The CIR is not subject to systematic control by the tax authorities. However, there has been a notable increase in the number of requests for information on the CIR/CII. Controls are becoming increasingly rigorous regarding the scientific and financial justifications to be provided, as well as any necessary adjustments.

In this context, it is essential to have a well-structured CIR process and a personalized approach to secure your R&D investments. Flag accompanies you on this journey and helps you to effectively manage your risk.

If you declare your CIR at the time of your closing, it will be immediately offset against your IS (Corporate Income Tax). If you do not pay enough IS, which is often the case for startups in the growth phase, you can request an immediate refund. It usually takes between 2 and 6 months to obtain the tax credit.

If you make a retroactive request, it can also take a few months because the administration often conducts checks before releasing the funds. However, please note that these delays are averages among our clients. There are significant differences in processing times between different SIE (tax offices for businesses).

It is entirely possible to include the expenses related to salaried executives or self-employed workers (TNS) in the expenditure base of the CIR.

Like for other resources, the amount is calculated regarding the time proportion spent on the work.

Caution, for executives or founders to be considered in the CIR, they must be directly remunerated by the company or as part of personnel provision. Dividends or stock options are not taken into account.

Sure, as long as you are a French company conducting R&D work in France, even if it is on behalf of a foreign parent company, you can qualify for the CIR/CII. For example, Google could potentially qualify for the CIR if it conducts research activities in France through a subsidiary.

Technically, no. You can perfectly attach the CERFA forms related to the CIR/CII to your tax return and even receive the CIR/CII. However, up to three years after this declaration (the fiscal prescription period in France), you could be subject to an audit by an expert from the Research Ministry, who will examine the validity of your assessment and the eligibility your work. In this case, you will need to provide a very detailed technical file justifying the R&D work done, the resources involved, the state of the art at the beginning of the work, etc. These audits have become increasingly common in the recent years. 

It is therefore highly recommended to produce a detailed technical file for each CIR declaration to be able to respond to any request from the administration and avoid an adjustment. Regarding retroactive CIR/CII, requests for information are almost systematic, and it is impossible to bypass the need for a technical file.

An innovative project is one that introduces something new or improves and optimizes a product, service, or process. It's important to note that innovation is not limited to the technological domain. It can also extend to other areas, such as:

• Service innovation (for example: development of low-cost airlines)
• Marketing innovation (for example: online shopping)
• Organizational innovation (for example: the Taylorism organizational model)
• Social innovation (for example: the Emmaus association)

It is very common for French companies to seek innovation funding only when they realize their internal budget is insufficient. Unfortunately, this is often too late. 

It is very common for French companies to seek innovation funding only when they realize their internal budget is insufficient. Unfortunately, it often is too late.

However, it is important to emphasize that public support is abundant. Organizations such as Bpifrance, Ademe, the Regions, Europe, and industry committees (CNM, CNC, etc.) are actively seeking projects to finance, covering various stages of development, including market entry and internationalization.

Our experts at Flag, specialized in innovation funding, are in daily contact with various financiers and are available to help you select, plan, and prepare the right applications at the right time.

One of the first things that a bank or an actor like Bpifrance will look at is your gearing ratio, also known as "debt-to-equity ratio". 

This ratio is determined by dividing net debt by equity according to the following formula:

Net debt / Equity = X%

Net debt encompasses the entire financial indebtedness situation, including the amounts of medium and long-term (MLT) and short-term (ST) borrowings, adjusted for any cash surpluses:

Long-term borrowings + short-term loans - financial surpluses = net debt

When cash surpluses exceed borrowings, it's referred to as negative net debt or net financial surplus.

Equity consists of capital contributions as well as the cumulative undistributed results, including reserves, retained earnings (in the French presentation), and the current year's earnings.

Is it a bit technical? Contact Flag. We can quickly tell you where your gearing stands compared to the current practices of various lending institutions.