BOFiP update: new adjustments for the CIR on hiring aid and wage portage

November 15, 2024

CIR: hiring subsidies are not subject to the compulsory deduction of public subsidies

In a rescript issued on October 23published in the Bulletin Officiel des Finances Publiques, the administration states that recruitment subsidies paid by legal entities governed by public lawThese are not to be deducted from the base used to determine the research tax credit (crédit d'impôt recherche - CIR).

Rescript analysis

In accordance witharticle 244 quater B of the CGIIn France, industrial, commercial and agricultural companies that are subject to a real tax regime, or are exempt under certain legal provisions, can claim a tax credit for the expenses they incur during the year in carrying out scientific or technical research.

In order not to finance the same research operation through several public subsidiesIII of article 244 quater B of the CGI stipulates that public subsidies received by companies for operations qualifying for the tax credit are deducted from the basis for calculating the tax credit, whether they are definitively acquired by them or refundable.

In its rescriptthe tax authorities answer the question of whether recruitment subsidies paid by legal entities governed by public lawThese include flat-rate aid for work-study contracts, and aid for hiring job-seekers, disabled workers or workers from disadvantaged areas, are public subsidies within the meaning of III of Article 244 quater B of the French General Tax Code (CGI), which must be deducted from the base used to determine the research tax credit (CIR)?

Response from the tax authorities:

"Only public subsidies, whether reimbursable or not, relating to operations qualifying for the tax credit should be deducted. Therefore, if a company receives a subsidy for a project that includes both operations eligible for tax credit and operations that are not, only the portion of the subsidy relating to operations eligible for tax credit should be deducted. This fraction is determined pro rata to the amount of operations qualifying for the tax credit (I-A § 10 of BOI-BIC-RICI-10-10-30-20).

On the other hand, all other conditions being met, hiring subsidies granted by legal entities under public law that are not conditional on the recruited personnel being assigned to the performance of research operations do not have to be deducted from the CIR base, even if the recruited personnel are in practice required to take part in eligible research operations.

The opinion of tax experts

This is a general rescript.

These are rescrits issued to taxpayers, providing answers to questions that other taxpayers may have. These rescrits are anonymized and then included in the Bulletin officiel des finances publiques, BOFiP-Impôts.

These formal, general positions are enforceable against the tax authorities in the event of an audit, in accordance with article L. 80 A of the LPF.

If you are concerned by hiring assistance granted to a member of your R&D team who is eligible for the CIR, please do not hesitate to ask our experts for advice to find out if you are eligible for this new rescrit.

Public assistance must be examined on a case-by-case basis to determine whether or not it should be deducted from your research tax credit.

CIR: taking into account freelance portage

In a ruling published on October 23, the French tax authorities state that personnel expenses incurred by user companies under a "portage salarial" contract can be taken into account in the tax base for the research tax credit (CIR) or the innovation tax credit (CII).

Rescript analysis

Wage portage constitutes the lawful lending of skilled labor for profit, provided that it is carried out in compliance with the provisions of the Labour Code.article L. 1254-1 et seq. of the French Labor Code (C. trav.). It enables companies to call on external human resources on an occasional or one-off basis, particularly for services requiring expertise that they do not have in-house. The employment contract signed with the "portage" company includes the elements that make up the price of the service, including remuneration.

Pursuant to b of II ofarticle 244 quater B of the French General Tax Code (CGI) Personnel costs for researchers and research technicians directly and exclusively assigned to eligible scientific and technical research operations are included in the CIR base.

Pursuant to 2° du k du II de l'article 244 quater B du CGI, staff costs directly and exclusively allocated to the design of prototypes or pilot installations for new products incurred by small and medium-sized enterprises within the meaning of European Union law are taken into account in the CII tax base.

Under the terms of thearticle 49 septies I of appendix III to the CGIIn accordance with article 244 quater B of the French General Tax Code, staff costs include salaries and related expenses, as well as social security charges, insofar as these correspond to compulsory social security contributions.

Strictly speaking, the notion of remuneration, which determines the personnel expenses covered by the tax credits, covers the remuneration and corresponding social charges paid to employees by the employing company in payment for their services, and not sums paid to self-employed workers from outside the company.

In its rescript, the French tax authorities answer the following question whether personnel expenses incurred by user companies under a "portage salarial" contract can be taken into account when calculating the tax credit for research (CIR) or the tax credit for innovation (CII)?

Response from the tax authorities:

The Conseil d'Etat has ruled that the expenses eligible for the tax credit cannot be reduced solely to the remuneration and social security contributions paid for employees, but must also include the remuneration and social security contributions paid by the company in respect of the provision by a third party of persons to carry out research operations on its premises and using its resources (CE, decision of January 25, 2017, No. 390652, ECLI:FR:CECHR:2017:390652.20170125).

In this respect, administrative doctrine allows for the inclusion of expenses relating to temporary staff and the loan of labor for profit, provided that they can be qualified as expenses for research personnel directly and exclusively assigned to eligible research and development operations. Only the remuneration and social security contributions of the research staff concerned are included in the tax credit base, excluding indirect costs (personnel management and general administration costs) (I-A-3-c § 80 of BOI-BIC-RICI-10-10-20-20 and I-B § 40 of BOI-BIC-RICI-10-10-45-20).

As a result, personnel costs related to the use of ported employees can be taken into account in the CIR or CII base, provided that :

portage salarial, a for-profit loan of labor, complies with the conditions set out in article L. 1254-1 et seq. of the C. trav;
ported employees carry out eligible operations on the client company's premises and using its resources;
the remuneration and social charges of researchers and technicians directly and exclusively assigned to eligible operations (taken into account in proportion to the time actually spent on eligible operations; excluding other costs included in the price of the service) are only taken into account.

As a result, the rules for determining the expenses incurred by ported employees to be taken into account in the base for tax assistance must be identical to those applicable to employees.

The opinion of tax experts

This is also a general rescript.

In accordance with the 2nd paragraph of article L. 80 A of the LPF, these formal, general positions are enforceable against the tax authorities in the event of an audit.

In this case, the answer is clear : "The rules for determining the expenses of ported employees to be taken into account in the base for tax assistance must therefore be identical to those applicable to employed persons.

As a result, the expenses to be taken into account will be personnel expenses, and the portage company's approval will therefore not be required.

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