In this article, you'll discover the main concepts related to the research and innovation tax credit (CIR and CII).
What is the CIR / CII?
The research tax credit (CIR) and the innovation tax credit (CII) are two tax measures for industrial, commercial and agricultural companies subject to tax on their actual profits, either by right or by option. Their aim is to :
- Supporting these companies' R&D efforts (basic research, applied research, experimental development) and innovation (expenditure on prototypes or pilot plants for new products) ;
- Improving the environment for R&D and innovation of these companies;
- Increase the attractiveness of the French territory in terms of R&D and innovation.
What are the differences between the CIR and the CII?
The CIR represents 30% of eligible R&D expenditureup to €100 million, with a ceiling of 5 % for research expenditure exceeding this amount.
The CII represents 30% of eligible innovation expenditure400,000 per year from 2023.
It is important to note that the CII is intended only for SMEs as defined by the European CommunityIn other words, companies with fewer than 250 employees and sales of less than 50 million euros (or total assets of less than 43 million euros). To determine whether a company complies with these thresholds, it is necessary to take into account, in full, in part or not at all, the headcount and sales of the other subsidiaries in the group, according to the percentage of ownership or participation between them.
The calculation of the CIR takes into account the inclusion of fixed operating costs (+43% in personnel costs and +75% in depreciation and amortization), which are no longer included in the ITC.
What expenses are eligible under the CIR vs. the CII?
Eligible expenses mainly include human and material resources allocated to projects, subcontracted work and patent registrations, in accordance with current regulations. In addition, these expenses must be invested in operations that meet the scientific eligibility criteria.
The following are therefore eligible:
- The activities of fundamental research, applied research or experimental development for research and development projects (CIR) ;
- The activities of creation of prototypes and installations pilot new products that are more competitive in their market for innovation projects (CII).
Are you new to the CIR / CII? Follow the guide!
Before starting to declare CIR or CII, it is necessary to take stock of your company's activities, in particular :
- By drawing up a list of projects carried out during the year: you must be exhaustive ;
- By assessing the overall stakes (time spent, invoicing, etc.): it is essential to check whether the project is structuring and contributes to the credibility of research and development/innovation ;
- By identifying the deliverables that retrace the work carried out: it is important to tangible proof of the work being valued and capitalizing on the new knowledge acquired.
Declaring your CIR / CII: what are the main steps?
These are the starting points for all the steps involved in filing a tax return:
Justification eligible projects and expenses necessary in the event of a tax audit by the authorities
CIR / CII: which support is right for you?
With over 20 years' expertise in the CIR and CII, G.A.C. Group has developed a range of support services to meet your needs and secure your tax credit, making it a sustainable source of financing for your innovation.
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Article written by
Axel MERLIN
Innovation Business Manager at G.A.C. Group
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