Is the CIR/CII just a declarative exercise... or a real financial lever?
The Research Tax Credit (CIR) and the Innovation Tax Credit (CII) are still too often understood as annual tax mechanisms, mobilized with an essentially declarative logic. For a CFO, a tax department or an R&D department, this approach is insufficient today.
If managed in a structured way, the CIR and CII are genuine financial value creation levers :
- Improved cash flow,
- Reduced net cost of R&D and innovation investments,
- Secure profitability trajectory,
- Controlling the effective tax rate as part of a global approach to taxing innovation.
They form the upstream base of the innovation tax value chain, which then extends to asset valuation via the IP Box.
Read our article: Tax strategy for innovation: how to manage the CIR/CII and IP Box to transform R&D into sustainable financial performance.
What are the differences between the CIR and the CII... and what figures should be used for financial management?
The Research Tax Credit (CIR) and the Innovation Tax Credit (CII) pursue complementary objectives, but are aimed at different different phases of innovation and respond to distinct eligibility conditions.
Eligibility criteria
The CIR applies to eligible R&D expenses, covering :
- Fundamental research,
- Applied research,
- Experimental development.
The Innovation Tax Credit (CII) targets innovation work related to design of prototypes or pilot plants for new products.
Access conditions
The CIR is available to all industrial, commercial and agricultural companies subject to corporation tax, whatever their status or size.
The CII is subject to the same conditions, but is only available to SME in the community sense, i.e. :
- Workforce < 250 employees,
- Sales ≤ 50 M€ or balance sheet total ≤ 43 M€.
Device | Applicable rate | Ceiling / special feature |
|---|---|---|
CIR | 30 % of eligible R&D expenditure | Rate reduced to 5 % above €100M calculation base |
CII | 20 % of innovation expenditure | Up to €400,000 of expenditure per year |
Rates and bases
Illustration in figures :
- An innovative SME spending €1m on R&D can claim a CIR of 300 000 € (subject to eligibility of work and expenses).
- If it incurs €300,000 in eligible product innovation expenditure, the CII can generate 60 000 € tax credit.
- Both devices can be accumulated, provided that each item of expenditure is correctly broken down according to the specific eligibility rules for each scheme.
Return mode / cash impact
- CIR the tax credit is deducted from the corporation tax due, and any excess is refunded after 3 years (or immediately if the company is an SME as defined by the European Union, or in the case of certain special statutes): average repayment period of 5 months after the declaration date.
- CII works in the same way as the CIR for imputation and restitution.
The can also be pre-financed by funding bodies as soon as the work has been carried out (half-yearly or at the end of the year), as opposed to reimbursement by the authorities the following year. This maximizes the impact on the company's cash flow.
Scope of eligible expenditure
- CIR personnel costs, subcontracting costs (compulsory approval), depreciation (purchased new), operating costs, standardization
- CII personnel costs, subcontracting costs (compulsory approval), depreciation (capitalized from 2013), industrial property costs (patents, designs)
In the case of innovation aid, tax credits are calculated on the portion of expenditure that is not subsidized.
Challenges for a CFO
Fine-tuned management of the CIR and CII, with anticipation of thresholds, rates and refund rules, allows you to :
- Secure cash creation,
- Smooth out the effort over several exercises,
- Avoid lost opportunities due to late reporting,
- Boost cash flow and tax performance,
- Accelerate the company's growth and development.
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How can CIR/CII be integrated into multi-year financial governance?
A strategic approach implies going beyond the simple logic of a declarative campaign to make the CIR and CII part of an overall strategy. multi-year governance :
- Mapping of eligible projects,
- Projection of base and financial impact over several years,
- Alignment with the technology roadmap,
- Articulation with intellectual property policy,
- Management of the impact on earnings, ETR and cash flow.
The CIR and CII thus become financial management tools to support innovation strategy, not just tax incentives.
How to secure the CIR and CII in the face of tightening controls?
The controls This applies both to the scientific and technical nature of the work, and to the financial justification of expenditure. Effective security relies in particular on :
- Rigorous project qualification (scientific challenges, uncertainties, experimental approach),
- Traceability of time and resources,
- Detailed justification of personnel, subcontracting and capital expenditure,
- Consistency between technical files, cost accounting and tax returns,
- Anticipation of contradictory exchanges with the administration.
The aim is to make perennial and limit the risk of partial or total withdrawal.
How can CIR, CII and IP Box be integrated into an integrated tax strategy?
The CIR and CII finance upstream R&D and innovation efforts. Downstream, the IP Box reduces taxation on income from intellectual property assets created as a result of this work.
The articulation of these systems is part of a tax value chain logic:
R&D / Innovation → Eligible expenses (CIR / CII) → Asset creation → Revenues → IP Box → Cash.
What is the role of the CFO, tax department and R&D department in managing the CIR and CII?
The performance and security of the system depend on cross-functional governance:
- The R&D department qualifies and documents the work,
- The finance department monitors the impact on cash flow and performance,
- The tax department ensures regulatory interpretation and consistent reporting.
The CIR and CII thus become strategic financial assets, integrated into a global strategy for taxing and financing innovation.
How does the CIR/CII strategy fit into an overall innovation financing strategy?
The management of the CIR and CII is part of a broader strategy of global innovation financing. Tax credits help to reduce the net cost of R&D and innovation expenditure, while tax credits help to reduce the net cost of R&D and innovation expenditure. regional, national and european public aid (subsidies, repayable advances, Bpifrance, France 2030 Horizon Europe, Eurostars, etc.) provide direct funding for upstream and industrialization projects.
For finance departments, the challenge is to orchestrate these levers in a coherent way, paying particular attention to principle of no double financing The CIR and CII must be subtracted from the basis of expenditure declared for the purposes of the CIR and CII. This arrangement is essential to secure declarations, optimize the overall financial leverage effect, and steer investment capacity and the creation of value from innovation over the long term.
Build and secure your CIR/CII strategy with G.A.C. Group experts
In a changing regulatory and budgetary context, mastering the Research Tax Credit and Innovation Tax Credit schemes is a key challenge for CFOs, tax departments and R&D departments.
G.A.C. Group supports innovative companies in structuring, securing and optimizing their CIR/CII declarations, and in anticipating audits and regulatory changes.
FAQ - Research Tax Credit (CIR) & Innovation Tax Credit (CII)
What's the difference between the CIR and the CII?
The CIR finances research work (fundamental research, applied research, experimental development). The CII, reserved for SMEs in the EU sense of the term, is aimed at innovation work linked to the design of prototypes or pilot plants for new products offering superior performance to the state of the art on the market.
Can the CIR and CII be combined within the same company?
Yes for SMEs, provided that the same expense is never counted twice and that each cost is allocated to the scheme corresponding to the actual nature of the work (R&D for the CIR, product innovation for the CII).
Can I benefit from the CIR or CII even if I'm making a loss?
Yes, tax credits can be offset against corporation tax and, in the event of a surplus, can be refunded. This means they can be used as a genuine cash-flow lever, irrespective of the company's immediate profitability.
What are the main reasons for a tax audit?
Scientific or innovative qualification of projects, justification of staff time, eligibility of subcontracting, consistency between technical files, cost accounting and tax returns.
How to secure scientific qualification (CIR) and innovation qualification (CII)?
A structured demonstration of the technical challenges, the state of the art, the uncertainties and the experimental approach for the CIR, and the novelty of the product, the existence of a prototype or pilot and the market gap for the CII, supported by robust technical documentation.
Is subcontracting eligible, and under what conditions?
Yes, provided that the service provider has CIR and/or CII accreditation, that the outsourced work has real scientific or innovative content, and that it forms part of an eligible project managed by the client company.
How can I obtain CIR/CII accreditation as a service provider?
By submitting an application to the Ministry of Research via the dedicated platform (CIROCO), demonstrating the skills, resources and references required to carry out eligible R&D or innovation work. Approval is a prerequisite for invoices to customers.
How can you ensure reliable traceability of R&D time and expenses?
By implementing monitoring tools adapted to project organization and tax requirements. Solutions such as MyInnoTime are used to structure time tracking by project and by type of activity, to secure declared bases and facilitate justification in the event of an audit.
When and how to declare the CIR and CII?
Each year, with the tax return, using form CERFA 2069-A-SD, generally no later than the 2nd working day following May 1st for financial years ending on December 31st (or within three months of the end of the financial year for staggered financial years).
How can you increase your in-house skills to manage and secure the CIR and CII on a long-term basis?
By structuring a Finance-Fiscal-R&D governance structure and drawing on dedicated training programs. In particular, G.A.C. Group offers the « Securing and managing your CIR / CII: mastering systems and anticipating tax audits »This new initiative is aimed at CFOs, tax departments and R&D teams, to help them master the rules, anticipate audits and professionalize internal practices.
Discover our support to manage and secure your CIR / CII
