2021 Finance Law: Measures regarding the Research Tax Credit (RTC)

For the second year consecutively, the Finance Act has reduced the base of eligible expenses for the CIR.

Elimination of the doubling of the base for public research as of January 1, 2022

To date, the expenses incurred on R&D works entrusted to public entities may be double counted when calculating the R&D tax credit. 2021 Finance law abolishes this mechanism as of January 1, 2022.

Thus, the research expenses entrusted will be taken into account for their simple amount, the service provider will have to be certified, the ceiling of eligible expenses will be €10 million (€2 million in case of dependency between the contracting company and the service provider) and the expenditure entrusted shall be retained up to a limit of three times the amount of the other eligible research expenditure.

Higher CII rates for expenditures on Corsica’s territory

The R&D expenses incurred in Corsica will be eligible to the innovation tax credit with an improved rate of 35% for medium-sized companies and 40% for VSBs. This measure comes into force on January 1, 2021.

RTC rulings

Until now it was possible to ask for a RTC ruling to the French tax administration (LPF, art. L80 B 3°) and both to the Ministry of Research and to organizations responsible for supporting innovation (LPF, art L 80 B, 3° bis). As of January 1, 2021, the requests will be sent only to the FTA or to the Ministry of Research.

Lucille Chabanel

Lucille has more than 14 years’ experience in tax law. She is a member of the corporate tax department since 2002 and joined the R&D group in 2004. She has […]

Béatrice Prim

Beatrice, a Senior Manager who has been attached to the research and development team since 2010, advises her clients on CIR (security, defence during tax audits) and coordinates missions on […]