A base larger than the spending incurred

SAS Novilis incurs 580 000 € of actual research spending. Its tax credit base comes to 817 000 €, that is 237 000 € more than it paid out. Those 237 000 € are worth 71 100 € to it. Before you read on: where does a base larger than the spending come from?

Two rates, one very high threshold

Article 244 quater B of the tax code sets the research tax credit at 30 % for the portion of spending up to 100 million euros, and at 5 % for the portion above that amount.

The 100 million threshold places the overwhelming majority of businesses in the first band. For a small or medium-sized business the applicable rate is therefore simply 30 %, with no splitting to do.

Enhanced rates exist in the overseas departments, where the portion below 100 million euros opens a rate of 50 %. It is the location of the establishment incurring the spending that governs that enhancement.

One calendar feature is worth knowing: the credit is determined by calendar year, from 1 January to 31 December, whatever the closing date of the business's accounting year.

The operating allowance, a base with no invoice

Four categories of spending make up the base: depreciation of assets assigned to research, personnel costs of researchers and technicians, operations entrusted to approved bodies, and operating costs.

That last category is the most singular. Operating costs are not evidenced: they are set on a standard basis at 75 % of depreciation charges and 40 % of the personnel costs taken into account.

The allowance requires no invoice and matches no identifiable outflow. It stands for the indirect costs of research — premises, energy, supervision, administration — which the legislator chose not to have traced item by item.

Its weight is far from marginal. In a structure whose research rests mainly on salaries, it commonly represents close to 30 % of the total base, and that is as much credit obtained with no further evidence.

Subcontracting, allowed but capped twice

Research operations entrusted to approved bodies enter the base. That is what lets a business with no laboratory of its own benefit from the scheme, relying on outside providers.

Two caps frame that option. The first is relative: subcontracted spending is taken up to three times the total amount of the other eligible research spending.

The second is absolute and concerns independence: where no relationship of dependence exists between the business and the body, the annual cap is 10 million euros. These bounds prevent a credit resting entirely on external invoices.

One last correction applies before the rate. Public subsidies received for research projects are deducted from eligible spending: the State does not fund the same expense twice.