Tax credits and Young Companies

Our fields of actions

• Research Tax Credit

  The Research Tax Credit is a declaratory tax measure. The RTC is declared using form 2069-A-SD, which is attached to the company’s income tax return. It is possible to apply upstream for a tax ruling (rescrit fiscal) or downstream for an inspection on request, in order to obtain an opinion from the tax authorities on the eligibility of projects for the CIR and on the expenses claimed, and thus secure the claim.

  The company making the claim must draw up a supporting scientific file and compile all the administrative and accounting information requested by the tax authorities in the event of a tax audit. It is therefore important to collect the necessary documents as R&D projects progress: R&D staff timesheets, CVs and diplomas, subcontracting invoices, etc.

  The CIR credit obtained is deducted from the company’s corporation tax (or income tax) for the financial year containing the calendar year in which the R&D expenditure was incurred. Certain companies may request immediate repayment of the claim, in particular those with JEI (Jeune Entreprise Innovante) status, SMEs as defined by the European Union, companies created less than 5 years ago, and companies in financial difficulty.

• Innovation Tax Credit

  Who can benefit from the Innovation Tax Credit?

  The Innovation Tax Credit (ITC) is a form of public support for innovation aimed at SMEs, in the form of a tax credit. It can be combined with the Research Tax Credit (CIR) and is available under certain conditions:

  • Be subject to income tax (IR) or corporation tax (IS),
  • Be an SME as defined by the European Union,
  • Carry out activities involving the design and/or production of prototypes or pilot installations for a new product, as defined for tax purposes.

  Note that the product must offer superior performance (technical, functional, ergonomic, eco-design) compared with products on the market when the work begins.

• Young Innovative Companies

  Innovative companies with a recently created Research and Development (R&D) activity can benefit from significant tax and social security advantages thanks to the status of JEI (Jeune Entreprise Innovante – Young Innovative Company).

  To qualify for JEI status, companies must meet certain criteria:

  • Be an SME as defined by the European Union: with fewer than 250 employees, a turnover of less than €50 million or a balance sheet of less than €43 million,
  • It must have been in existence for less than 8 years,
  • Be independent: at least 50% of its capital must be held continuously during the financial year by an individual, another start-up or a company that is 50%-owned by individuals, a scientific association or foundation, or a research and teaching establishment,
  • Incur R&D expenditure (Research and Development as defined by the CIR) amounting to at least 15% of the company’s total tax-deductible expenses for the financial year,
  • Be created from scratch, i.e. not be the result of a takeover, extension or merger of existing activities.

  Like the CIR, JEI status is subject to strict criteria regarding the nature of the work carried out: the R&D projects carried out must meet the definition set out in the Frascati Manual, an international reference published by the OECD.