France offers an R&D tax credit of 30% of qualifying R&D expenses on deductible tax income, for
all companies across all sectors.
As main features, this volume-based regime includes an additional benefit of 43% of eligible staffing
costs and 75% of eligible capex costs (subcontracted R&D with doubled advantage for public partners) making it attractive for all claimants, whether claiming inhouse or external R&D expenses.
European-sized SMEs can also claim 30% from expenditure in 2023 of innovation expenses up to 80K€ (400K€ in QE).
|France all Companies||France SMEs|
|30% Research Tax Credit (up to €100 million QE, 5% thereafter)||30% Innovation Tax Credit (SMEs, up to K€400 QE)|
||The calculated Tax Credit is deducted from the year’s corporate income tax, with unused tax credits being cashed back for a maximum four years after claiming.|
|Eligible Claim Period
||The eligible claim period can go back a minimum of 3 years and in some cases 4 years (depending on the company’s financial year-end).|
||The scheme was created in 1983 and remained negligible until the early 2000s. It then reached its peak in 2008 when it became a volume-based incentive. Improvement to the regime occurred in the early 2010s and the
scheme is now mature and stable, having been declared durable by the last 3 presidents.In 2013, the Innovation tax credit was introduced for the SMEs to specifically claim the QE of Innovation.
|Ease of Application
||There is a flexible but compulsory justification template for demonstrating R&D and/or Innovation that companies have to complete for each R&D or innovation project. This covers both technical and financial information with a significant level of detail.
The 2069-A-SD Tax Form needs, in the case of a tax audit, a breakdown of the Qualifying Expenditure (QE) in each cost category and for each project, along with supporting scientific documentation.
The benefit is deducted from income tax the year of claiming, unused credits being carried forward for three years.
Cashback of unused credits is given after this 3 year period and is usually received within weeks. Immediate cashback is available for SMEs.
|Regulating Body Policies
||The tax authority does regular and randomised audits of submissions. Where required, the Ministry of Higher Education, Research and Innovation is requested to assess the scientific level of claimed R&D activities.
Sometimes an audit meeting is organised for the company to present its R&D and qualifying activities.
|Issues to Consider
||R&D definitions are Frascati based Scientific R&D justification has to be operated according to an updated template published each year by the French Ministry of Research. In the case of a tax enquiry, both the Ministry of Research or Tax Administration can ask for justification, whether that is technical or financial. The window of enquiry is until 31st December of the 3rd year after claiming|