Young Innovative Enterprise and research tax credit : the accumulated tax savings

Young Innovative Enterprise and research tax credit (CIR) – Abstract

Not only can the subsidiary of a foreign company acquire Young Innovative Enterprise but it can also accumulate it with the research tax credit under certains conditions. See the example below.

An example of savings Young Innovative Enterprise status and CIR

The data

An American company M, owned 40% by Mr. X and Mrs. Y, and 20% by a venture capital fund, has acquired at the beginning of 2018 company F in France. F has been founded beginning of 2016 and has a research center in France and filed for Young Innovative Status.

M, which has no other subsidiary than F, has declared for the fiscal year closed on December 31, 2018 a (euro equivalent) 35 M€ turnover, with 120 employees. F declared a 2 M€ turnover, with 23 employees, 1.25 M€ of gross salaries, of which  0.35 M€ of personnel costs for research operations, social taxes (@ 42% before any exemptions)  and a 0.083 M€ of corporate tax. The company did not file for either the CIR or the JEI status at the end of 2016. What grant aid can the company still benefit from for the 2018 calendar year ? If possible, how much can the aids be?

The answers

1)  F can still benefit from the JEI status until the 31st of December 2024 because,

  1. The company has filed the JEI before it being acquired by M,
  2. It is a SME under the European definition (the parent company and the subsidiary company employ together less than 250 people),
  3. It is owned by more than 50% by physical persons and venture capital funds,
  4. R&D expenses represent 843 K€ (405+158 x 1,50), which is far above the threshold  of  15% of the total charges.

2) It can also benefit from the research tax credit (CIR over the year 2018 as well).

3) it can get a corporation tax exemption, provided

  1.  the corporation tax expense does not exceed 200 K€
  2.  this is the first time the company records a pre-tax profit.

3) All in all it can save 381 K€ !!

 

Young Innovative Enterprise

Young Innovative Enterprise