Research Tax Credit (RIC) – France
The purpose of the Research Tax Credit (RTC) is to encourage companies to engage in research and development (R&D) activities. The CIR level varies according to the geographical location of the company.
Who can benefit from the Research Tax Credit?
An industrial, commercial or agricultural company can benefit from the research tax credit if it completes one of the conditions following:
- Either she's subject to an actual regime (regular or simplified) business tax (IS) or income tax (IR).
- Either she's tax-exempt and is one of the following:
- Young Innovative company (JEI)
- Company created for the recovery of a company in difficulty
- Company located in one of the following areas:
- Regional aid area
- Free-urban zone / entrepreneurial territory (ZFU_TE)
- Employment pool to be revitalized (BER)
- Defense Restructuring Area (DRA)
- Free zone of activity of the overseas departments
- Rural Revitalization Area (RRZ)
- Urban basin to be dynamized (BUD)
- Priority Development Area
An artisanal company subject to an effective tax regime and generating industrial and commercial profits (BICs) can benefit from the tax credit.
What activities are covering by the CIR?
The activities covered by the research tax credit are:
- Activity of basic research : Experimental or theoretical research to acquire new knowledge, without considering any particular application or use.
- Activity of applied research : Research to identify possible applications of the results of basic research.
- Activity of experimental development :: Systematic work based on knowledge from basic and applied research. Their purpose is to produce new products or processes or to improve existing products or processes.
These activities must relate to research that takes place within the European Union or a Member State of the European Economic Area. That State must have concluded an administrative assistance agreement to combat fraud and tax evasion.
What cost are eligible?
The research tax credit applies to the following research expenditures:
- Depreciation of property or buildings which have been created or acquired new. They must be used in carrying out scientific and technical research. They can also be used in the performance of operations for the design of prototypes or pilot installations
- In the event of loss or damage to property or a building, the difference between insurance compensation and the cost of reconstruction and replacement
- Expenditure relating to staff next:
- Researchers and research technicians who are directly and exclusively assigned to research and development operations
- As a staff member with a PhD or a diploma of an equivalent level, the expenses are taken into account for twice their amount during the first 2 years of the CDI. The number of staff must not have decreased in comparison with the previous year
- Employees who have invented after research operations and who have been paid additional remuneration
- Wages and social security contributions on the periods during which employees participated in official standardization meetings
- Filing and defense costs (lawyers' fees, legal expert, court costs, etc.) of designs and models in connection with search operations
- Depreciation and defense costs (lawyers' fees, legal expert, court costs, etc.) of the patents and plant breeders' rights
- Take-up and maintenance costs patents and plant breeders' rights. This also includes premiums and contributions for legal expenses insurance contracts up to €60,000 per year
- Expenses of technology watch when performing search operations up to €60,000 per year
- Expenditure incurred for the performing search operations by approved companies or engineering and design offices
- Expenditure incurred for the performing search operations and which have been entrusted to one of the following bodies:
- Public research organizations
- Higher education institution awarding a master's degree
- Accredited Foundation for Scientific Cooperation
- Public establishment for scientific cooperation
- Recognized Foundation for the Public Benefit of the Accredited Research Sector
- Association majority owned by one of the preceding entities
- Private research organization, scientific or technical expert approved by the Minister responsible for research
- Other administrative expenditure in the context of research and development operations
- Expenditure related to the development of new creations by companies in the textile, clothing and leather sector, including those entrusted to approved stylists or style offices (until 31 December 2024)
What is the CIR rate?
The tax credit will vary depending on where the company is located. In Mainland France the rate is up to 30% for any cost less than 100.000.000 € and 5% for higher amounts. In Overseas Departments the rate goes up to 50% for expenditures below 100.000.000 € and 5% for expenses exceeding that amount.