Take advantage of the CII: an exclusive scheme for SMEs

What is the Innovation Tax Credit?

The Innovation Tax Credit (CII) is a tax incentive designed to help French SMEs finance their innovation expenses.

The 2025 Finance Act extended this measure for expenses incurred until December 31, 2027.

It covers innovation expenses related to the design of prototypes or pilot installations of new products for a previously defined reference market.

The CII requires the product to be:

• New to the market concerned,
• And offering observable and measurable superior performance in terms of:
• Technology,
• Eco-design,
• Ergonomics,
• Functionality.

Which companies are eligible?

Eligible companies are SMEs as defined by the European Union, i.e. those with:

• Fewer than 250 employees;

A turnover of less than €50 million or a balance sheet total of less than €43 million.
These thresholds are assessed differently depending on whether the company is independent, a partner, or affiliated.

What expenses are eligible?

Eligible expenses are those that impact the company’s taxable income.

They must be incurred during the calendar year, in France, the European Union, or the European Economic Area.

These expenses must fall into one of the following categories:

• Personnel expenses;
• Depreciation allowances;
• R&D services outsourced to approved service providers;
• Patent, design, and model expenses.
  Since the 2023 calendar year, there are no longer any operating expenses.

As with the CIR, in addition to eligible expenses, adjustments must be applied to the CII tax base.

These adjustments are made following a rigorous analysis of subsidies, repayable advances, and zero-interest innovation loans relating to innovation projects, as well as contracts between the reporting companies and their advisors.

The CII rate

Since January 1, 2025, the CII rate has been 20% of the eligible expenses listed above.

This rate is increased to 60% for research expenses incurred in the overseas departments.

An additional rate exists in Corsica:

• The rate is set at 35% for medium-sized companies,
• The rate is set at 40% for small companies.

The CII ceiling

Total eligible expenses may not exceed the ceiling of €400,000.

Thus, an SME in mainland France can benefit from a maximum CII amount of €80,000.