The Act on the Tax Promotion of Research and Development (Research Allowance Act – FZulG) of December 14, 2019 (Federal Law Gazette I, p. 2763) introduced a new tax incentive for research and development in the form of a research allowance. This tax incentive complements the well-established landscape of project-based funding and aims to strengthen Germany as an investment location and stimulate research activities, particularly among small and medium-sized enterprises.