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France Pharma and Life Sciences Tax Guide

French tax incentives for the pharmaceutical and life sciences sector. The guide covers: the Crédit d'Impôt Recherche (CIR) — the cornerstone of French R&D tax incentives: 30% of eligible R&D expenses up to €100 million and 5% above; the CIR is available for all companies (not just biotech and pharma) but is particularly important for the life sciences sector; the eligible expenses include: (a) the salaries of researchers and technicians (the "frais de personnel" — the salaries, bonuses, and employer social charges for R&D staff), (b) the depreciation of R&D assets (the "dotations aux amortissements" for equipment and buildings used for R&D), (c) the subcontracting costs (the "frais de recherche confiés à des organismes de recherche" — up to €2 million per project per year for external research), (d) the operating costs (a flat rate of 50% of the total salary costs for researchers), (e) the patent fees (the "frais de prise et de maintenance de brevets"), (f) the technology watch costs (the "frais de veille technologique" — up to €60,000 per year); the Crédit d'Impôt Innovation (CII) — 20% of innovation expenses up to €400,000 for SMEs; the CII is available for the development of new products, the design and prototyping, and the pilot testing; the JEI (Jeune Entreprise Innovante) regime — the Young Innovative Enterprise regime: the company must be less than 8 years old, spend at least 15% of its expenses on R&D, and have a capital held at least 50% by individuals; the JEI regime provides: (a) full exemption from corporate tax (IS) for the first 36 months of profit (the "exonération d'IS pendant 36 mois") and 50% exemption for the following 24 months, (b) full exemption from the CFE (Cotisation Foncière des Entreprises) for the first 7 years, (c) full exemption from the CVAE (Cotisation sur la Valeur Ajoutée des Entreprises) for the first 7 years, (d) full exemption from social charges for the first 8 hires (the "exonération de cotisations sociales patronales" for the first 8 employees); the patent box regime (the "régime des brevets") — the income from the licensing or the sale of patents, patentable inventions, and certain software copyrights is subject to a reduced tax rate of 10% (instead of the standard 25% corporate tax rate); the reduced rate applies to the net income from the intellectual property (the "produits de la propriété industrielle" — royalties, capital gains on patents); the company must have made the R&D effort that led to the patent (the "nexus rule" — the income eligible for the reduced rate is calculated using the ratio of qualifying R&D expenses to total R&D expenses); the clinical trial costs — the costs of clinical trials conducted in France are eligible for the CIR (the subcontracting costs for clinical research organisations (CROs) and the costs of the clinical trial materials).

The French tax system is highly favourable for R&D-intensive industries, particularly the life sciences sector. All amounts in Euros (EUR). For related reading, see our Corporate Tax Guide → and Starting a Business Guide →.

CIR — Research Tax Credit

• 30% on first €100M: The CIR is calculated as 30% of eligible R&D expenses up to €100 million, and 5% above. The CIR is a tax credit (not a deduction) — it is deducted from the corporate tax due. If the CIR exceeds the tax due, the excess can be carried forward 3 years, or refunded after 3 years (immediate refund for SMEs, JEI, and new companies).

JEI — Young Innovative Enterprise

• Conditions: The company must: (a) be less than 8 years old (from the date of first registration), (b) spend at least 15% of its total expenses on R&D (the "dépenses de recherche"), (c) be independent (not part of a group with more than 2,000 employees), (d) be held at least 50% by individuals or by another JEI or by a venture capital company.
• Benefits: (a) Corporate tax exemption: full exemption for the first 36 months of positive results, 50% for the following 24 months, (b) CFE exemption for 7 years, (c) CVAE exemption for 7 years, (d) employer social charges exemption for the first 8 R&D hires (the "exonération de cotisations patronales" for the salaries of researchers, up to 4.5 times the minimum wage).

For the patent box regime and the reduced rate on IP income, see our Corporate Tax Guide →. For the CII innovation credit, see our Corporate Tax Guide →.