The Research Tax Credit and the Innovation Tax Credit
The CIR and the CII are effective tools for financing innovation, provided that you master the rules
The CIR and the CII
These efficient financing tools necessarily imply careful justification in substance with the formalism expected by the Tax Administration.
Introduced in 1983 for the research tax credit and in 2013 for the innovation tax credit, these systems are intended to encourage companies to commit themselves in terms of research and development and innovation. The State finances in year N + 1 part of the costs incurred in year N, regardless of the technical success of the project.
For the year 2012, the statistics published by the Ministry of Higher Education and Research show that VSEs and SMEs have respectively declared an average research tax credit of € 53 K and € 174 K.
These financings encourage companies to invest, but points of vigilance deserve to be underlined. Indeed, the peculiarities of these financial tools lie in the declarative nature of the systems and the methods of ex-post verification. This process, therefore, involves risks of dispute, both on the valuation of expenses and on the eligibility of the projects selected by the company.
Very often, the origin of disputes lies in the non-anticipation of reporting companies, which do not prepare supporting documentation and find themselves in difficulty when the Tax Administration requests them.
Since the possibility offered to SMEs to request the reimbursement of their tax credit in the event of a deficit, the prior requests from the administration are increasing, which are initially requested a summary of the projects selected and the details financial.
It is therefore a question of understanding the requirements expected by the tax administration in order to formalize the supporting elements without waiting for administrative requests. To do this, we recommend that companies, whatever their maturity in the matter, benefit from support, in particular on the preparation of the technical justification file, on which the requirements are reinforced from year to year.
Our experts are at your disposal to deal with all of these subjects and allow you to secure your declarations and thus make innovation the engine of your business development.
The CIR is determined by calendar year, regardless of the year-end date. Public subsidies received for research projects giving entitlement to the CIR must be deducted from the credit calculation bases. Repayable grants are added to the calculation bases for the year of their repayment.