Tax Credit for Research Expenses

Companies taxed on the basis of their actual profits may, on an optional basis, benefit from a tax credit for research expenses incurred in France and abroad. An innovation Research Tax Credit (RTC) is also granted to Small to Medium size enterprise (SMEs) that incur innovation expenses.

1. Companies impacted
2. Operations subjected
3. Eligible expenses
4. Resubmission for tax purposes
5. Calculation of the tax credit
6. Utilization of the tax credit
   1. Charge to the IR or IS
   2. Return of the unallocated tax credit
   3. Mobilization of the claim

1. Companies concerned: The research tax credit (RTC) is available to industrial, commercial or agricultural companies operating individually or as a company and taxed on the RTC (Research Tax Credit) or IS (société et imposes-Incorporation Tax) according to their actual benefit, including those covered by a temporary exemption scheme. The innovation RTC, on the other hand, is reserved solely for Small to Medium size enterprise SMEs in the Community sense (less than 250 employees, annual turnover of less than €50 million or balance sheet total of less than €43 million).
2. Operations covered: Scientific or technical research expenses including basic research, applied research and experimental development activities are eligible for the general RTC. The patentability of a technical creation is an indicator of R&D activity, but is not in itself a sufficient condition.

The innovation component covers the design of prototypes or pilot installations for “new” products. A product that has not been placed on the market and is distinguished from existing products by superior technical performance is considered as such. 

1. Eligible expenses: For the general RTC (Research Tax Credit), as for the innovation RTC (Research Tax Credit), eligible expenses may be taken into account provided that they are deductible from the company’s RTC or SI(Incorporation Tax) taxable income and that they correspond to research operations located in France or in another EEA State (The European Economic Area). 

• Industrial companies in the textile-clothing and leather sector can claim the benefit of RTC (Research Tax Credit) for the development of new collections, including when they outsource their production to third parties.