Elisabeth Borne used Article 49.3 of the French Constitution on Wednesday, October 18, in order to pass the first part of the Finance Bill 2024 (PLF24).
Earlier in the debates, several amendments concerning the Research Tax Credit (CIR) and Young Innovative Companies (JEI) had been adopted.
The use of article 49.3 of the constitution allows the government to disregard all amendments, including those adopted. No amendments to the CIR have been adopted at this stage..
On the other hand, the current version provides for a change in the status of young innovative company (JEI).
What does the PLF24 say about JEI status?
With regard to start-ups, the amendments adopted and included in the current version of the bill are as follows:
- An amendment provides for the abolition of the income tax exemption mechanism (art. 5 septtricies), for companies that created from January 1, 2024
- Creation of the Young Innovative Growth Company (JEIC)which incurs between 5 and 10% of its tax-deductible expenses. From January 1, 2025
Today, to be considered a JEIA minimum of 15% of the company's expenses must be allocated to research and development within the meaning of the research tax credit.
This amendment (included in article 5 undecies of the law) proposes the following creation of the "jeune entreprise innovante de croissance" (young innovative growth company) for companies committing between 5 and 10 % in research expenditure.
Certain conditions for access to this status will be specified by decree (access to the status will be conditional on an increase in sales, the number of employees and investments), as well as certain advantages (assistance with hiring, assistance with raising funds, cash flow assistance, assistance with access to public contracts, etc.).
- Creation of the Young Innovative and Breakthrough Company (JEIR) with at least 30 % of research expenditure. From January 1, 2025
An amendment (included in article 5 undecies of the law) aims to broaden the JEI scheme by creating the category of "Jeunes Entreprises d'Innovation de Rupture for companies created less than 12 years ago and spending at least 30% on research.
Other conditions, such as ownership, are also specified. The benefits (hiring assistance, assistance in raising funds, cash flow assistance, assistance in accessing public contracts, etc.) will also be specified by decree.
It should be noted that a number of provisions have also been introduced to encourage private financing for start-ups..
What does the PLF24 say about the CIR?
Concerning the CIR, the following amendments are therefore not yet part of the bill.
- Amendment providing for the creation of a new CIR rate
The amendment provided for the creation of a bracket at 15% between €50m and €100m of eligible expenditure valued at CIR.
- Amendment restricting access to the CIR for certain business sectors
This amendment was intended to target more precisely the sectors eligible for the tax credit, and to this end made it impossible for companies in the financial sector to benefit from the research tax credit.
The opinion of our tax experts:
It's not impossible that discussions on the CIR will resume during the debate on the second part of the PLF, which deals with expenditure. It is at this stage that the system is generally the subject of much discussion. Debates on the system are not yet over.
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