Research tax credit (RTC)

A measure in favor of research and development activities (R&D)

The RTC is annual, regardless of the date on which the financial year ends

The RTC rate is :

• 30 % on research expenses not exceeding 100 million euros (or 50% in oversea departments)
• 5 % on research expenses exceeding 100 million euros

Purpose of the RTC :

• Deductible from the income tax
• The excess tax credit is carried on the next 3 years. After this period, the amount of tax credit that has not been used may be reimbursed
• An immediate refund is possible under certain conditions

Expenses eligible for the RTC :

• Research operations within the European Economic Area included in taxable incomes

The following expenses are taken into account by the RTC :

• Tax deductible depreciation related to R&D fixed assets, directly used for the research operations ;
• Tax deductible depreciation related to patents ;
• Wages of the R&D staff involved in the research activity ;
• Operating expenses fixed to 50% of the gross salaries and 75% of tax deductible depreciation above mentioned ;
•  Subcontracted R&D ;
• Patent expenses related to registration, updating and any litigation cost ;
• Technological survey expenses.

Ruling request :

The company may submit a request to French Tax Administration to confirm the eligibility of it’s expenses.

The ruling request must be made 6 months before the RTC compliance.

The answer must be given within 3 months, otherwise the tax ruling is deemed granted.