Collection tax credit (CIC): dedicated financing for textiles

Learn all about the tax credit for the textile-clothing-leather sector: a key measure that supports research and innovation in the creation of new collections.

Understanding the Collection Tax Credit (CIC)

The Collection Tax Credit (CIC) is a tax incentive specifically designed to support industrial companies in the textile-clothing-leather sector in their expenditure on developing new collections of products in this sector. The measure is designed to stimulate innovation in these traditional industries, recognizing the importance of regularly renewing product ranges to maintain market competitiveness.

Dedicated to new collections

The collection tax credit specifically targets expenditure associated with the development of new product collections in the textile-clothing-leather sector. The development of a new product range must be carried out at regular, pre-determined intervals, in line with the sector's commercial practices.

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To be considered new, collections must be clearly distinguished from previous ones by the use of new materials, designs, shapes or colors. The creative process and eligible activities include research into new ideas, design and production of unsold prototypes or samples. The aim is to encourage companies to invest in high value-added activities, leading to innovation and renewal of their offering.

The benefits of the tax credit for companies in the textile-clothing-leather sector

The CIC offers many advantages to eligible companies, enabling them to optimize their innovation potential while reducing production costs:

• Reducing R&D costs: Crédit d'Impôt Collection can supplement certain R&D work eligible for Crédit Impôt Recherche (CIR), depending on the expenses incurred and for eligible companies.
• Stimulating innovation: It encourages companies to step up their efforts to offer new product ranges in the targeted textile-clothing-leather sector.
• Improving competitiveness: the Collection Tax Credit helps companies stand out from their competitors.
• Growth support: Companies can explore new markets, attract a wider customer base and boost their economic growth.
• Financial flexibility: It gives companies greater flexibility in managing their development budget, enabling them to devote additional resources to other strategic projects.

Eligibility and procedures

Eligible companies

Industrial companies eligible for the collection tax credit are those in the textile-clothing-leather sector (NAF codes starting with 13, 14 or 15) developing new collections.

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Industrial companies that subcontract their manufacturing are also eligible for the tax credit, provided they own the raw materials and assume all manufacturing and marketing risks.

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This does not apply to companies in the textile-clothing-leather sector which do not carry out any production activities (stylists' offices, companies which create new collections but outsource manufacturing to other companies, etc.).

Eligible activities

Eligible activities concern the development of new collections that differ from previous ones in terms of materials, designs, shapes or colors. These collections must be renewed at regular intervals known in advance.

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When the range is renewed at irregular intervals, the company is not eligible for the scheme.

Eligible expenses

1. Personnel costs, including salaries and social security contributions, for stylists and design office technicians who are directly and exclusively responsible for designing new products, and for production engineers and technicians responsible for producing unsold prototypes or samples.

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2. Depreciation of new fixed assets, created or acquired, which are directly assigned to the production of prototypes or unsold samples of new products.

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3. Operating expenses, set at a flat rate of 75% of total personnel costs.

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4. Costs associated with registering and defending designs, up to a limit of €60,000 per year.

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5. Expenses related to the development of new collections entrusted to approved external stylists or design offices.

Calculation and amount

1. The credit is calculated at 30% of eligible expenses.

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2. The aid scheme is subject to compliance with the European "de minimis" regulation, which limits a company's total "de minimis" aid to €300,000* over a period of three fiscal years.

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This rule on the ceiling for "de minimis" aid comes into force on January 1, 2024, and is applicable until December 31, 2030. Prior to 2024, the ceiling for such aid was €200,000. It is essential to understand and integrate this rule into your tax and financial strategy.

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Note: To date, the collection tax credit applies to expenses incurred up to December 31, 2024. Whether or not the scheme is extended will depend on the next Finance Act.

Possibility of rescript

Companies can apply to the tax authorities for a formal position on the eligibility of their activities for the tax reduction, via the tax rescript procedure. The position obtained (failure to reply within 3 months is tantamount to tacit acceptance) is binding on the tax authorities, and limits their right of retroactivity.

Justification file

It is necessary to prepare a supporting file to justify the company's eligibility, the work carried out and the expenses incurred.

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This file must demonstrate that the company and its activities meet the requirements of the scheme. It must refer to various files that illustrate the work involved in developing new product collections in the dedicated sector. These may include trend charts, design and styling research, prototypes and, where appropriate, finished products.

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Work carried out in year N concerns collections released in N+1; N+1,5 (example: work in 2021 for the Spring-Summer (PE) 2022 collection; Autumn-Winter (AH) 2023 collection).

Trends section

It is advisable to document in this section everything to do with color palettes and seasonal design trends. It is also possible to include collection inspirations where they exist, for example, inspiration from an animal, a plant, etc.

Research section

In this section, you should cover everything to do with design and color research for the product in question. Documents can include sketches, graphic tests (color or material design), as well as graphic elements (e.g. print drawings).

Prototype part

In this section of the Collection Tax Credit file, you'll examine everything related to or originating from the process of designing and producing unsold prototypes or samples: fabric scraps, pattern testing, mannequin trials, adjustments, design sketches, etc.

Conclusion

The Collection Tax Credit (CIC) is a valuable initiative designed to stimulate innovation and strengthen competitiveness in the textile, clothing and leather industries. Against a backdrop of increasingly intense global competition and a growing demand for quality and originality from discerning consumers, the CIC encourages investment in the creation of unique and memorable collections. By reducing expenditure on the creation of new collections, the scheme encourages companies to innovate and stand out from the crowd. The steps to benefit from this credit are clearly defined, offering security and clarity to eligible companies.

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This tax incentive not only provides financial support, it also acts as a catalyst for innovation, encouraging companies to explore new ideas and position themselves advantageously in the market. In short, the Collection Tax Credit is an indispensable tool for companies in the textile-clothing-leather sector wishing to invest in the future and accelerate their growth in a competitive environment.

Dynergie, a consulting firm that helps you obtain your Collection Tax Credit (CIC)

At Dynergie, we support companies wishing to obtain the Collection Tax Credit. If you would like to benefit from the skills of our team of experts, please contact us via our contact page.

FAQ

How do I know if I'm eligible for the CIC if I'm already receiving the ITC?

While each tax credit finances distinct expenses, the Collection Tax Credit (CIC) and the Innovation Tax Credit (CII) can coexist. For example, the CII will finance innovation and the CIC will finance the creation of new collections (this is also the case for the Crédit d'Impôt Recherche concerning R&D).

What other tax credits are available for research and innovation?

Other tax incentives for research and innovation include the Research Tax Credit (CIR) and the Innovation Tax Credit (CII).

Who is entitled to the research tax credit (CIR)?

The Research Tax Credit (Crédit d'Impôt Recherche - CIR ) is intended for companies that incur research and development (R&D) expenditure in France. Eligibility criteria include :

• All industrial, commercial and agricultural companies, regardless of size, status (company, sole trader) or tax regime (income tax or corporation tax).
• Companies investing in fundamental research, applied research or experimental development. The scope of activities eligible for the CIR must clearly demonstrate compliance with five cumulative criteria: novelty, creativity, uncertainty, systematization and reproducibility.
• Eligible expenses include salaries, operating expenses, depreciation, research expenses entrusted to CIR-approved third parties, intellectual property expenses, etc.

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Note: For R&D work carried out as part of research collaborations with accredited research and knowledge dissemination organizations, a new scheme has been available to companies since 2022: the Research Collaboration Tax Credit (CICO or CRC).

Who is eligible for the innovation tax credit (ITC)?

The Innovation Tax Credit (CII ) is available :

• SMEs, as defined by the European Union, that incur innovation costs for the design of prototypes or pilot plants for new products.
• Companies must be subject to corporate or income tax in France.
• The scope of eligible activities must satisfy two cumulative conditions: i) the new product must not yet be on the market; ii) it must be distinguished by superior performance to products already on the market in terms of technology, eco-design, ergonomics or functionality.

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In force since 2013, the CII applies to expenditure incurred up to December 31, 2024. Whether or not it is extended will depend on the next Finance Act.

What are the upcoming changes to the CIR?

You can find a full article on the CIR reform here.

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Dynergie constantly monitors developments in the various systems.

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Follow our news to find out more.