Innovation Tax Credit (ITC)
Verified 20 February 2026 - Entreprendre Service Public / (Prime Minister)
The Innovation Tax Credit (ITC) is an extension of the Research Tax Credit (RIC) that applies to expenses incurred until 31 December 2027 by PME: titleContent. The expenditure concerned relates to the carrying out of operations to design prototypes or pilot installations of a new product.
One PME industrial, commercial or agricultural can benefit from the innovation tax credit if it meets one of the conditions following:
- Either she is subject to a real regime (ordinary or simplified) business tax (IS) or income tax (IR).
- Either she exempt from tax and falls into one of the following categories:
- Young Innovative company (JEI)
- Company created for the recovery of a company in difficulty
- Company located in one of the following areas:
- Regional aid area (RFA)
- Employment areas to revitalize (BERS)
- Defense Restructuring Zone (DRZ)
- Free zone of activity of the overseas departments
- Zone France ruralités revitalizations (FRR)
- Urban basin to be energized (BUD)
- Priority Development Area (PDA)
Please note
A business that exceeds the thresholds applicable to PME (in particular following its integration into a group of businesses), no longer eligible for the innovation tax credit from the second consecutive year of exceedance.
The ITC applies to expenses incurred in the conduct of design operations of a prototype or pilot installation of a new product.
A new good is tangible or intangible property that meets the following two conditions:
- He must not not yet made available on the market.
- He must differentiate from existing products superior performance in terms of technology, eco-design, ergonomics or functionality.
The project should focus on the creation of a new product, not just the improvement of an existing service.
Example :
Thus, a digital solution, such as a SaaS platform, may be eligible if it constitutes a new intangible product with superior performance (technical, functional, ergonomic or related to eco-design). On the other hand, an innovative service provision, a new organization or a simple evolution of an existing offer does not fall within the scope of the CII.
Warning
The prototype must not be intended for placing on the market. It should be used as template for the realization of a new product.
Expenditure eligible for the CII is as follows:
- Depreciation goods or buildings which have been created or acquired new. They are to be used in the conduct of scientific and technical research. They can also be used in the realization of prototype design operations or pilot installations.
- In the event of loss or damage to property or a building, the difference between insurance compensation and reconstruction and replacement costs
- Expenditure which concern staff next:
- Researchers and research technicians who are directly and exclusively assigned to research and development operations
- Staff with a PhD or equivalent degree, expenses are taken into account for twice their amount during the first 2 years of CDI. The number of staff must not have decreased compared to the previous year
- Employees who invented after search operations for which additional remuneration was paid
- Depreciation patents and plant breeders' rights
- Defense costs (lawyers' fees, forensic experts, court fees, etc.) patents, plant variety certificates, designs and models in connection with research operations
- Filing Fee of drawings and models
- Expenditure on research operations carried out by companies or approved design and engineering offices
These expenses may be internal or may be due to subcontracting.
FYI
The amount of expenses taken into account in the calculation of the tax credit may not exceed €400,000.
When these expenses have already taken into account in the calculation of research tax credit (RIC), they cannot also be taken into account in the calculation of the Innovation Tax Credit (ITC).
Warning
Expenditure relating to the prototype production phase or the pilot installation new product are not not concerned by the ICN.
The tax credit varies depending on where the company is located.
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Metropolis
The rate of the innovation tax credit is 20%.
Overseas Department
The rate of the innovation tax credit is 60%.
Corsica
Small company
Company with fewer than 50 employees and with an annual turnover or annual balance sheet total not exceeding €10 million.
The rate of the innovation tax credit is 40%.
Average company
Company with between 50 and 250 employees and an annual turnover not exceeding €50 million or whose annual balance sheet total does not exceed €43 million.
The rate of the innovation tax credit is 35%.
Public grants received for research projects must be deducted from the amount of expenditure taken into account in the calculation of the CII.
The IIF shall be determined by calendar year, irrespective of the year-end date.
Example :
A company ended its accounting year at September 30, 2025, the tax credit is calculated on expenses incurred during the year 2024 (from 1er January 2024 to December 31, 2024).
To benefit from the innovation tax credit, the company must declare its expenses on the same form as the CIR (2069-A-SD) which must be attached to the income tax return:
The filing date of the application differs depending on the company's tax system.
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The company subject to business tax must send its application for a tax credit no later than the 15th of the 4the month following the end of its financial year.
Income tax
The company subject to income tax must submit its application for a tax credit no later than 15 days after the 2nde working day after 1er May.
The application must be made online via one of the following online services:
The company can deduct its innovation tax credit on amount of tax (IS or IR) for which it is liable. The deduction is made when the company pays the balance of the tax for the year in which the expenditure was incurred.
Example :
A company incurs expenses in 2024 to obtain an innovation tax credit. The amount of the tax credit will be applied to the balance of the tax due for 2024 (paid in May 2025).
The company can use the amount of its tax credit to pay its taxes for the next 3 years the year in which she received the tax credit. At the end of these 3 years, if the company has not used all of its tax credit, the the remaining part is reimbursed directly to him.
Example :
One company received a tax credit in 2023 and used a portion of that tax to pay the tax due for the same year. If she has not used the full amount of her tax credit, she will be able to use it to pay tax for the next 3 years. At the end of these 3 additional years, if he still has a part of his tax credit, it will be refunded.
However, special rules on the use of the tax credit granted shall apply to the following companies:
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Company created as part of a merger, restructuring, extension or takeover of pre-existing activities
The company may request that the tax credit granted to it during its 1re year of existence and during the 4 subsequent years be reimbursed directly to him.
She must be detained at least at 50% by the following person(s):
- Natural person
- Business of capital held in 50% at least by natural persons
- Venture capital business, risk mutual funds, professional funds
Company created less than 2 years ago
The company may request the direct reimbursement of his tax credit. However, it must send the supporting documents that prove that the expenses were incurred at the time of the claim.
Young Innovative company (JEI)
The company can apply for a tax credit refunded directly.
Company in conciliation or safeguard proceedings
The company can apply for a tax credit refunded directly from the date of the decision or judgment which led to the opening of the procedure.
Company in receivership or liquidation
The company can apply for a tax credit reimbursed directly from the date of the decision or judgment which led to the opening of the procedure.
The claim for reimbursement must be done in one of the following ways:
- The company is subject to business tax (IS) : she must make her application at the time of her tax balance declaration on her professional area of the site impôt.gouv.fr ("My services" -> "Declare" -> "")
- The company is subject to income tax (IR): she must apply for a refund every year when she files her income online on her professional area of the site impôt.gouv.fr
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