Research & Development tax credit in France
Article 244 quarter B of the French tax code
Published on 23/11/2021
Called in French “Crédit d’Impôt Recherche” or “CIR” in this memorandum, the CIR is a corporate tax credit based on R&D expenses for projects undertaken by any company located in France, regardless of its sector or size. Companies wishing to ensure that their research projects are eligible for the tax credit can request confirmation to the French tax authorities or the French Ministry of Research and Innovation.
Fundamental or applied research expenses are eligible as well as experimental development (prototypes) expenses. Research expenses eligible for the tax credit are exhaustively listed by law. They include personnel costs and equipment dedicated to internal R&D, subcontracted R&D activities, technology watch and filing and protection of patents. In addition, they must be deductible from taxable income of companies in France and correspond to operations located in the EU, Norway, Iceland, or Liechtenstein. This condition of territoriality is not required for technology watch and filing / protection of patents. Some additional details can be provided:
- Personnel costs include wages and mandatory social contributions.
- Only tax-deductible amortization (on fixed assets or software directly dedicated to the R&D) can be eligible.
- The costs of sub-contractors (which must have a CIR accreditation by the Ministry of Research and Innovation) are also eligible.
- Technology watch can include subscriptions to magazines and databases, participation to scientific conventions.
- A fixed allowance is added for overheads and is equal to 43% of personnel costs (200% for young PhDs), and 75% of amortization determined above.
Calculation & use of the tax credit
The amount of the tax credit is equal to 30% of the total value of all eligible expenses (up to 100M€ of expenses) and to 5% for the amount above 100M€.
The CIR is deducted from the corporate income tax for which the company is liable, the year when the eligible expenses were incurred.
If the CIR cannot be deducted, it can be used for next payment of corporate income tax. It can be reimbursed after three years. But SMEs and new companies can request an immediate refund of this amount.