2024-11-01 07:00:00
Will the research tax credit (CIR) slip through the cracks once again? This system, which grants companies a tax reduction calculated on the basis of their R&D expenditure and which weighs 7.7 billion euros this year, was spared in the version of the Finance bill for 2025 presented by the government on October 11. But things shouldn’t stop there.
On the lookout for all potential savings to complete its 2025 budget, the government could be tempted by cuts in this increasingly criticized tax niche. In a report on business aiddating from March 2024, the General Inspectorate of Finance pleaded for savings, without structural reform. The administration proposed, for example, to exclude expenses linked to patents, standardization and technological monitoring from the base of eligible expenses, and to eliminate the “young doctors” system, which makes it possible to promote employment of doctors on permanent contracts in companies after obtaining their doctorate. These two measures alone would save 450 million euros.
The “wisdom” of government
These savings proposals do not leave the various parliamentary groups indifferent, with a view to the examination of the Finance bill which resumes in the hemicycle on November 5.
The general budget rapporteur, Charles de Courson (Liot), who endorsed the two measures recommended by the IGF, tabled two amendments (ici et ici) in this sense.
As shown in a document obtained by Contextthese two amendments received an opinion of wisdom from the government during an interministerial arbitration meeting organized last week. A sign that the executive is not opposed to savings on the CIR, quite the contrary, despite the recent exit of the Minister of Industry Marc Ferracci who considered in West France that he was “ essential ” of ” preserve the CIR ».
For its part, the State Secretariat for AI and Digital Affairs seems better aligned with the “wisdom” of the government. In an interview with The Tribune on October 12, the holder of the morocco, Clara Chappaz, said she was ready to “ study all the avenues that parliamentarians will propose to us “. Including on the CIR.
Cut the fat
Beyond these well-known avenues, the other parliamentary groups have no shortage of ideas for cutting CIR expenses, not hesitating to also draw on the IGF report.
Let us cite for example Philippe Latombe (Modem) who would like refocus the tax advantage on SMEs and mid-sized companies, and that the calculation of the CIR be done at the level of the integrated group and no longer at the level of the subsidiaries. 500 million euros could thus be saved.
The elected official of Vendée propose also a total or partial reimbursement of the CIR when the company which benefited from it does not remain on the national territory due to a sale to a foreign actor, or a relocation.
For its part, the socialist group propose a “in-depth reform of the system”by transforming the calculation method into a progressive system based on the ratio between R&D expenses and turnover, with the aim of encouraging research by SMEs whose propensity to carry out disruptive innovations is greater. The environmental group pleads for “ green » the CIR by introducing differentiated rates depending on the contribution of the activities of the beneficiary companies to green research.
Within the Ensemble group, Paul Midy strives to offer solutions to save the CIR, as well as two other schemes which benefit startups – the innovation tax credit (CII), and the Young Innovative Companies scheme (JEI) – both subject to cuts in the government’s initial copy. The first being, at this stage, simply not renewed next year within the framework of the PLF. The second having been the subject of a government amendment to the social security financing bill which aimed to reduce the number of beneficiaries.
Paul Midy’s “war room”
The Ile-de-France MP meets every Friday morning, by videoconference, his “war room”, made up of representatives of around fifteen professional associations from the tech sector and the world of investment (France digitale, Numeum, France Invest.. .). Its objective: to convince the government not to cut either the CIR, the CII, or the JEI system.
Instead, Paul Midy suggests saving money on two devices “ from the same tax ecosystem », he confides to The Tribune. And first amendmentadopted on October 23 against the advice of the government, concerns a provision of the general tax code (150-0 B ter, known as “contribution-transfer”). This allows the taxation of capital gains to be shifted over time for certain asset classes. The MP’s proposal aims to ensure that the mechanism promotes reinvestment in the real economy.
The second amendment defended by Paul Midy aims to cap the so-called “patent box” tax advantage, which relates to income from certain industrial property assets. According to the elected Macronist, these two measures would allow a saving of around 600 million euros, without affecting any of the three tax aids dear to entrepreneurs.
Regardless, there is still a long way to go and many uncertainties continue to hang over this budget. Whatever the outcome of the debates in the Assembly – use of Article 49 paragraph 3 of the Constitution, or not – the deputy who poses as a defender of French Tech says to himself “ very vigilant » as to the future of the finance bill for 2025 during its passage in the Senate. He already promises to lead “ awareness work » with his colleagues in the upper house, with a view to examining the text, and especially to a possible joint committee.
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**Interview with Paul Midy, French MP and Advocate for R&D Tax Credits**
**Interviewer**: Thank you for joining us today, Paul. With the recent discussions surrounding the research tax credit (CIR) and its potential cuts, what is your main concern regarding the government’s approach to this crucial support system for R&D?
**Paul Midy**: Thank you for having me. My main concern is that cutting the CIR would significantly compromise our innovation ecosystem. The CIR is vital for fostering research and development, particularly among startups and SMEs. These companies are often at the forefront of innovation, and cutting support could stifle their growth and ability to contribute to the economy.
**Interviewer**: There are proposals on the table to reform or reduce the CIR based on the General Inspectorate of Finance’s report. Can you elaborate on the specific amendments you’ve proposed to counter these cuts?
**Paul Midy**: Certainly. One of my key proposals is to preserve the CIR for companies that genuinely invest in R&D, and to shift the focus towards simplifying its access for SMEs. Additionally, I’m advocating against the proposed cuts by suggesting we save funds elsewhere within the tax ecosystem rather than penalizing R&D efforts. We must recognize that investment in research is an investment in our future.
**Interviewer**: How do you respond to the argument from some parliamentary groups suggesting that savings could be made by restricting the CIR to smaller companies?
**Paul Midy**: While it’s true that we should focus on supporting SMEs, I believe that this should not come at the expense of larger companies that also contribute significantly to innovation. The CIR should reflect a balanced approach that encourages all levels of business to invest in research. A tiered system can be effective, but we should avoid hindering the overall environment for R&D funding.
**Interviewer**: Government officials, such as Clara Chappaz, have indicated a willingness to discuss potential reforms. What do you hope to achieve in your negotiations with them?
**Paul Midy**: I aim to open a constructive dialogue that prioritizes long-term benefits over short-term savings. My goal is to present clear data on how R&D investments not only drive innovation but also create jobs and economic stability. By collaborating with government officials, I hope we can find a solution that safeguards the CIR while still addressing fiscal needs.
**Interviewer**: As the examination of the Finance bill resumes on November 5, what strategies are you planning to employ to advocate for the preservation of the CIR?
**Paul Midy**: I’m mobilizing a coalition of support from representatives across various sectors, including tech and investment. Our “war room” meets weekly to strategize and share insights on the importance of the CIR. We are prepared to present compelling evidence about its long-term economic benefits to the assembly, aiming for a unified front to push back against potential cuts.
**Interviewer**: Thank you, Paul, for shedding light on this critical issue. We look forward to seeing how these discussions unfold.
**Paul Midy**: Thank you for having me. It’s essential we continue to advocate for R&D funding to ensure that France remains at the forefront of innovation.