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Innovation Tax Credit (ITC)

Verified 19 janvier 2021 - Legal and Administrative Information Directorate (Prime Minister)

The Innovation Tax Credit (ITC) is an extension of the CIR that applies to expenditures related to prototypes and pilot facilities for new products. It is reserved for SMEs. The declaration is made using the same form and the same procedure as for the CIR.

The IIC may be applied to projects for the design of a prototype, the realisation of a prototype or the pilot installation of a new product.

However, the prototype or pilot installation must meet the following 2 conditions:

  • It must have superior technical performance
  • It must present features, ergonomics or eco-design in relation to the products marketed by competitors at the start date of the work.

  Warning : only the technology part of a service innovation may be eligible for ITC.

The expenses eligible for ITC are:

  • Prototype design costs
  • Prototype construction costs
  • New Product Pilot Installation Expenses

These expenses may be internal or due to subcontracting.

Expenditures for the prototype or pilot phase of the new product are not covered by the ITC.

In Metropolitan

The ITC rate is 20% of the project's expenditures. The amount of the credit is limited to €80 000 per year. The expenditure incurred shall be capped at €400 000 per year.

Department of Overseas

The ITC rate is 40% of the project's expenditures. The amount of the credit is limited to €160 000 per year. The expenditure incurred shall be capped at €400 000 per year.

Corsica

Expenses can be internal or subcontracted.

The rate shall be 35% for expenditure incurred in the project for the accounting years ended from 31 December 2019. Otherwise, it shall be 20%.

The amount of innovation expenditure shall be capped at €400 000 per year.

The purpose of the recript is to determine whether the project submitted to the ITC is eligible for the ITC. The administration takes a formal position.

It ensures that the project will have good access to the ITC and that no different assessments can be made during a subsequent tax audit.

The actual situation must be the same as described in order to obtain the positive result.

The company can apply for as much remission as it wishes to maximise its expenses over time.

The tax authority may ask the X to conduct an expert review of the work presented before responding to the business. The tax authority must reply within 3 months of receipt of the complete file or the opinion is considered favourable.

The application for a licence must be filed no later than 6 months before the deadline for filing the CIR-CII declaration.

It must be sent by registered letter with acknowledgement of receipt to the Enterprise Tax Service (EIS) to which the company is attached to complete its tax returns.

If the opinion of the tax authority is unfavourable, the company may:

  • Ask for a second opinion, she has 2 months to do it. The tax authority will have to respond within 3 months after consulting an ad hoc committee.
  • Override the administration's opinion and use the reasons for the rejection to modify its draft to become eligible. It can then re-apply for a rescript on this modified project.

  Warning : if the company decides to ignore the tax authority's opinion and not to modify its plan, it runs the risk of being corrected in case of control.

It must be filed at the same time as the special declaration on CIR.

This declaration must be made in paragraph IV of the 2069-A-SD Declaration Form.

  • If the business is subject to corporation tax, it must file the form cerfa 11081 at the tax office no later than April 15, together with the balance sheet.
  • If the business is subject to income tax, it must file the form cerfa 11081 to the tax department no later than the 2nd working day following the 1to May.

Research Tax Credit

Cerfa n° 11081*21 - Ministry of Finance
Other number : 2069-A-SD

  FYI : ITC returns may be subject to tax control.