R&D Tax Credit
The French Government assists companies by offering an R&D credit which can be carried forward three years and is assessed on a valum-basis. If the credit is not utilised within the three years provided, certain companies are authorised to a refund to the 3-year utilisation rule. Those who can claim a refund, include, SMEs, new startups, young innovative companies, and companies facing financial hardship. Furthermore, these types of companies are able to claim prompt refunds for any unutilised credits.
Description of Incentive
Companies are able to receive 30% tax credit on R&D activities. The credit is applicable at a rate of 30% for the first €100 million of qualified expenses incurred during the relevant fiscal year, and 5% of any amount in excess of €100 million. The credit may be offset against CIT liability for the relevant year of application and subsequent three years. Credits may be carried forward three year and refunded if not offset after three years.
Subcontractor expenses can be redeemed up to €2 million, or up to €10 million if both parties are not dependent. There is a cap on private subcontracted research which is three 3 times the other qualifying expenses.
All types of entities may qualify for R&D incentives if they have eligible activities, inclusive of basic research, applied research, and development activities. It is important to note, R&D activities must generally:
- Show a significant technological advancement in comparison to current technology available
- Utilise a collaborative effort of scientists, researchers and technology experts
- Uncertain outcomes including complex methodology for research
- Use of scientific methods and theories to achieve results
All qualified activities must occur within the European Union, however there is no limit on the location of resulting IP from research activities. Taxpayers may also pursue government pre-approval or contractor certification by the Ministry of Research as these payments to certified contractors are considered R&D expenditures. When a claim exceeds €100 million, new documentation is required.
Swanson Reed offers the following services:
- Advice on tax preparation relevant to claiming the R&D tax credits incentive
- Preparation of documents relating to filing and substantiating a R&D taxation claim
- R&D tax advice and consultations
- R&D tax claim planning and preparation
For a full range of services in relation to the credit, please click here.