Best R&D tax incentives in Europe
France offers the best research tax credit in Europe:
- Tax breaks: 40% of all R&D costs in the first year, 35% in the second year and 30% in subsequent years, up to €100 million, and 5% above this threshold.
- Tax base: the tax credit is calculated on the annual volume of all eligible R&D expenditure (salaries, social security contributions, running costs, depreciation, patents, etc.)
- Further incentives: the research tax credit rate is doubled for R&D carried out with public-sector bodies and is quadrupled for R&D undertaken by junior final-year doctoral and post-doctoral research personnel in their first two years of employment.
OTHER TAX FACTS:
- The Innovative New Company status (JEI – jeune entreprise innovante) allows firms conducting R&D projects to receive tax breaks and pay lower social security contributions for highly qualified jobs such as engineers and researchers.
- Partial wealth tax exemptions are granted for investments up to €45,000 in SMEs (‘ISF PME’ tax deduction)
- Entertainment technology also benefits in France with the video game tax credit - a unique measure in Europe, which enables companies to save 20% of eligible video game creation expenditure, subject to meeting certain qualifying criteria.
- Analysis by KPMG on effective corporate tax rates ranks France (Competitive Alternatives, KPMG’s Guide to International Business Location, 2012):
- First place for R&D operations, ahead of the United Kingdom (5th) and Germany (11th)
- Sixth place for manufacturing operations, ahead of Germany (10th) and Italy (13th).