The Innovation Tax Credit (CII) is a tax measure available in France specifically for small and medium-sized enterprises (SMEs) to encourage innovation. This tax credit is an extension of the Research Tax Credit (CIR). It aims to support expenditures related to the design of prototypes or pilot installations for new products, i.e., products that do not yet exist on the market and that offer superior performance compared to existing products.
Key aspects of the CII:
- Eligibility: The CII is reserved for SMEs, i.e., companies with fewer than 250 employees and annual revenue of less than €50 million or a balance sheet total of less than €43 million.
- Eligible expenses: The CII covers expenses related to the design and development of new products, including personnel costs, subcontracting costs, and fees for hardware and software necessary for prototype design.
- Credit rate: The CII offers a tax credit of 20% on eligible expenses, with a yearly ceiling of €400,000.
- Use: Like the CIR, the CII reduces the tax owed by the company. If the amount of the tax credit exceeds the tax due, the excess can be refunded or carried forward to subsequent years.
In summary, the Innovation Tax Credit is an essential tool for French SMEs seeking to innovate by developing new products. It helps them finance the critical stages of design and prototyping, thereby strengthening their competitiveness in the market.