The Young Innovative Company (JEI) or Young University Company (JEU) status is a tax status that can be requested by any French SME, subject to specific conditions, investing in research and development (R&D).
How to obtain JEI or JEU status
At the end of each fiscal year, JEI and JEU must cumulatively meet the following conditions
– Be an SME as defined by the European Union (less than 250 employees and less than 50 million euros in sales or total assets of less than 43 million euros);
– Be less than 11 years old (the company loses its JEI status definitively the year of its 11th anniversary);
– Be an independent company;
– Not have been created in the context of a merger, restructuring, expansion of activity, or takeover of such activities;
– Carry out R&D expenses up to a minimum of 15% of the tax-deductible expenses for that year.
Specific characteristics of the JEU status
Specific conditions apply to obtain the status of young university enterprise (JEU):
– To belong for at least 10% to students (or graduates of a master’s degree or a doctorate for less than 5 years) or to teachers-researchers;
– Have as main activity the valorization of research works realized in which its leaders participated, during their schooling;
– To have concluded an agreement with an institution of higher education
The advantages of the JEI and JEU statutes
If these conditions are met, JEI and JEU can benefit from the following advantages
The companies having obtained the status of JEI or JEU can thus benefit from exemptions in terms of income tax or corporate tax. During the first fiscal year, the tax exemption is total. For the following beneficiary year, the tax exemption is 50%.
It is important to mention that this income tax exemption can be combined with the research tax credit (CIR). A JEI or a JEU can even benefit from the immediate restitution of the research tax credit claim.
Young innovative companies can also be exempted from the territorial economic contribution (CFE and CVAE) and the property tax for 7 years if the local authority has voted a deliberation in this sense.
Social exemption (limited to the first 8 years):
The exemption of employer’s social charges concerns the remuneration of employees, involved in Research and Development work insofar as 50% of their working time is devoted to R&D projects.
The exemption is applicable until the last day of the 7th year following the creation of the company.
If during a year, the company no longer meets one of the required conditions, it loses the benefit of the exemption for the year in question and for the following years as long as it does not meet all the conditions.