Adoption of a special law to ensure budget continuity: impact on innovation taxation

December 18, 2024

France is currently going through a major institutional crisis following the adoption of a motion of censure, which led to the fall of the Barnier government.

This unprecedented situation has suspended the examination of budgetary texts for the year 2025, including the PLF 2025 (Finance Bill) and the PLFSS 2025 (Social Security Financing Bill).

To overcome this impasse, on December 16, 2024, a special law has been adopted unanimously by Parliament. This legislation aims to extend the budgetary measures of the Finance Act for 2024 and to authorize the State to levy taxes as of January 1^er january 2025.

Two major priorities are defined by this special law to ensure budget continuity

1. extend the PLF 2024:

- Budget appropriations for 2024 have been maintained to ensure the operation of public services and current expenses.
- To avoid a legal vacuum and ensure short-term budget stability.

2. maintain tax collection :

- - The State is authorized to collect existing taxes from 1^er January 2025.
  - Allows you to continue tax collection without interruption, thus ensuring the continuity of the State's revenues.

This emergency measure, in accordance with the opinion of the Board of state issued on December 10 at the request of the Barnier government, does not allow no reforms or new tax measures.

The projects planned by the PLF 2025The Council of State's opinion stressed the importance of maintaining the regularity and transparency of public finances. The Conseil d'Etat's opinion underlined the importance of maintaining the regularity and transparency of public finances, stressing that any tax changes require clear compensation that is integrated into existing budget ceilings.

What impact do innovation-related tax measures have?

The absence of a Finance Bill for 2025 has specific repercussions for tax measures aimed at companies, particularly those involved in innovation.

Innovation Tax Credit (CII)

- The Senate provided for a extended to 2027 and rate revised to 20 % of this device.
- In the absence of a new Finance Act, the CII could disappear on December 31, 2024 in the absence of legislative renewal.
- Companies need to anticipate this eventuality and adjust their tax strategies accordingly.

Textile CIR

This sectoral tax credit, also awaiting renewal, is also in danger of expiring.

Fortunately, some measures remain stable:

The Research Tax Credit (CIR) ;
The Young Innovative Company (JEI) status.

These devices remain in place, providing a certain stability in an uncertain environment for innovative companies.

A transitional solution with limits

Special law ensures short-term budget continuitybut it does not resolve all the uncertainties. The absence of a fully operational government to present a new PLF raises major issues for companies and their tax systems.

Possible disappearance of the Innovation Tax Credit (CII) to December 31, 2024 ;
A legislative framework set for 2025.

To overcome this situation, companies need to prepare for budgetary and fiscal adjustments, while at the same time contemplating a possible absence of the planned reforms.

Conclusion

The adoption of the special law guarantees the continuity of public services and tax collection in the short term. However, in the absence of a new Finance Act for 2025, there are major uncertainties surrounding tax incentives for innovation. Companies need to anticipate these developments now, and secure their strategies for the year ahead.

We'll keep you informed as soon as new news is published.

Our firm is at your disposal to guide you through this complex period and help you prepare your tax projects in the face of this instability.

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