The Council of State has ruled that the exceptional and temporary contribution (CET), payable by companies belonging to an institution under the AGIRC, constitutes a social contribution to be considered as personnel expenses for the determination of the research tax credit.
It also ruled in favor of considering internal personnel expenses for technological monitoring, which are not included in the expenses of eligible researchers and research technicians.
The facts
The Administration questioned the RTC corresponding to:
- payments made in respect of certain compulsory levies based on the remuneration paid to its research staff, i.e., FNAL, APEC and the exceptional and temporary contribution (CET), payable by companies belonging to an AGIRC institution (referred to in Article 2 of Annex III to the national collective agreement on retirement and provident funds for executives dated 14th March 1947)
- technological monitoring expenses including personnel expenses
The exceptional and temporary contribution (CET) constitutes a social contribution that can be retained as personnel expenses
The Council of State recalls that “remuneration and its accessories, as well as social charges, insofar as they correspond to compulsory social contributions” are retained in the RTC base, as personnel expenses.
It then defines compulsory social contributions as payments made by employers to compulsory social security schemes, as well as payments intended to finance complementary collective guarantees instituted by legislative or regulatory provisions or guarantees instituted by means of collective agreements, as well as by the draft agreements or unilateral decisions mentioned in Article L. 911-1 of the social security code, the purpose of which is to open up rights to benefits and advantages provided by these schemes under these guarantees.
And it completes this definition by indicating that it also includes levies “which, while not entering into account for the determination of the calculation of the benefits provided by a compulsory social security scheme, condition the opening of the right to these benefits and constitute, by their characteristics, an element of internal solidarity to the scheme”.
It then ruled that neither the FNAL nor the APEC are compulsory social contributions (see also Council of State, 19/06/2019, n°413000, ST Microelectronics et Administrative Court of Appeal of Paris, 14/04/2016, n°14PA04805, SA AB Science).
On the other hand, the exceptional and temporary contribution, which is additional to the main pension contribution and constitutes, given its purpose and its small amount, an element of internal solidarity within the scheme, is among the payments that condition the entitlement to benefits under the scheme and must be considered, even though it is not taken into account for the determination of the points acquired each year by the insured persons, as a social contribution within the meaning of the RTC.
It therefore takes a position contrary to that expressed by the Administration in its comments to the BOFiP, which expressly excludes this contribution from eligible compulsory contributions (BOI-BIC-RICI-10-10-20-20, 5 December 2018, n°320).
Internal staff costs incurred in connection with the technology watch necessary for research operations may be eligible for the EIF
Under Article 244c B (j) (II), the basis of assessment of the RTC may be used ‘ Technology watch expenses incurred when carrying out research operations, up to a limit of €60,000 per year ».
Article 49f I c of Annex 3 to the French Tax Code states that “ Technology watch is understood as a process of continuous updating with the objective of systematically organizing the collection of information on scientific, technical and product, processes, methods and information systems in order to reduce opportunities for development. ».
The courts of first and second instance had confirmed the Administration’s position that technology watch expenditure could not include staff costs, the latter being considered only pursuant to Article 244 quarter B (b) of II (staff costs relating to researchers and research technicians).
The Council of State censors this interpretation by stating that “ staff costs incurred under the technology watch organized for the carrying out of research operations and which are not among the staff costs relating to researchers and research technicians referred to in Article 244c B (b) (II) » are eligible for the RTC within the limit of 60,000 €.
As a result, internal staff costs relating to technology watch may be retained, regardless of whether they qualify as researchers or research technicians.
A word from our experts
The admission of the CET in respect of compulsory social contributions eligible for the RTC scheme, even if this contribution does not as such give rise to special rights for the employee (solidarity contribution), opens interesting prospects for assessing the eligibility of more recent social contributions and for the moment not covered by administrative doctrine, in particular the technical equilibrium contribution and the general equilibrium contribution, created following the merger of the AGIRC-ARRCO scheme in 2019.
Concerning the technological watch, we noticed for several years the reluctance of the administration as to the eligibility of internal personnel expenses. The clear decision of the Council of State will make it possible to retain in the same way the monitoring expenses whether they are carried out internally (by researchers, research technicians or staff who do not have this qualification) or outsourced.
