How to benefit from the research tax credit
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The Research Tax Credit, abbreviated CIR, is one of the mechanisms that allow a company to reduce its taxes, and aims to support investment and activities in the field of research and development (R&D). It can benefit young companies as well as older ones. The rate of reduction is not fixed and varies according to the investments made.
The research tax credit (CIR)
The research tax credit is the main tax incentive for research. It is an optional measure for companies. The amount is variable and is calculated according to the company’s research and development expenses.
In order to benefit from it, the company must carry out a commercial, industrial or agricultural activity and be subject to corporate income tax or income tax.
It is a significant tax expenditure for the State since in 2019 and 2020, it represented respectively 6,400 and 7,460 million euros and 23,324 companies benefited from it in 2020 (Annex LOI n° 2020-1721 of December 29, 2020 of finances for 2021). It is in this sense that the system is very strongly controlled by the tax authorities in order to avoid abuse.
Do not hesitate to contact AlterTax-Avocats to ensure that your expenses are eligible for the CIR.
The amount of the research tax credit (CIR)
The rate of reduction is 30% for expenses not exceeding 100 million euros (50% for companies located in the DOM). The rate is lowered to 5% of eligible expenses above the 100 million euro ceiling(Article 244 quater B).
Research operations and expenses eligible for the CIR
The expenses taken into account are those of fundamental research, applied research and experimental development. A decree has been issued to clarify the law on the framework of research used for the tax credit. The case law and the doctrine of the administration came to bring precisions on the eligible expenses.
Expenditure on outsourced R&D operations,
Depreciation of fixed assets allocated to research, as well as amortization of patents
Personnel expenses for researchers, research technicians, doctors and engineers assigned to research operations;
Costs related to the protection of intellectual property
Technology watch expenses up to a limit of €60,000 per year
To benefit from the research tax credit, you must attach the 2069-A-SD declaration (electronically, for the year for which the request is made) to the income tax return submitted to the Service des Impôts des Entreprises (SIE).
Control at the request of the tax authorities
To ensure the eligibility of your project, companies can always seek the opinion of the administration through a rescript.
However, as part of the improvement of the relationship between the administration and the taxpayer, companies can have recourse to the control on request, provided for in article L 13C of the Tax Procedures Book (LPF).
Article L 13 CA of the LPF extends to all companies the right to request an audit when it concerns the CIR. The aim is to ensure that the R&D work they plan to include in the tax base is eligible.
Once the audit has been carried out, the company informs the taxpayer and this position is binding on the administration under articles L 80 A and L 80 B-1° of the LPF.
If you have the slightest doubt concerning the eligibility of your project for the Research Tax Credit (RTC), contact AlterTax Avocats, so that your tax advantage is not called into question after a tax audit by the administration.
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