France introduces a new R&D tax credit for collaborative research work

General 3 min
January 27, 2022

France has introduced a new research tax credit (“R&D tax credit”) in the framework of collaborative contracts between public and private entities (“Collaborative R&D Tax credit” or French “CICo”).

Private companies will be eligible for this new Collaborative R&D Tax credit if they agree collaborative contracts (between 1st January 2022 and 31 December 2025) with “R&D Organisations” dedicated to independent industrial research or experimental development activities.

The private companies and the R&D Organisation should not be affiliated, and the R&D Organisation should be accredited, through a ruling granted by the French Ministry of Research.

In this respect, the collaborative contracts should include compulsory provisions, notably:

  • be concluded prior to any R&D works,
  • be remunerated at cost and
  • cover a maximum of 90% of the total R&D expenditures incurred by the Organisation,
  • the results including the IP rights cannot be granted in full to the private companies under the contract
  • state the common objective pursued
  • organise the condition for sharing the risks and results of the collaborative works
  • grant to the Organisation the rights to publish the results of the collaborative contract.

R&D works should be located within the EU or EEA countries which concluded an administrative assistance agreement with France (Norway, Iceland, Lichtenstein).

The R&D works should be carried out directly by the Collaborative R&D Organisation, with the possibility to sub-contract with another accredited Collaborative R&D Organisation some of the works subject, if it is specifically mentioned under the main collaborative contract.

The private entities will benefit from a tax credit equal to 40% of the R&D Organisation expenses, up to 6 million euros per year, leading to a maximum tax credit of 2.4 million euros per year, which could reach 3 million euros (50% of the R&D Organisation expenses) for small and medium-sized companies (SME) (as defined in Community regulations).

Private entities will be entitled to request a prior ruling to secure their positions.

The collaborative R&D tax credit can be offset against French corporate income tax due the same year or against the taxes due in the three years that follow. At the end of the 3-year-period, the unused tax credit can be refunded in cash. The tax credit is immediately refundable for SMEs or innovative start-ups (JEIs) and companies under amicable settlement or safeguard procedure.

This new incentive tax regime will help to develop public-private collaborative research and increase the R&D tax credit granted by the French State, which cost approximately 6.4 billion euros in 2021 and represents 65% of the innovation aid granted to companies.

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.
Heloise Virenque
Heloise Virenque
As a member of the Tax team, I am involved in tax matters for both companies and individuals. Specialising in French and international tax law, I regularly advise companies and managers, both in the day-to-day tax management of their activities, and in national and cross-border transactions (mergers and acquisitions, restructuring and private equity). An important part of my activity is also dedicated to tax issues related to R&D tax credit together with IP/Patent box regimes. I also assist my clients to the settlement of tax audits and tax disputes.

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