Incentive programs for business investors and start-up

France grants a R&D tax credit to companies carrying R&D activities in France.

This tax credit can reduce the cost of research by one third. According to several surveys, this incentive places French researchers among the most efficient in the world and makes France one of the most competitive European countries.

Surveys made by the OECD indicate that France has one of the best R&D incentive in the world, putting it ahead of the USA and Japan.

However, other incentives for companies operating in France do exist.

They allow companies to significantly decrease their taxable basis as well as the burden of social security contributions.

Tax incentives for companies may be summarized as follows:

Corporate Income Tax (CIT)

Common Regime for Companies

  • Full and immediate deduction of R&D expenses for the taxable basis to CIT
  • Exceptional depreciation for software (full depreciation over 12 months after purchase)
  • Straight line depreciation over 5 years of R&D investment expenses

Specific Regime for SME’s

A company qualifying as a “Young Innovative Company” may benefit from:

  • A full exemption of CIT for the first fiscal year; and
  • A 50% exemption of CIT for the second fiscal year.
  •  An exemption of social security charges during seven years, if certain conditions are met.

R&D Tax Credit (to be offset against CIT)

Provided that the expenses are incurred in the course of R&D research, qualified as such under French tax law, companies carrying R&D activities may offset a tax credit against CIT equal to:

  • 30% of R&D expenses limited to EUR100m;
  • 5% for the portion of R&D expenses exceeding EUR100m

Innovation Tax Credit

  • Offsetting a tax credit against CIT equalling 20% of innovation expenses and limited to EUR400,000 per year
  • The maximum tax credit that may be obtained equals to EUR80,000 per year

Patent box

Royalties may benefit from a reduced CIT rate of 15%.

Furthermore, in order to attract engineers, France has put in place a favorable impatriate regime for foreign workers not attached to France. Besides, an expatriate regime exists and allows a full exemption of wages paid to an engineer working abroad provided that specific conditions are met.