, interviews with the team and , depending on the individual case, even a detailed on-site inspection.
The Schlussbesprechung (closing meeting): The grand finale. Founders, advisers and the auditor sit across from one another. It is only here that the final outcome of the audit is decided.
Stefan Höhn, one of the founders of zebra embassy and the law firm ZE Tax & Legal, summarises the current situation based on his experience supporting clients who have been or are currently being audited: “Our experience shows that the process of a Betriebsprüfung (tax audit) focusing on the Forschungszulage ( R&D tax credit) currently varies considerably from one Bundesland (state) to another because these audits are new territory for everyone involved. Auditing this type of funding is also completely new territory for the authorities and it shows.”
For example, there was a case in which an auditor wanted to reject everything from the outset because, in her view, there were no “real” Stundenzettel (timesheets) – i.e. records kept weekly or at least monthly and regularly signed off by a supervisor. The background: there currently isn’t a supreme-court case law on this specific requirement, leaving considerable room for interpretation. The auditor’s logic was: if the company being audited does not agree, it will simply have to take the matter to court and thereby establish legal certainty.
02 The subtle problem: Auditor psychology
There is a massive gap in understanding between the day-to-day reality of a tech startup and the working world of a Finanzamt (finance office). Tax auditors are generally not software architects or engineers. They want to understand what the BSFZ has certified in substantive terms, but they often simply do not understand the technical processes within a company. This leads to the infamous request: “Explain the project to me in simple terms.” At best. When things go badly, fundamental misunderstandings can arise.
One example involved a zebra embassy client whose submitted activity records repeatedly contained the word “Design”. Only during the conversation with her did it become clear that the auditor had assumed this meant graphic design, which is not eligible for funding. What the company meant was software design. It is a mundane example of how easily a linguistic misunderstanding can turn into a tangible reduction in funding.
If you confront the auditor with technical jargon, you lose. You need to meet auditors at eye level and build the bridge they need to understand the case and sign off on the file. Without that understanding, auditors may start applying the red pen randomly. Stefan Höhn reports from a recent case:
“The auditor really went through all the project reports in detail – the reports contained a short description for each employee of what that person had done in the project during the financial year. And she literally took every single one of these descriptions and marked the parts she considered unrelated to the R&D project. It was very clear in many places that there was no technical understanding.”
Because many auditors lack familiarity with research and development, and because case law is still sparse, misunderstandings can occur even when Stundenzettel (timesheets) have been properly maintained. Auditors often have an image of Forschung und Entwicklung FuE (research and development) as someone in a laboratory conducting an experiment with a test tube. The work of funded startups, particularly in software, is highly unclear to auditors, who simply have no idea how these processes work. With this in mind, companies should understand the auditors’ situation and, ideally, explain the processes involved in a funded project in detail, showing the auditor what research actually encompasses.
There is another deeply ingrained perception within Finanzämter (finance offices): paying money out is, generally speaking, something they are not used to. Stefan Höhn: “A founder who took part in a Betriebsprüfung (tax audit) told me that the auditors were fundamentally complaining about the Forschungszulage ( R&D tax credit) because the Finanzamt (finance office) has to pay money out. In their understanding, the Finanzamt normally only collects money.”
The conclusion from ZE’s experience with clients undergoing Betriebsprüfungen (tax audits) is therefore clear: companies need to actively engage with the auditor, guide them through the case and provide assistance rather than distancing oneself.
IMPORTANT: The golden rule from day one is therefore: as soon as the Prüfungsanordnung (tax audit order) arrives, unprepared employees should not speak to the auditor – no unprepared conversations with developers. Appoint one internal point of contact and make it clear that only this person communicates with the auditor. Involve your Steuerberater (tax adviser) and the agency supporting your application immediately. Allowing the auditor to roam freely through the office without coordination can put the entire process at risk.
03 Tax audit strategy: The three pillars of truth
To successfully navigate a Betriebsprüfung (tax audit), the company’s case needs to rest on three non-negotiable pillars. This is where it becomes clear who received sound and professional advice from the outset.
Pillar 1 – Arbeitszeit-Dokumentation (working-time documentation): The gold standard is genuine, project-based time tracking; in most cases, however, companies do not have this. Retrospective reconstructions therefore need to be carefully derived, documented and explained. The use of “unternehmensinterne Dokumentation” (internal company documentation) is explicitly permitted, but the way this is translated into the Forschungszulage (R&D tax credit) claim must be comprehensible to the Finanzamt. The fact that work is documented internally is a prerequisite; establishing a transparent link to auditable Stundenzettel is the focus of the audit in such cases. Blanket estimates without a source (“the CTO probably spent 50% of their time on research”) will be rejected immediately.
Pillar 2 – What counts as research: There must be a razor-sharp distinction between genuine Forschung & Entwicklung (F&E; R&D) – defined by technical uncertainties, hypotheses and the risk of failure – and normal product development or day-to-day business operations.
Pillar 3 – The project start date: Under the law, the Forschungszulage (R&D tax credit) applies only to projects that began after certain cut-off dates. Funding began on 1 January 2020 – any project that had already started before then is not eligible. The funding was subsequently adjusted twice: on 28 March 2024 through the Wachstumschancengesetz (growth opportunities act) and on 1 January 2026 through the Wachstumsbooster (growth booster). Depending on the funding being claimed, these cut-off dates can also be decisive. The actual project start must be clearly differentiated from strategic preliminary work – and it was precisely this third pillar that lay at the heart of the million-euro case described above.
Stefan Höhn knows from experience: “The audit shows who has worked accurately when it comes to documentation and records. It is a general rule for everyday business: if you document things properly and accurately, you will be in a much stronger position when it comes time for a Betriebsprüfung (tax audit). Every company is responsible for this itself.”
04 Tax office focus: Critical audit points
When auditors dig deeper, they tend to focus on the same weak points. Companies that know where these vulnerabilities lie can prevent them before the audit:
Projektberichte & Nachweisführung (project reports & supporting documentation): Does the documentation describe an experimental, iterative search for solutions (F&E)? Or does it read like the standard implementation of a finished specification?
Der Lohnjournal-Abgleich (payroll reconciliation): Does the claimed share of F&E work exactly match the payroll data? Most importantly, holidays, public holidays and sick days must be deducted from the recorded research hours on a day-by-day basis.
The mixed roles in startups (the problem with founders’ hours): In Personengesellschaften (partnerships), non-employed founders/shareholders may claim their own work on a flat-rate basis. In Kapitalgesellschaften (corporations), such as a GmbH (LLC), the claim is based on the regular gross salary of employed management. The problem in both cases is that a CTO or founder is usually also involved in fundraising, sales or general management. Those hours must be strictly excluded – claiming 100% F&E is immediately suspicious, although there are exceptions, particularly during company formation.
The freelancer & Auftragsforschung (contract research) problem: If agencies or service providers are involved, part of these costs may be claimed. But beware: commissioning documents, contracts, invoices and detailed work records (SOWs) must be available without gaps and clearly show exactly what the subcontractors did.
Das Doppelförderverbot (prohibition of double funding): Were the same employee hours already funded through ZIM projects, by the BMBF or through EU funding? Those hours must be clearly separated and excluded.
NOTE: Since 2026, the funding rates and the maximum Bemessungsgrundlage (assessment base) have increased again, and there is also a new Gemeinkostenpauschale (flat-rate overhead allowance). This means that potentially even more money is at stake – and therefore there is an even greater incentive for Finanzämter (finance offices) to look closely.
05 The Finale: Why results can be negotiated
IMPORTANT: What many founders do not know is that, to a certain extent, a Betriebsprüfung (tax audit) is also a process of “give and take”. Put differently: the Schlussbesprechung (closing meeting) involves negotiation.
That is precisely what saved the startup mentioned above. What began as a demand for repayment of the entire funding amount had already been reduced to 40% of the funding by the time of the Schlussbesprechung (closing meeting) – still an enormous sum. Because the company was exceptionally well prepared and entered the closing meeting with a watertight chain of arguments, it ultimately managed to agree on 11%. The startup was saved. In the other case mentioned above, the final repayment amounted to around €3,500 – less than 2% of the total funding amount.
Stefan Höhn draws a striking conclusion: “The results of a Betriebsprüfung (tax audit) are negotiable. There is always an element of give and take. I have to say, I find it somewhat disturbing at times. But you need to know this!”
There is another important point to understand: even if an audit is lost in full and the Bescheid (order) demanding repayment of the full funding amount is issued, the company can still file an Einspruch (formal objection). “Many companies are not aware of this, particularly those that do not seek professional assistance during the audit,” Stefan Höhn says. “We recently advised a company to do exactly that – and as a result, the repayment demanded in the Bescheid (order) was reduced by another 50%.”
IMPORTANT: A company should never enter a Schlussbesprechung (closing meeting) unprepared or intimidated. You need to know exactly where you can make strategic concessions on minor points and where you need to stand your ground on core issues. You should also keep the auditor’s psychology in mind. In one recent case, zebra embassy and a partner law firm supported a company that entered the Schlussbesprechung (closing meeting) extremely well prepared, with its own in-house Steuerberater (accountant). It quickly became clear, however, that the very young auditor was not authorised to make decisions herself. She had to discuss every step with her supervisor and obtain his approval. Another example of the fact that there are currently no clear routines or established procedures for Betriebsprüfungen (tax audits) by Finanzämter (finance offices).
06 The most common pitfalls at a glance
Some mistakes occur repeatedly in Betriebsprüfungen (tax audits) involving startups. We have listed them here – along with tips on how to avoid them.
No or Incomplete Time Tracking
Problem: Companies that estimate working hours only on a blanket basis or document them incompletely risk having the auditor retrospectively reject the entire personnel costs of the project.
Tip: Use a timely, project-based time-tracking system from day one in which employees record their F&E hours accurately.
Timesheets “Polished Up” or Backdated
Problem: Excel spreadsheets created in a last-minute rush shortly before the audit, or backdated using identical patterns, can be exposed immediately through metadata checks and may come close to attempted fraud.
Tip: Be transparent about any gaps – mistakes can happen. Work records are often based not on formal timesheets but on internal company records such as GitHub. Experience shows that auditors generally value honesty more than clumsy attempts at concealment.
Unclear Distinction: Research vs. Day-to-Day Business
Problem: When the line between innovative development involving technical risk and standard product maintenance becomes blurred, the Finanzamt may reject the costs of “normal” software or product development.
Tip: Clearly document the underlying hypothesis, the technical uncertainties and any failures in order to demonstrate the experimental nature of the work.
Inconsistencies Between the BSFZ and Finanzamt Applications
Problem: If the substantive project description submitted to the BSFZ does not match the figures and employee roles later claimed on the tax form, the auditor may become suspicious. Minor deviations are not necessarily a problem, but key facts such as the project start date must be consistent.
Tip: Carry out a thorough consistency check before submitting the claim to the Finanzamt (finance office): are the key facts regarding project durations, titles and key personnel consistent in both applications?
Double Funding Not Excluded
Problem: Hours or invoices already subsidised through other funding programmes, such as ZIM, BMBF or EU funding, may not also be claimed through the Forschungszulage (R&D tax credit).
Tip: Maintain a strict cross-project booking history and have your Steuerberater (accountant) cross-check the funding notices from other funding bodies directly to reliably rule out overlaps.
The “Mixed Role” of Founders and Executives
Problem: Auditors scrutinise Gesellschafter:innen (shareholders) particularly closely. Anyone working as a CTO while also being involved in sales, HR or fundraising may not declare those hours as F&E.
Tip: Exclude management and administrative activities on a day-by-day basis and document purely operational F&E work with twice the level of diligence applied to the rest of the team.
Poorly Documented Use of Freelancers (Auftragsforschung)
Problem: Although part of the costs of external service providers may be claimed, detailed timesheets from the subcontractor are often missing, or the arrangement is incorrectly classified as Arbeitnehmerüberlassung (employee leasing).
Tip: Clearly define the project relationship in the contract with agencies and freelancers and require them to provide monthly, project-specific Stundenzettel (time sheet) as work records that clearly demonstrate the technical risk involved in their work.
07 Lessons learned: What startups should do now
Prevention from day one: Document work promptly and on a project-specific basis – not when the letter from the authorities arrives. Maintain coherent, project-specific Stundenzettel (time sheet) for every employee and every year. Document the project start and process clearly, and describe the project in a way that even non-specialist readers can understand.
Honesty wins: If there are gaps in historical documentation, communicate them openly and actively address them rather than trying to cover them up. In our experience, auditors respond considerably more favourably to transparency than to attempts at concealment.
First-aid check: Before submitting the claim, carry out a consistency check between the BSFZ application, the Finanzamt (finance office) form and the time-tracking records. This is precisely where inconsistencies can arise that may trigger an audit.
NOTE: zebra embassy’s support during Betriebsprüfungen
zebra embassy supports its clients not only when applying for the Forschungszulage, but also in the event of a Betriebsprüfung (tax audits) – either by supporting their existing tax adviser or in cooperation with a partner law firm:
Long-term data security: Although zebra embassy’s active involvement formally ends with the final Bescheid (oder) from the Finanzamt, zebra embassy archives all data completely and in a legally compliant manner.
Immediate readiness to defend: zebra embassy is ready to step in as soon as the Prüfungsanordnung (tax audit order) arrives. Because we know the audit landscape well, we provide targeted support with strategic communication.
Substantive support: zebra embassy provides the requested concise supporting documentation and prepares the client’s team specifically for communication with the auditors.
Negotiation support: zebra embassy accompanies clients through the Schlussbesprechung (closing meeting) to successfully challenge unjustified reductions.
Companies that receive proper support from the outset can approach a Betriebsprüfung with greater confidence. And if things do catch fire: zebra embassy stays in the line of fire alongside its clients – right through to the end. DIY solutions or standalone time-tracking software may help with the application process, but when a genuine Betriebsprüfung (tax audit) comes around, they generally cannot provide the same level of full-service protection.