Finance Act and Social Security Financing Act for 2025

Adjustments to the research tax credit (CIR)

Without structurally reforming the CIR, France is modifying the credit’s tax base and revising certain calculation parameters. In March 2024, the General Inspectorate of Finance identified ways to achieve savings of approximately EUR 400 million to EUR 450 million from the scheme. These recommendations have been largely adopted in the Finance Act for 2025.

The law excludes several expense categories from the CIR tax base, including expenses related to patents and plant variety certificates (filing and maintenance fees, defense fees, depreciation allowances) and technological watch expenses. This first measure is expected to generate savings estimated between EUR 200 million and EUR 250 million.

The text also provides for a reduction in the flat rate for considering staff expenses in determining operating expenses under the CIR, from 43% to 40%. This reduction could lead to savings of approximately EUR 100 million.

The most symbolic measure involves the elimination of the mechanism that accounted for double the amount of expenses related to young PhDs (staff expenses and related general expenses). Ending this enhancement in the CIR tax base could generate approximately EUR 90 million in savings.

Additionally, the term “public subsidy” now has a legal definition: “funding awarded by public law entities or by private law entities carrying out a public service mission.” For reference, public subsidies received by companies for operations eligible for the tax credit must be deducted from the credit’s calculation base.

These measures went into effect on 15 February 2025.

Extension of the collection tax credit (CIC) and innovation tax credit (CII) and adjustment to the CII

Companies will continue to benefit from the CIC (available for industrial companies in the textile, clothing, and leather sector that incur expenses for developing new collections) and the CII (available for small and medium-sized enterprises in the industrial, commercial, or agricultural sector that incur certain innovation expenses) until 31 December 2027. However, the CII rate will be reduced from 30% to 20% for expenses incurred as from 1 January 2025.

Measures related to young innovative companies (JEIs) and other tax schemes

The 2025 Social Security Financing Act (PLFSS), which was gazetted on 28 February 2025 and entered into force on 1 March 2025, increases the share of research expenses in JEI charges from 15% to 20%. This new rate also applies to young growing innovative companies (JEICs) for expenses incurred as from the first day of the month following the publication of the PLFSS, i.e., 1 March 2025.

Finally, the patent box and C3IV (tax credit for investment in green industries) schemes remain unchanged.