Innovation Funding in France
Funding solutions for R&D
R&D Tax Credit
The R&D Tax Credit is a generic measure of support for companies’ research and development (R&D) activities, without restriction of sector or size. Companies that incur basic research and experimental development expenditures can benefit from the R&D Tax Credit by deducting from their taxes under certain conditions.
The R&D Tax Credit is a tax credit of 30% on R&D expenses, tax-determined up to € 100 million, and 5% on R&D expenses going beyond this € 100 million. Companies benefiting from corporation tax (IS) or income tax (IR) and carrying on an industrial, commercial or agricultural activity can benefit from the R&D Tax Credit. The R&D Tax Credit applies regardless of the operating mode of these companies (individual company, craft company, limited liability company, public limited company, etc.). Associations governed by the 1901 law may, under certain conditions, also benefit from the R&D Tax Credit.
Industrial, commercial, craft and agricultural companies, irrespective of their legal status, which are subject to corporation tax or income tax in the category of BIC and, are taxed according to their real profit ( normal or simplified).
Companies exempted from corporation tax are excluded from the scheme, except for innovative start-ups, companies set up to take over a company in difficulty, and businesses located in assisted areas, etc.
The following expenses are eligible :
- Depreciation charges of assets and premises assigned to research ;
- staff costs for researchers and research technicians (the salary of young doctors is taken into account for twice the amount for 2 years after being hired in permanent contracts) ;
- Additional remuneration for employees who is at root of an invention ;
- operating expenses, set at a flat rate of 75% of depreciation and 50% of staff costs (200% for expenditure on young doctors) ;
- outsourced research expenses, entrusted to any public institution, university, foundation of public interest, association of the law of 1901 having as founder and member a research organization or a university, expenses retained for twice of their amount (provided there is no arm’s length relationship between the organization and the company) ;
- research expenses entrusted to organizations accredited by the Ministry of research (limited to 3 times the total amount of other research expenses eligible for the tax credit) ;
- certification fees ;
- standardization expenses of the company’s products (for 50% of the amount) ;
- technological watch expenses (60000 € per year maximum) ;
- expenditure of new collections in the textile-clothing-leather sector.
New companies created before December 31, 2016 and investing in research and development (R&D), with the status of a young innovative startup or a young academic startup, can benefit from social and tax exemptions. Innovative startup status has been extended to Academic startup, which is a special category of Innovative startup.
Companies must, at the end of each financial year, meet all the following conditions:
- Be an SME ;
- Have established within the past 8 years (the company definitely loses the innovative startup status on its 8th anniversary) ;
- Be independent (its capital must be held for at least 50% by natural persons, other innovative startup owned at least 50% by persons, associations or foundations recognized as being of public utility of a scientific nature, research and educational institutions.
- are not set up within the framework of a concentration, a restructuration, an extension of a pre-existing activity or the resumption of such activities ;
- R&D expenses of at least 15% of tax deductible expenses for this financial year, excluding expenses incurred by other innovative startup carrying out research and development projects.
The academic startup must :
- at least 10% belong to students (or graduates of a master or PhD for less than 5 years) or to research professors ;
- the main activity of which is the valorization of research work carried out by its directors or associates, during their schooling or in the performance of their duties, in a higher education institution authorized to issue a diploma conferring at least the master’s degree.
La conception de prototypes de nouveaux produits ou d’installations pilote de nouveaux produits.
Innovative startup and academic startup can benefit from exemptions in:
- Income tax and corporate taxes :
- Total exemption during the 1st year (or the first tax period) ;
- And 50% of exemption for the forthcoming period ;
- of the territorial economic contribution (CFE and CVAE) and the property tax during 7 years on deliberation of the local authorities.
The income tax exemption can be combined with the R&D tax credit.
Innovative startup can also, under conditions, obtain :
- Exemption from capital gains on the sale of shares or shares
- Exemption from capital gains on the sale of shares or shares ;
- Immediate restitution of amount due of R&D tax credit.
The tax benefits apply to businesses created until December 31, 2019.