A new tax credit for collaborative research (CICO)!

1) Implementation of a tax credit for collaborative research (CICO)

This system is intended to compensate for the elimination, within the framework of the 2021 finance law, of the doubling of expenditure subcontracted to public bodies as well as the increase of 2 million in the ceiling for all subcontracting expenditure. contracting for expenses entrusted to public bodies.

1. The companies concerned

Industrial, commercial, craft or agricultural companies taxable according to the real regime or benefiting from certain exemptions.

2. The research organizations concerned

They must meet the definition given by the communication of the European Commission n° 2014/C 198/01, relating to the framework of State aid for research, development and innovation. We do not know at this stage if certain structures will be considered public, like the CIR system. These bodies must be approved by the minister responsible for research. They must not maintain a link of dependence with the company with which they wish to collaborate. The question was asked to the MESRI to know if the approval will be the same as that to be obtained for the Research Tax Credit, the ministry indicated that today the procedure was not stopped, and that it was going to be to be soon.

3. The contract

  • It is concluded between a company and a research organisation;
  • It is concluded prior to the start of the research work;
  • It provides for the invoicing of works at their cost price;
  • It establishes a common objective, the distribution of work, the methods of sharing risks and results (including intellectual property rights, which cannot be attributed in full to the company);
  • The contract must provide for the possibility for the organization to publish the results of their own research conducted within the framework of the collaboration (criterion whose implementation should be clarified)

4. Eligible expenses

  • The expenses invoiced by the research organization cannot exceed 90% of the total expenses incurred;
  • The work is performed within the EU or EEA;
  • Research operations are carried out directly by the research organization, except in the case of derogation provided for in the contract for an approved organization;
  • Expenses are included in the tax credit calculation basis within the overall limit of 6 million euros per year.
  • Public grants received by companies are deducted from the tax credit calculation bases, whether they are definitively acquired or repayable.
  • Amounts valued under the CICO cannot be taken into account in the basis for another tax credit or reduction.

2) Regulatory developments concerning subcontracting expenses: Publication of the procedures for the approval of public bodies

As of January 1, 2022, the 2021 Finance Law provides for the abolition of the doubling of expenses incurred with public or similar public service providers, and the end of the exemption from approval for the said bodies.

The MESRI, by updating its website on December 15, made available the forms to be completed to obtain the approval of organizations exempted before 2022.

As expected, the form becomes mandatory for all companies but the supporting documents vary for public or similar bodies. For the most part, only the submission of the form is requested.

Please find the link to these forms below: https://www.enseignementsup-recherche.gouv.fr/fr/demande-d-agrement-cir-pour-les-structures-publiques-ou-assimilees-82660#.YcrkF_2t6X8

3) Extension of the innovation tax credit (CII)

The application of the CII is extended for 2 years, until December 31, 2024.

Furthermore, to ensure the system's compliance with Community law, the item corresponding to “other operating expenses” is now excluded from the base of expenses recoverable in the CII.

In order to compensate for this exclusion, the rate of CII (common law) goes from 20 to 30% and the rate applicable to Overseas goes from 40 to 60%.

These changes come into effect from 1er January 2023.

Source: Section 83

4) Extension of the duration of JEI status

Until now, the status was granted for the first 8 years of a company's existence.

From now on, companies that are eligible for the scheme can benefit from it until their 11th anniversary. 

With regard to this system, it is interesting to note that the expenses retained under the CICO (tax credit in favor of collaborative research) will be taken into account for the calculation of the research expense ratio.

As a reminder, the JEI status was only extended by the 2020 finance law until December 31, 2022

These changes concern companies that will close their financial years on or after December 31, 2021.

sourthis: Article 11

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