diff --git a/dace/sdfg/validation.py b/dace/sdfg/validation.py
index 5ad00a2942..7ad8ff20e1 100644
--- a/dace/sdfg/validation.py
+++ b/dace/sdfg/validation.py
@@ -279,8 +279,11 @@ def validate_sdfg(sdfg: 'dace.sdfg.SDFG', references: Set[int] = None, **context
 
             # Because of how the code generator works Scalars can not be return values.
             #  TODO: Remove this limitation as the CompiledSDFG contains logic for that.
-            if isinstance(desc, dt.Scalar) and name.startswith("__return") and not desc.transient:
-                raise InvalidSDFGError(f'Can not use scalar "{name}" as return value.', sdfg, None)
+            if (sdfg.parent is None and isinstance(desc, dt.Scalar) and name.startswith("__return")
+                    and not desc.transient):
+                raise InvalidSDFGError(
+                    f'Cannot use scalar data descriptor ("{name}") as return value of a top-level function.', sdfg,
+                    None)
 
             # Validate array names
             if name is not None and not dtypes.validate_name(name):
@@ -332,7 +335,6 @@ def validate_sdfg(sdfg: 'dace.sdfg.SDFG', references: Set[int] = None, **context
                 symbols[str(sym)] = sym.dtype
         validate_control_flow_region(sdfg, sdfg, initialized_transients, symbols, references, **context)
 
-
     except InvalidSDFGError as ex:
         # If the SDFG is invalid, save it
         fpath = os.path.join('_dacegraphs', 'invalid.sdfgz')
@@ -340,6 +342,7 @@ def validate_sdfg(sdfg: 'dace.sdfg.SDFG', references: Set[int] = None, **context
         ex.path = fpath
         raise
 
+
 def _accessible(sdfg: 'dace.sdfg.SDFG', container: str, context: Dict[str, bool]):
     """
     Helper function that returns False if a data container cannot be accessed in the current SDFG context.
diff --git a/tests/python_frontend/return_value_test.py b/tests/python_frontend/return_value_test.py
index 93870c41ce..4a845bea0b 100644
--- a/tests/python_frontend/return_value_test.py
+++ b/tests/python_frontend/return_value_test.py
@@ -12,6 +12,19 @@ def return_scalar():
     assert return_scalar() == 5
 
 
+def test_return_scalar_in_nested_function():
+
+    @dace.program
+    def nested_function() -> dace.int32:
+        return 5
+
+    @dace.program
+    def return_scalar():
+        return nested_function()
+
+    assert return_scalar() == 5
+
+
 def test_return_array():
 
     @dace.program
@@ -91,6 +104,7 @@ def return_void(a: dace.float64[20]):
 
 if __name__ == '__main__':
     test_return_scalar()
+    test_return_scalar_in_nested_function()
     test_return_array()
     test_return_tuple()
     test_return_array_tuple()