Technical file

Case law - State of the art Vs State of the market - January 2020

The Lyon Administrative Court of Appeal recalled that activities which were not carried out with a view to the production of new materials, devices, products, processes, systems, services or with a view to their substantial improvement, have not the nature of experimental development operations and cannot benefit from the research tax credit.

The activity of the company was the design and production of machines for technical and vocational education. The activity is defended by the company by maintaining that it was about new didactic processes.

It was judged that the activity of creating machines was based on natural or scientific phenomena already known and that no scientific or technical knowledge had been generated. In addition, it was judged that the only comparison with the products offered by the company's competitors could not justify the qualification as new teaching methods of the machines created.

Source: CAA de Lyon, January 28, 2020, N ° 18LY03255

The Court reiterated the need to provide proof of a new nature of projects and considered insufficiently detailed the state of the art and technological uncertainties, when these are too briefly described. The fact that the company brings a new report in justification, did not make it possible to call into question the report of the ministry, if this first was not sufficiently supported.

Source: CAA de Nantes, December 12, 2019, n ° 17NT02363

Case law - Distinguishing between an optimization study and a research - November 2019

The Nantes Administrative Court of Appeal ruled that research operations in order to obtain the research tax credit did not present a research object, when it was only a question of finding the most optimal conditions in order to obtain the research tax credit. to make a foal more competitive.

In the present case, the applicant company argued that real research had been carried out, corresponding to a phase of experimental development. The research focused on the influence of parental selection criteria and on the different conditions specific to the horse.

Relying on article 244 quater B of the French General Tax Code, the Administrative Court of Appeal argued that the expenses taken into account for the research tax credit were only those "incurred for the development or substantial improvement of materials, devices, products, processes, systems or services, the design of which could not be envisaged, given the state of technical knowledge at the time in question, by an informed professional, simply by developing or adapting these techniques".

The Administrative Court of Appeal ruled on the eligibility of projects by seeking the criterion of novelty. It was judged that the techniques put forward by the company in order to make the foals more competitive, were improvements or improvements of already existing techniques without "character of experimental development operation". Finally, the increase established by the tax administration for willful breach was justified, since the company could not be unaware that the research operations that it declared did not constitute an object of research.

Source: CAA de Nantes, November 15, 2019, N ° 18NT03339

Case law - Validation of criteria by year of declaration - June 2019

The tax administration contested the eligibility of projects for which the applicant company provided an expert report and which gave a favorable opinion on the work carried out after the contested years (projects suspended at the beginning).

On the one hand, the judge, like the administration, checks the eligibility criteria of a project year by year and not by taking into account the project as a whole.

On the other hand, an independent report cannot support the arguments in favor of the eligibility of projects when it decides on years that differ from those called into question.

This position confirms that eligibility is not assessed with regard to the project as a whole but according to compliance with the criteria of the work carried out during the year.

Source: CAA Nantes of 06/28/19, n ° 17NT03520

Case law - Need for novelty in R&D work - November 2018

In this judgment of November 15, 2018, the Nantes Administrative Court of Appeal reiterates that work eligible for the CIR must be of a new nature.

In this case, a construction company of individual houses had for project to solve the problems of airtightness of energy equipment and insulation of the building.

The Court considered that "even though it carried out tests in 2010 and 2011 on its sites, set up a technological watch and developed a preselection of technical solutions to guarantee the construction of houses to receive the label BBC-Effinergie, the experimental project, in its three components, results from a simple use of existing techniques and does not present a new character.

Source: CAA Nantes, 11/15/2018, n ° 17NT01336

Case law - Justification of work and eligible staff costs under the CIR - February 2018

The Court reiterates the importance of providing all supporting documents to demonstrate the real involvement of the research personnel valued within the framework of the research tax credit, whatever the financial situation of the company.

Taking up the arguments of the Tax Administration, the judges of the Administrative Court of Appeal of Lyon considered that the production of "project files" is not sufficient to prove the reality of the allocation to research of the expenses taken into account for the determination of the research tax credit due to the lack of classification of employees by level as well as the absence of an hourly and financial breakdown of research and development hours by project.

Finally, these same judges also recall that the agents of the Ministry of Research are not obliged to go to the premises to verify the reality of the research.

Source: Lyon Administrative Court of Appeal, 5th training chamber at 3, 22-02-2018, n ° 16LYO4221

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