Research and innovation are important levers for the economic development of companies. Numerous public aid schemes exist in France to support and accompany companies in their various innovation projects
The devices revisited: CIR and JEI
Among them is the Research Tax Credit (CIR), a flagship support scheme for innovative SMEs. A report by the Court of Auditors suggests that studies should be carried out on its cost and effectiveness. Indeed, the increase in checks on its beneficiaries has raised various questions. Nevertheless, the CIR remains an essential mechanism for companies and the 2014 Finance Act, which came into force on 1 January, has made a number of changes to facilitate access to it. The Young Innovative Company status has also been reformed: on the one hand, advantages are granted to encourage the company's start-up and on the other hand, the aid is extended over time.
The day after its promulgation, Thomas Gross and Charles-Edouard de Cazalet, associate directors of the public finance consulting firm SogedevIn the context of the 2014 Budget Act, the main reforms in favour of innovation and entrepreneurship are reviewed.
Young Innovative Company status: return to favourable conditions and extension of the scheme
The return to an exemption to 100% of the employer's contributions to URSSAF for Young Innovative Enterprises (JEI) and their extension to staff assigned to innovation activities (such as prototyping or the installation of new pilots) is undoubtedly the major reform in favour of innovative SMEs.
Created in 2004, the JEI status has undergone important reforms over time, which have not always been accepted by entrepreneurs. Until the end of 2010, JEIs benefited from a total exemption on URSSAF employer contributions for the salaries of staff working on R&D projects. A principle of degressivity in the rates of exemption from employer's contributions had been introduced by the 2011 Finance Act and adjusted since 1 January 2012 (80% in the fifth year, 70% in the sixth year, 60% in the seventh year and 50% in the eighth year).
The 2014 Finance Act puts an end to this degressivity for the benefit of IEDs.Par elsewhere, initially intended for companies created until the end of 2013, the JEI status is extended to SMEs created from 1 January 2014 to 31 December 2016, until the last day of their 8th year of existence.
"The JEI status is an indispensable fiscal tool for the creation and development of young innovative SMEs. We are delighted with these changes, which promote a climate conducive to innovation and competitiveness of French companies in a still difficult economic context.says Sogedev.
Research Tax Credit: reforms to help find and maintain jobs
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The government has also made some adjustments to the Research Tax Credit in accordance with certain recommendations made in the context of the "simplification shock" announced last July. These minor reforms aim to simplify and harmonise the scope of this aid.
The 2014 Finance Act redefines the conditions for benefiting from the doubling of the CIR base for the hiring of "young doctors". Personnel expenses relating to "young doctors" are taken into account up to 200% of their amount during the first twenty-four months following recruitment, provided that the number of the company's research and development staff is not less than that of the previous year. This condition is a legitimate response to the need to prevent young doctors recruited with a tax advantage from replacing researchers already working for the company.
Thus, a company that is experiencing staff restrictions in another branch due to its economic difficulties, but which continues its research efforts, will not be penalized and will continue to benefit from the tax advantage linked to the hiring of "young doctors".
The reform also aims to unify the territoriality rules applicable to expenditure on the protection of industrial property rights. All expenditure relating to industrial property rights is now included in the EIF base without any geographical restriction.
"The Research Tax Credit is unquestionably the most popular scheme in favour of innovation among SMEs. These various amendments to the Finance Law reflect a general awareness of the need to maintain the CIR and make it more accessible to companies wishing to claim it. It is becoming more effective and more readable. However, further adjustments would be welcome in order to remove some persistent obstacles, particularly in tax audit procedures".concluded Thomas Gross and Charles-Edouard de Cazalet.
Sogedev helps companies to obtain, optimise and secure public aid schemes for the financing of innovation, local and international development. Sogedev responds to the growing need of innovative companies to benefit from advice to help them in their public financing issues. Today, it is a recognised player on its market and is particularly appreciated for the quality of its expertise and its responsiveness. Since its creation, Sogedev has accomplished more than 2800 missions and operates in various sectors such as information technology, biotechnology, automotive and printing. To find out more about Sogedev: www.sogedev.com