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France

France offers an R&D tax credit of 30% of qualifying expenses on deductible tax income, for all companies across all sectors.

As main features, this volume-based regime includes an additional benefit of 50% 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 in-house or external R&D expenses.

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All Companies
30% Research Tax Credit (up to €100 million QE, 5% thereafter)
Benefit Overview
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).
Historical Background

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.

Ease of Application

There is a flexible but compulsory justification template for demonstrating R&D that companies have to complete for each R&D 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 R&D 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.

Eligible Costs
  • Technical staffing costs
  • R&D equipment depreciation allowances
  • Operating costs – pre-determined as 50% of staffing and 75% of depreciation allowances
  • Subcontracted R&D
  • Technological watch – conferences, IP
  • Patents
  • Standardization meetings
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.

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