Article 69 of the 2022 Finance Act created a new tax credit for expenses invoiced by research organizations under a collaborative contract concluded between January 1, 2022 and December 31, 2025.
This tax credit for collaborative research is open to industrial and commercial or agricultural companies, under the same conditions as the research tax credit (CIR).
Only expenses invoiced by research organizations in the context of a collaborative research contract concluded between January 1, 2022 and December 31, 2025 are eligible.
Research organizations are defined as public or private organizations whose primary objective is to carry out, in complete independence, fundamental research, industrial research or experimental development activities, or to widely disseminate the results of these activities.
These organizations must be approved by the minister in charge of research in accordance with procedures to be defined by decree.
The benefit of the tax credit is, moreover, subject to the absence of dependence between the research organizations and the companies.
Expenditures eligible for this new tax credit cannot be taken into account in the basis for calculating another tax credit or another tax reduction (e.g. the CIR).
In addition, the €100 million threshold above which the CIR rate is lowered from 30% to 5% must include expenses eligible for the tax credit for collaborative research.
Finally, the amounts eligible for the tax credit for collaborative research are to be integrated in the calculation of the research expenditure ratio used to establish the status of a young innovative company.
Framework of the research collaboration
The collaboration contract must meet several cumulative conditions, namely
– be concluded prior to the start of the research work ;
– provide for the invoicing of research expenses at their cost price;
– to set the common objective, the distribution of the research work between the company and the organization as well as the modalities of sharing the risks and the results, it being specified that the results, including the intellectual property rights, cannot be entirely attributed to the company;
– provide that the expenses invoiced may not exceed 90% of the total expenses incurred in carrying out the operations provided for in the contract;
– and allow organizations to have the right to publish the results of their own research conducted in the context of the collaboration.
Collaboration contracts differ from traditional subcontracts in that they establish a cost-sharing arrangement, but do not result in the research organizations charging a commercial margin, as long as the results of the project benefit all parties involved.
The expenses invoiced by the research organizations to the companies within the framework of the collaboration contract are eligible for the tax credit as long as the research work is located within the European Union.
Moreover, these research operations must be carried out directly by the research organization with which the company has concluded a collaboration contract (no cascading subcontracting). However, an exemption is provided when the collaboration contract allows research organizations to use other approved research organizations to carry out the work necessary for the research operations.
Calculation and use
This tax credit is equal to 40% of the expenses invoiced to companies by the research organizations for carrying out the research operations provided in the collaboration contract, up to an overall limit of €6 million per year.
These are the only expenses eligible for this scheme.
As with the calculation of the CIR, public aid must be deducted from the calculation basis (and reintegrated if it is reimbursed).
There is an incentive effect for SMEs: the rate is increased to 50% for them.
The tax credit is deducted from the tax due by the company for the year in which the research expenses taken into account for the calculation of the tax credit were invoiced by the research organization.
The excess credit constitutes a credit for the company towards the State which can be used for the payment of the tax due for the following 3 years. The unused portion at the end of this period is reimbursed.
The claim resulting from the excess credit can also be mobilized with a credit institution.
As with the CIR, certain companies can request immediate reimbursement of their claim; these are the following companies:
– SMEs as defined by the European Union;
– young innovative companies;
– new companies (less than 5 years old) whose capital is mainly held by individuals
– and companies in difficulty (conciliation, safeguard, recovery or liquidation).
Control procedure
The control procedure for this tax credit is identical to that for the CIR.
In addition to the tax authorities, who are the only authorities authorized to apply rectification procedures, the Ministry of Research and Technology may intervene.
In addition to the fact that it is possible to file a rescript to ensure the eligibility of the operation beforehand, companies can ask the administration to check the operations carried out without waiting for a tax audit.
The tax authorities can examine the declaration up to the end of the third year following the year in which it was filed.
When, in the context of the contradictory rectification procedure, a disagreement persists with the administration on the accuracy of the allocation to research of the expenses taken into account for the calculation of the tax credit for collaborative research, the case may be presented, at the taxpayer’s request, to the advisory committee on the tax credit for research expenses.
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Written by
Plamen Petkov
