What is the French R&D tax credit?
November 2013.- The French tax credit, or “Crédit d'Impôt Recherche” (CIR) in French, is an incentive aimed at encouraging R&D and innovation. The objective is to boost the competitiveness of French companies and to improve the country’s business appeal as a whole. The incentive includes 3 parts:
- Financing R&D spending of all companies. Fundamental research, applied research, experimental development.
- Financing innovation efforts of SMEs. Since 2013, French SMEs can benefit from a tax credit on innovation spending made after the R&D process.
- Financing spending on new collections in the textile, clothing and leather industry.
According to the French Ministry for Higher Education and Research, 17,700 companies have benefited from France’s research tax credit in 2011.
Why should R&D companies established in Catalonia be interested in this?
Thanks to this system, expenditures in outsourced R&D services can be deducted from corporate income tax. To offer this advantage to clients, the outsourced company has to be certified by the French Ministry for Higher Education and Research.
Catalan established R&D companies and technological centres may obtain a R&D supplier certificate, issued by the Ministry. The certificate is valid for a maximum duration of 3 years (renewable).
Once the R&D supplier certificate is obtained, the company can offer its services on the French market with competitive advantages. In other words, Catalan R&D suppliers with the certificate will be easily outsourced by French companies.
Over and above their specific knowledge and expertise, the supplier offers a guarantee to its French client of an indirect 30% discount on the total cost of the operation via the tax credit. It is a strong argument to gain market and allows the R&D supplier to raise margins. Furthermore, the Catalan company may also benefit from tax discounts in Spain for the innovative activity that it has performed.
Which expenses are covered and to what extent?
- Tax credit on R&D expenditures. It covers 30% of all R&D costs up to 100 million euros, and 5% above this threshold. It includes salaries, social security contributions, amortization and depreciation allowances, operating costs, subcontracting, patents and monitoring.
- Tax credit on innovation expenditures. Eligibility of expenses has been extended to innovation in 2013 for SMEs with a tax credit of 20% up to 400,000 euros on spending for prototyping or construction of pilot facilities for new products.
- Tax credit for the textile, clothing and leather industry. 200,000 euros maximum over three consecutive years.
How can you obtain the certificate?
The company can process the certificate request by applying directly to the French Ministry for Higher Education and Research or through an R&D consulting company.
Christophe Arnoul - Elodie Bobard - ACCIÓ Office in Paris