Staff costs

Case law - Recognition by the Council of State of the eligibility of a former contribution, as well as of non-research staff involved in the expense item of technology watch - May 2021

In a judgment of May 19, 2021, the Council of State first ruled on the application of a flat rate to research staff by the tax administration, as well as on the eligibility of the former CET contribution, and on the eligibility of personnel who do not have the status of researcher involved in technology watch.

The decision of the Council of State highlights that the company Publicis has not succeeded in justifying the allocation rates for research of its employees. In fact, the production of tables showing the distribution of working time was not detailed enough, and therefore did not make it possible to assess whether all the tasks carried out by the employees actually contributed to carrying out research operations.

Thus, the Council of State did not question the rate cap at 85% applied by the tax administration.

The Council of State also ruled on the possibility of valuing the “internal” time of non-research workers in the expense item of technology watch. Indeed, the judges considered that the internal time of non-research staff spent on technology watch could be valued as research tax credit in the expense item relating to technology watch.

Finally, the Council of State considered that the temporary exceptional contribution (which no longer exists since January 1, 2019), was eligible for the research tax credit. This position of the judges is in contradiction with administrative doctrine.

Conversely, the judges confirm that the FNAL and APEC contributions are not eligible for the research tax credit.

Source: Council of State, 9th - 10th chambers combined, 19/05/2021, 432370, Publicis


Case law - Need to bring elements of staff involvement, the mere production of time tracking is not sufficient - April 2021

In a judgment of April 13, 2021, the Paris Administrative Court of Appeal ruled on the need to produce sufficiently detailed implication elements.

In this case, the company had time tracking where the number of hours declared by its employees were mentioned and detailed. Thus, this time tracking included, on the one hand, the hours declared as eligible for the CIR, and on the other hand, the hours invoiced in their name to the company's customers. However, the tax administration noted that, for certain projects, the cumulative quantities of work declared for the research tax credit and those invoiced for other unrelated projects were not compatible with the annual volume of work. of these employees. Thus, the tax administration considered that despite the presence of time tracking, the company only produced tables retracing the hours of research per employee and per project declared initially.

The Administrative Court of Appeal ruled in favor of the tax administration and ruled that it was justified in excluding the corresponding expenditure from the base eligible for the research tax credit. The company is then criticized for not producing supporting evidence to demonstrate the work carried out.

Source: CAA de PARIS, 7th room, 04/13/2021, 19PA02410, Société Criatys Consulting


Case law - Reminder: Eligibility of research technicians with regard to the application of the definition - February 2021

In a judgment of February 24, 2021, the Council of State confirms that research technicians can be valued in the CIR for companies, regardless of their training.

As a reminder, to promote a research technician, it is necessary to verify the combination of two cumulative conditions:

• The first condition is that the technician must be in close collaboration with the researcher and under his control, performing tasks necessary for the execution of R&D projects.

• The second condition is that they must be essential for the proper conduct of research and development work by their technicality, experience, or practical know-how.

In the present case, and before any decision by the Council of State, the Administrative Court of Appeal emphasized that the applicant company did not establish the existence of a collaborative relationship between each of the employees valued as a technician. and a researcher "with a view to ensuring the technical support essential to research work".

As it was unable to establish a relationship with researchers, the Court ruled that this staff could not be qualified as eligible within the meaning of the CIR.

Thus, the Court of Appeal, in its decision, reiterates the importance of justifying the expenses incurred.

However, the company appealed to the Supreme Court, and the Council of State ruled that, in fact, the rejected personnel were under the authority of the technical director responsible for research work, who was validated as eligible for the CIR by the administration.

The Council of State then comes back to the principle being that "can be qualified as research technicians the employees who carry out the operations necessary for the research work eligible for the CIR, under the guidance of one or more researchers who supervise them, and when even they would not have a diploma or a professional qualification in the scientific field ”.

In this judgment, the demonstration of the hierarchical connection between researchers and technicians was essential to admit the eligibility of the technical staff questioned.

Source: CE, February 24, 2021, 429222


Case law - Correlation between the technical file and the number of hours valued - December 2020

In a judgment of December 24, 2020, the Paris Administrative Court of Appeal ruled on the assessment of the qualification of rigor and sufficient precision in establishing the number of hours valued, in the absence of a basis pointing.

In this case, the Ministry of Higher Education, Research and Innovation, had validated, during an expertise commissioned during an audit, the number of hours allocated. The tax administration continued to argue that the methods of calculating staff costs were not justified, and thus rectified the company in question.

The Administrative Court of Appeal ruled that when the [AM2] description of all the research operations carried out make it possible to justify with sufficient precision that the remuneration on which the company relies was actually paid during research operations and gives rise to the right to the tax credit on the basis of the b) of II of article 244 quater B of the general tax code.

In other words, the description by a company of all the research operations carried out, which shows the complexity and the volume of the research operations undertaken, make it possible to justify with sufficient precision that the remuneration on which the company relies was actually paid during research operations.

Source: CAA de PARIS, 5th chamber, 12/24/2020, 19PA00143


Case law - Eligibility of the provision via a mandate contract - November 2020

The Nantes Administrative Court of Appeal ruled on the eligibility of expenditure on staff made available when the formalism is not respected.

In this case, the deputy chief executive officer of one company was made available to another company by means of an agency contract. It is noted by the Court, that the administration has in no way called into question the eligibility for the tax credit in favor of research expenditure corresponding to the hours devoted by this person to research operations during the period. controlled.

The Court then ruled that “the fact that this personnel intervened in the company by means of a mandate contract, and not by means of an agreement for the provision of personnel is in this regard without impact on the eligibility of these expenses for the tax credit ”.

Thus, the Court validates the eligibility of a provision scheme through a mandate contract.

In any event, as this decision goes against the conditions set out by labor law, we recommend that you comply with all the conditions in establishing the provision of staff in order to avoid any questioning. of the scheme by the tax authorities.

Source: CAA Nantes, 1st chamber, November 5, 2020, n ° 19NT00453


Case law - Eligibility of the provision providing for the application of invoicing with margin - November 2020

The Nancy Administrative Court of Appeal ruled on the eligibility of personnel expenses made available when the formalism is not respected.

In this case, a company had invoiced its subsidiary the sums relating to the provision of research staff and had declared the amounts in its own research tax credit declaration. It therefore turns out that it was not this company that had carried out the research work, as its research staff had indeed been made available. It was therefore not entitled to claim the benefit of the CIR on these expenses which it also invoiced to the subsidiary company.

However, the Court also ruled on the eligibility of expenditure for provision within the subsidiary, when the amount invoiced included a margin. In this regard, the Court ruled that the expenditure relating to the staff made available was eligible with the daughter company, when this mechanism was implemented through an assistance agreement and the amount declared under the CIR excluded any margin that could have been billed by the company providing this staff. 

In any event, as this decision goes against the conditions set out by labor law, we recommend that you comply with all the conditions in establishing the provision of staff in order to avoid any questioning. of the scheme by the tax authorities.

Source: CAA Nancy, 2nd chamber, November 12, 2020, 19NC01780



Case law - Staff involvement in an R&D project - November 2019

The Paris Administrative Court of Appeal ruled on the valuation of people without an engineering degree.

In this case, the administration had rejected the personnel costs relating to certain employees, on the grounds that the company had not provided details on “the active participation of this employee in research operations”. It was recalled that the provisions of articles 244 quater B and 49 septies G of appendix I of the CGI, allow for the benefit of the tax credit, personnel expenses that can be assimilated to engineers involved in research. .

The Court ruled that the mere production of the presentation of the research and development activity, the diploma and the salary slip, did not make it possible to establish “nor that it has developed skills in the field of research and development, nor that it has effectively participated in the company's research and development activities, either directly or in the form of close collaboration with researchers to ensure the technical support essential to research work within the meaning of the aforementioned article 49 septies G ”.

In addition, the Court supported the fact that a company could not rely solely on the part of the expert's report, nor on the general distribution of the hours of its employees. This report did not establish that the employee concerned could be regarded as directly assigned to research or development.

Source: CAA Paris, November 27, 2019, N ° 18PA03084



Case law - Exclusion of the cap on R&D rates - November 2018

The Administrative Court of Versailles ruled that the administration cannot apply, in the absence of a legal provision allowing it, a discount of 5% on salaries paid to personnel assigned exclusively to research, even if a fraction of their working time would be devoted to training, holding information and follow-up meetings and drafting reports.

By way of clarification, in the present case, the company has provided sufficiently convincing evidence demonstrating that its staff is indeed exclusively dedicated to research work. In particular, the company presented a contract and invoices from an external service provider who was responsible for administrative, accounting, tax, legal and financial tasks. Thus, the judges considered that the company had sufficiently justified that these various tasks were not carried out by the employees assigned to research.

Source: CAA Versailles of 11/27/2018, n ° 17VE00189



Case law - Staff involvement in an R&D project - April 2018

The tax administration contested the taking into account for the calculation of these tax credits of the remuneration of an employee, considering that he did not have the quality of researcher or research technician and did not have the required diplomas. in the scientific field; and that the company did not provide proof that he had been directly and exclusively assigned to research operations and that he had acquired within the company skills which assimilated it, by the level and nature of the activities, engineers involved in research work.

The judges of the Administrative Court of Appeal of Lyon confirmed the exclusion of the remuneration of the contested employee retained for the calculation of the research tax credit on the grounds that the elements presented by the company such as the employment contract, the copies assignment timesheets, copies of project presentation brochures as well as a dated and signed study protocol presenting the said employee as the person in charge of a project as well as "the support he brings", do not do not allow it to be established that he has developed skills in the field of research and development and that he has also effectively participated in the company's research and development activities either directly or in the form of a close collaboration with researchers to provide essential technical support for research work.

Source: Court Administrative Appeal of Paris, 2nd chamber, April 11, 2018, N ° 17PA1714

In addition to qualification, it is therefore also necessary to be able to justify the participation of personnel in R&D operations, especially in the absence of a diploma or experience.

These conclusions echo previous case law:


Case law - Retirement indemnities - June 2017

Article L242-1 of the CSS which considers the notion of indemnity to be remuneration in the broad sense has long been taken up by BOFIP until 2017. Since then, BOFIP has ruled out the application of this article and made its own restrictive application of what can be taken into account.

In this case, the judges emphasized in particular that the retirement indemnity relates to the entire career of the employee and not only to the periods during which the latter has devoted himself to research projects.

This conclusion is subject to interpretation since it suggests the possibility of valuing this compensation if the company has the capacity to justify the employee's R&D rate over his entire career.

On the basis of this restrictive application, the administration excludes, among other things, retirement indemnities.

Source: TA Montreuil of 06/08/2017, n ° 1604882


Case law - Condition for taking into account a Dispositioned staff (MAD) - January 2017

The Disposition (MAD) necessarily implies the physical movement of the employee in the premises of the company and the use of the latter's resources.

As a reminder, all the criteria to be met are as follows:

An employee secondment contract between the 2 companies.

The costs must correspond only to the gross remuneration charged with the employer's contributions.

No margin, euro invoicing the euro. Any for-profit operation having as an exclusive object the loan of labor is prohibited.

An amendment to the employment contract, signed by the employee, specifying the work entrusted, the hours and the place of performance. Specify the fact that he remains under the authority of his original employer.

Work on the site of the beneficiary company.

Source: Council of State, 25/01/2017 n ° 390652


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