Business Financing: Tax Credits and Public Aid in France
If you’re looking to start a business, hire employees, or invest in innovation, you may be eligible for tax reductions or public financial aid. Here’s a comprehensive overview of the main tax credits and aid available to businesses in France.
Research Tax Credit (CIR)
The Research Tax Credit (CIR) is available to businesses for their research and development (R&D) expenses. It allows companies to benefit from a tax reduction of up to 30% of their eligible R&D investments. Companies can use the tax administration’s simulator to quickly estimate their potential tax credit based on their R&D or innovation expenditures.
Innovation Tax Credit (CII)
The Innovation Tax Credit (CII) supplements the CIR and is specifically designed for small and medium-sized enterprises (SMEs) that invest in innovation-related expenses. As of January 1, 2023, the CII rate is set at 30% of eligible expenses, with a cap of 400,000 euros per year in mainland France.
Tax Credit for Collaborative Research
Businesses that enter into contracts with public research organizations can benefit from a tax credit for collaborative research. The tax credit ranges from 40% to 50% of eligible expenses, depending on the size of the company.
VAT Credit Reimbursement
Companies with deductible VAT exceeding the collected VAT can request a reimbursement of all or part of their VAT credit, provided they meet certain thresholds. The rules for VAT credit reimbursement depend on the company’s VAT tax regime.
Training Tax Credit for Business Leaders
The Training Tax Credit for business leaders supports companies that invest in the professional development of their leaders. It applies to all businesses under a real profit taxation regime, regardless of their legal form or industry.
The tax credit amount is calculated based on the number of training hours completed, multiplied by the hourly minimum wage rate (SMIC) as of December 31 of the year in which the tax credit is calculated. The maximum credit is limited to 40 training hours per calendar year per company.
Family Tax Credit (CIF)
The Family Tax Credit incentivizes businesses to invest in initiatives that help employees balance work and family life. Companies that establish daycare facilities or provide financial assistance to employees for family support can deduct these expenses from their taxes (corporate tax or income tax) under certain conditions. The CIF rate varies between 25% and 50%, with a maximum annual limit of 500,000 euros.
Video Game Production Tax Credit
Companies that develop or produce video games may be eligible for a tax credit of 30% of eligible expenses, up to a limit of 6 million euros per company and per fiscal year. To qualify, the project must have a development cost of at least 100,000 euros and the game must be intended for commercial release to the public.
Tax Credit for Craft and Artistic Trades
Businesses in the craft and art sectors can receive a tax credit of up to 30,000 euros per year. The standard rate is 10% of eligible expenses, such as costs related to the design of new products or patent filing fees. This rate increases to 15% for companies with the “Living Heritage Company” label. This tax credit is available until December 31, 2023.
Tax France: Corporate Sponsorship and Donations to Nonprofits
Corporate sponsorship involves providing financial or material support to a nonprofit organization without expecting anything in return. Companies that engage in sponsorship can benefit from a reduction in their tax bill (income tax or corporate tax) for the year in which the donation was made. The tax reduction is capped, regardless of the number of donations made.
Status of Young Innovative Companies
The Young Innovative Company (JEI) status applies to small and medium-sized businesses less than 8 years old (as of January 1, 2023) that allocate a significant portion of their expenses to research. This status provides access to tax and social security exemptions as well as various other benefits.
Finding Public Aid for Businesses
To explore all available public aid options, businesses can use the “Aides Entreprises” database, which provides detailed information on the financial support and tax incentives accessible to companies in France.
This comprehensive set of tax credits and financial aids is designed to support various business activities, from research and innovation to workforce development and community engagement. By leveraging these resources, businesses can optimize their financial planning and contribute to sustainable growth and innovation.
