French General Tax Code
In forceA company qualifies as a young innovative company carrying out research and development projects when, at the close of the financial year, it simultaneously meets the following conditions:
1° it is a small or medium-sized company, i.e. employing fewer than 250 people, and which has either achieved a turnover of less than 50 million euros during the financial year, reduced or extended where applicable to twelve months, or a balance sheet total of less than 43 million euros. The company's workforce is assessed by reference to the average number of employees during that financial year;
2° it has been established for less than eight years;
3° a. it has carried out research expenditure, as defined in a to g of II of Article 244 quater B and in 1 of A of II of Article 244 quater B bis, representing at least 15% of the expenses, excluding foreign exchange losses and net expenses on disposals of investment securities, deductible for tax purposes in respect of that financial year. In calculating this ratio, no account is taken of expenses incurred with other young innovative companies carrying out research and development projects;
b. Or it is managed or at least 10% directly owned, alone or jointly, by students, persons who have held a degree conferring the grade of master or a doctorate for less than five years, or persons assigned to teaching or research activities, and its main activity is the valorisation of research work in which these managers or partners have participated, during their studies or in the performance of their duties, within a higher education establishment authorised to award a degree conferring at least the grade of master. The conditions under which this valorisation is organised are set out in an agreement between the company and the higher education establishment, the content and procedures of which are specified by decree in the Conseil d'Etat. This decree defines in particular the nature of the research work that is the subject of the agreement, the services from which the company may benefit and the terms and conditions of the remuneration of the higher education establishment;
4° at least 50% of its capital is continuously held:
a. by natural persons;
b. or by a company meeting the same conditions, at least 50% of whose capital is held by natural persons;
c. or by venture capital companies, venture capital mutual funds, specialised professional funds falling under the article L. 214-37 of the Monetary and Financial Code as it read prior to Order no. 2013-676 of 25 July 2013 amending the legal framework for asset management, professional private equity funds, sociétés de libre partenariat, sociétés de développement régional, sociétés financières d'innovation or sociétés unipersonnelles d'investissement à risque on condition that there is no arm's length relationship within the meaning of 12 of l'article 39 between the company in question and these latter companies or these funds;
d. or by public scientific foundations or associations, or by a company itself qualified as a young innovative company carrying out research and development projects;
e. or by public research and education establishments or their subsidiaries;
5° it is not created as part of a concentration, restructuring, extension of pre-existing activities or a takeover of such activities within the meaning of III of Article 44 sexies.
