The different types of tax credits
The OECD in its latest report (dated September 21, 2022) on the evaluation of tax policies revealed that many countries had increased́ the generositý of tax incentives for businesses in order to stimulate investment and innovation, particularly to promote environmental sustainabilitý. This continues with the case of France in the Finance Bill for 2023 allowing for the adaptation of certain schemes to promote the energy transition.
These tax incentives can result in the application of a tax reduction or credit.
What is a tax credit?
It is a reduction in the tax payable and when the tax credit is greater than the tax due, the tax authorities reimburse the difference, which they do not do in the case of a tax reduction.
Refunds can be made via several payment methods:
- By check if you are not taxable.
- By bank transfer or by check according to the preferred method of payment, if you are taxable.
The tax credit is not only reserved for individuals, many tax expenditures are made for the benefit of companies among which :
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The research tax credit (CIR)
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The innovation tax credit (ITC)
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The tax credit for collaborative research (CICo)
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The tax credit for energy renovation work
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The tax credit for the training of the company manager
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The tax credit for employee buyouts
This list is not exhaustive and is likely to evolve with the various tax incentive mechanisms that have been put in place to promote the energy transition.
Which companies are concerned by the tax credit?
Companies that can benefit from tax credits are those subject to the real tax system (either income tax (IR) or corporation tax (IS)) and incurring specific expenses that are eligible for the tax credit concerned.
This is the case for companies that incur research expenses and are therefore eligible for the research tax credit (CIR), the rate of which varies according to the expenses incurred.
The tax rescript: a guarantee for the taxpayer
When granting a tax credit to your company, you are more likely to be fiscally controlled in the context of an accounting audit. This is why you can ensure the eligibility of this tax credit and the expenses made by a request to the tax authorities via the rescript.
It is a procedure allowing the taxpayer to question the administration on the interpretation he makes of a tax system, and to ask for clarifications on the application of the tax rules to his specific case.
The rescript may relate to all of the taxpayer’s applicable taxes.
There is a special rescript concerning the research tax credit which must be made at the latest 6 months before the filing of the tax return concerning the CIR(Form N°2069-A-SD).
The rescript commits the administration, which means that in the event of a tax audit, the auditor cannot go back on the administration’s answer. The rescript is enforceable against him under the provisions of the Book of Tax Procedures.(BOI-SJ-RES-10-20-20-20)
Do not hesitate to contact AlterTax Avocats, a team of tax lawyers with solid experience, who will advise you on the strategy to adopt in terms of tax credits, and on the drafting of your rescripts to the tax authorities.
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