New 2019 French Patent/Software box regime: taxation at a reduced rate of 10%

Biotech 1 min
February 7, 2019

A new preferential taxation regime for income generated by industrial property and software is applicable since January 1, 2019.

This new regime, applicable either to types of intangible assets or to a family of products or services, provides taxation at a reduced rate of 10% of net income generated by industrial property including patents and non-patented patentable inventions (for European SME only) and also copyrighted software. The inclusion of software constitutes the major change to the taxation regime.

The net income basis subject to a reduced rate of 10%, vs 31% in 2019, takes into account the research costs (which could also qualify for the Research Tax Credit) and a percentage determined from the “nexus” approach (i.e. ratio between the qualified costs and the total costs including the purchase cost).

This new regime also involves a detailed documentation that should be provided to the French Tax Authorities the first day of the tax audit under a penalty corresponding to 5% of income generated from the non-documented intangible asset.

Written by
Laurence Clot
Laurence Clot
As head of Bird & Bird's Tax Group in France, I am specialised in providing truly international tax advice to clients, particularly in respect of significant transactions. I am highly experienced in advising clients on a wide range of tax matters for French and international groups across a broad spectrum of industries mainly, life science, high tech, energy, insurance, distribution and communications. My practice offers expertise in dealing with international tax issues relating to significant transactions such as acquisitions, cross border mergers, transfer price issues, tax audits, tax litigation and cooperation alongside day-to-day tax matters.
Alexandre Polak
Alexandre Polak
I am a Counsel in our Tax Group in Paris. I specialise in providing national and international tax advice to our clients, offering significant expertise in M&A, restructuring and private equity as well as in individual tax matters.

Related articles

China’s First Supreme Court Patent Linkage Decision
On 5 August 2022, the Chinese Supreme Court (the “SPC”) handed down the second instance judgment on...
Blood, cells and tissues: regulatory change is coming
Approximately twenty years ago, the regulation of Substances of Human Origin (“SHO”)...
Supreme Court defines plausibility in the context of sufficiency
A majority postulates a new "outward presentation test" to deal with the infringement of second medical...
Cookie consent
We use analytics cookies to help us understand if our website is working well and to learn what content is most useful to visitors. We also use some cookies which are essential to make our website work. You can accept or reject our analytic cookies (including the collection of associated data) and change your mind at any time. Find out more in our Cookie Notice.