Research Tax Credit (RIC)
Verified 01 January 2024 - Legal and Administrative Information Directorate (Prime Minister)
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.
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
FYI
An artisanal company subject to an effective tax regime and generating industrial and commercial profits (BICs) can benefit from the tax credit.
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.
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)
The tax credit will vary depending on where the company is located:
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Metropolis
The research tax credit rate varies according to the amount of expenditure research:
- The rate is 30% for the part of expenditure less than or equal to €100 000 000
- The rate is 5% for the part of expenditure exceeding €100 000 000
Overseas Department
The research tax credit rate varies according to the amount of expenditure research:
- The rate is 50% for the part of expenditure less than or equal to €100 000 000
- The rate is 5% for the part of expenditure exceeding €100 000 000
Public grants received for research projects must be deducted from expenditure taken into account in calculating the CIR.
The CIR is determined by calendar year, irrespective of the end of the financial year.
Example :
One company closed its fiscal year as of September 30, 2023. The tax credit will be calculated on expenses incurred in 2023 (from 1er January 2023 to December 31, 2023).
The company must transmit a certain number information and documents which vary according to the amount of expenses taken into account for the research tax credit (RTC):
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Below €10,000,000
Business tax (IS)
To qualify for the tax credit, the company must declare its expenses to the aid of the Form No. 2069-A-SD :
The request must be made at the time of the SI pay statement, i.e., by the 15th of the 4the month following the end of the financial year.
Income tax (IR)
To qualify for the tax credit, the company must declare its expenses to the aid of the Form No. 2069-A-SD :
The request must be made at the time of the company's declaration of performance, i.e., not later than 15 days after 2eme working day after 1er May.
Between €10 000 000 and €100 000 000
Business tax (IS)
To qualify for the tax credit, the company must declare its expenses to the aid of the Form No. 2069-A-SD :
The request must be made at the time of the SI pay statement, i.e., by the 15th of the 4the month following the end of the financial year.
The company must also contact the form # 2069-A-1-SD and indicate the proportion of PhD graduates funded by or recruited on their basis, the corresponding number of full-time equivalents and their average remuneration.
Income tax (IR)
To qualify for the tax credit, the company must declare its expenses to the aid of the Form No. 2069-A-SD :
The request must be made at the time of the company's declaration of performance, i.e., not later than 15 days after 2e working day after 1er May.
The company must also contact the form # 2069-A-1-SD and indicate the proportion of PhD graduates funded by or recruited on their basis, the corresponding number of full-time equivalents and their average remuneration.
More than €100,000,000
Business tax (IS)
To qualify for the tax credit, the company must declare its expenses to the aid of the Form No. 2069-A-SD :
The request must be made at the time of the SI pay statement, i.e. by the 15th of the 4the month following the end of the financial year.
The company must also contact the form # 2069-A-1-SD including the following information:
- Description of the nature of the research in progress
- Status of their programs
- Material and human resources (direct or indirect) devoted to research
- Share of PhD graduates funded by these expenses or recruited on their basis, the corresponding number of full-time equivalents and their average remuneration.
- Location of these means
Income tax (IR)
To qualify for the tax credit, the company must declare its expenses to the aid of the Form No. 2069-A-SD :
The request must be made at the time of the company's declaration of performance, i.e., not later than 15 days after 2e working day after 1er May.
The company must also contact the form # 2069-A-1-SD including the following information:
- Description of the nature of the research in progress
- Status of their programs
- Material and human resources (direct or indirect) devoted to research
- Share of PhD graduates funded by these expenses or recruited on their basis, the corresponding number of full-time equivalents and their average remuneration.
- Location of these means
The company can deduct its research tax credit on the amount of tax (IS or IR) for which it is liable. The deduction is made at the time the company pays the balance of the tax for the year in which the expenditure was incurred.
Example :
A company spends money in 2023 to get a research tax credit. The amount of the tax credit will be applied to the balance of the tax owing for the year 2023 (paid in May 2024).
The company can use the amount of its tax credit to pay its taxes during the next 3 years the year in which the tax credit was received. At the end of these three years, if the company has not used all of its tax credit, the remaining part is refunded directly.
Example :
One company received a tax credit in 2023 and used a portion of that tax to pay tax owing for the same year. If she has not used up the full amount of her tax credit, she will be able to use it to pay the tax for the next 3 years. At the end of these three additional years, if he still has a part of his tax credit, it will be refunded.
However, special rules on the use of the tax credit granted shall apply to the following companies:
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Company set up in the context of a merger, restructuring, extension or takeover of pre-existing activities
The company may request that the tax credit granted to it during the sa 1re year of existence and during Next 4 years be directly reimbursed to him.
It must be held at least at 50% by the following person(s):
- Natural person
- Business of capital held at 50% at least by natural persons
- venture capital business, venture capital mutual funds, professional funds
Company created less than 2 years ago
The company may request the direct refund of his tax credit. However, it must send the supporting documents which proves that the expenses were incurred at the time of the application for reimbursement.
Young Innovative company (JEI)
The company may apply for its tax credit to be refunded directly.
Company in conciliation or safeguard proceedings
The company may apply for its tax credit to be refunded directly from date of decision or judgment which led to the opening of proceedings.
Company in receivership or liquidation
The company may apply for its tax credit to be refunded directly from date of decision or judgment which led to the opening of proceedings.
The claim for reimbursement shall be made in one of the following ways:
- The company is subject to business tax (IS) : she must make her application at the time of her declaration of balance of tax on her business space of the website Impasse.gouv.fr ("My services" -> "Report" -> "Tax on businesses")
- The company is subject to income tax (IR)): she must submit her refund application each year when filing her income online on her business area of the website Impasse.gouv.fr
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