The Tax Credit for Innovation (CII-Crédit Impôt Innovation)

In order to benefit from the innovation tax credit, the work carried out by the company must be qualified as innovation work. To be considered as an innovation, a product must not have already been implemented by other companies operating in the same competitive environment: the product must be new on the market in question. The performance improvement must therefore be measured in relation to the reference constituted by the offer of existing products on the market under consideration at the date of the beginning of the innovation work. The performance increase must be significant.

The expenses taken into account within the innovation tax credit are :

– The depreciation of fixed assets created or acquired in a new state, directly assigned to the realization of the innovation;

– The expenses of personnel directly and exclusively affected to the realization of the innovation;

– The other operating expenses fixed at a flat rate of 75% of the depreciation allowances and 50% of the personnel expenses (abolished from 2023);

– The depreciation allowances, the costs of acquiring and maintaining patents, as well as the costs of registering designs and models relating to innovation operations;

– The costs of defending patents, plant breeders’ certificates and designs relating to innovation operations;

– Expenses incurred for the realization of the innovation entrusted to companies or design and engineering firms approved according to the terms and conditions provided by decree.

Unlike the tax credit for research (CIR), the tax credit for innovation (CII) sets a cap on the innovation expenses that the company can claim.

Indeed, the ceiling of expenses, taken into account by the CII, is fixed at 400 000 € per year. This limitation applies only once a year, regardless of the number of prototypes or pilot installations made by the company.

The rate of the innovation tax credit is 20% (30% as of 2023)

To benefit from the innovation tax credit, the company must submit the cerfa 11081*21 form to the tax department:

– at the same time as the balance statement for companies subject to corporate income tax, no later than May 15,

– at the same time as the annual income tax return for companies subject to income tax, no later than the second business day following May 1.

As we have already mentioned, the expenses incurred for the realization of the innovation project entrusted to approved companies or design and engineering offices are eligible for the CII. Consequently, in order for these subcontracting expenses to be taken into account in the calculation of the CII, it is necessary that the subcontractor be approved for the tax credit innovation. To obtain this approval, the company must submit an application file, presenting an innovation project that it has carried out, or in which it has been heavily involved.

Once the file is submitted, the Administration must provide a decision within six months.