Tuesday, October 25, 2022
Which companies can benefit from CICo?
The CICo is open to any company (industrial, commercial or agricultural) subject to corporate income tax*, regardless of its legal form or size.
Three conditions must be met:
- The ORDC must be approved by the French Ministry of Higher Education and Research (MESR).
- The ORDC must have a collaboration contract.
- The collaboration contract must be signed between January 01, 2022 and December 31, 2025, prior to the start of the research work.
For the contract to be eligible, the research collaboration must be effective on the basis of a contract that:
- sets common objectives by dividing up the stages of the work,
- shares the financial, scientific and technological risks...
- shares the resulting results, in particular in terms of sharing the intellectual property
In addition, the ORDC must bear at least 10% of the expenses (eligible costs) and has the right to publish its research results.
The aim of CICo?
To create an incentive for companies, particularly SMEs and start-ups, to engage in R&D activities as part of partnership research.
What expenses and activities are eligible for the CICo?
The following expenses are eligible for the tax credit for collaborative research:
- the purchase of equipment and instruments to carry out the research
- projectoperating expenses to carry out the research
- projectremuneration of researchers and technicians assigned to the research
- projectprovision of services and Intellectual Property rights required to carry out the
- projectcosts of buildings and land used for the duration of the project
These expenses, invoiced in respect of an effective research collaboration by an ORDC, must be at cost less public aid received for the work undertaken, and may not exceed 90% of the total expenses for carrying out the activities provided for in the contract.
The CICo scheme covers the following activities:
- Fundamental
- researchApplied
- researchExperimental
developmentResearch work under the collaboration contract must be carried out within the European Union (unless otherwise stipulated in the contract).
What are the differences between the CIR and the CICo?
The three tax incentives for innovation (Crédit Impôt Recherche (CIR), Crédit Impôt Innovation (CII) and Jeune Entreprise Innovante (JEI) status) have all been affected by changes following the 2022 Finance Law. The Crédit d'Impôt Collaboration de Recherche (CICo) is in a way the little brother of the Crédit d'Impôt Recherche. The difference? The CICo offers a much more generous tax credit recovery rate (50% for SMEs versus 30% under the CIR).
Benefits for companies
The tax credit is equal to 50% of eligible expenditure for SMEs (headcount < 250 employees, sales < €50m or annual balance sheet total < €43m) and 40% for intermediate-sized companies (ETI) and large companies (GE), with a ceiling on declared expenditure of €6m per year.
It is deducted from the income tax due for the year in which the collaborative research expenditure was invoiced by the ORDC. The company has 3 years in which to use the tax credit. On request, a new company, a young innovative company (JEI) or a European company can have this claim reimbursed immediately.
It should be noted that expenses declared to the CICo cannot be cumulated with other state aid such as the CIR. On the other hand, CICo-eligible expenditure is taken into account to determine whether the CIR base reaches the €100 million expenditure ceiling, from which the CIR is calculated at a rate of 5%. This means that some projects will benefit from being declared for the CIR, while others will benefit from being declared for the CICo.
Note: at the time of publication of this article, the BOFIP issued by the tax authorities to clarify the deployment of CICo had not yet been published.
* Note: CICo is also available to certain companies exempt from income tax. These include young innovative companies (JEI), companies created to take over a company in difficulty (created before January 1, 2022), and companies created in regional aid zones (ZAFR), rural revitalization zones (ZRR), employment areas to be revitalized (BER), defense restructuring zones (ZRD), urban free zones - entrepreneurial territories (ZFU), urban areas to be revitalized (BUD), or priority development zones (ZDP).
CICo application decrees: Decree no. 2022-1005 of July 15, 2022, JO of 16 Decree no. 2022-1006 of July 15, 2022, JO of 16