Focus on the 2024 Finance Act: C3IV, JEI and other measures

We're here! On December 30, 2023, French President Emmanuel Macron officially promulgated the 2024 Finance Law, formalizing numerous changes in the innovation ecosystem. Some of the measures were widely commented on, and the parliamentary shuttle maintained the vagueness about them right up to the end. Of the text initially presented, only a few measures remain intact. 

Contents

I. The Green Industry Investment Tax Credit: making France a world leader

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II. Reforming JEI to support investment and growth in innovative start-ups and SMEs

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III. Other measures confirmed or withdrawn during the parliamentary shuttle procedure

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IV. Dynergie strategy

Green Industry Investment Tax Credit: making France a world leader

Resulting from the Green Industry Act presented by the government last spring, the green industry investment tax credit (or C3IV) will finance productive investments for companies across the battery, wind, heat pump and photovoltaic value chains. 

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Officially authorized by the European Commission on January 8, 2024, under article 2.8 of the Temporary Crisis and Transition Framework of March 17, 2023, which aims to stimulate the deployment of green energies in Europe, this tax credit operates on the same principle as the video game tax credit: you will need to obtain approval from the administration in order to have your work financed. The final rate depends on the size of the company and its geographical area, ranging from 20% to 40% in the general case, and up to 45% in the most favorable case.

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💡 Expanded by the Senate during the first reading of the Finance Bill to include the electrolyser (for hydrogen) and carbon capture and storage (CCUS) sectors, the National Assembly's Finance Committee chose to remove them from the list . C3IV to finance them, from 2024, via the France 2030 program.

Reforming the Young Innovative Company (JEI) to support investment and growth in innovative start-ups and SMEs

Thought up and recommended by the Midy report to support investment in start-ups, innovative SMEs and growth SMEs, the reform of the JEI status has finally seen the emergence of a new category: the Jeune Entreprise de Croissance (JEC) status. This new status will enable young companies with between 5% and 15% research expenditure to benefit from the advantages of JEI status, provided they meet performance indicators relating to their growth. 

The new French Finance Act also enables public-sector bodies (hospitals, ministries, local authorities, public-sector companies, etc.) to buy from ILEAPs up to €100,000, without competitive bidding and using a simplified procedure. 

Finally, tax incentives for individuals have been introduced, with the aim of stimulating savings, and directing them towards the ecosystem of innovative companies. On the other hand, new companies created after January 1ᵉʳ 2024 and joining the scheme will no longer benefit from the corporate tax exemption, a measure deemed too unhelpful.

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Read more: The reform of JEI status in the 2024 Finance Act: what remains of the Midy report?

Other measures confirmed or withdrawn during the parliamentary shuttle procedure

• Introduction of measures under the Anti-Fraud Act, aimed at effectively combating social and tax fraud. In the case of the latter, the emphasis is on combating abusive tax optimization, but also on better tax support for companies, enshrining the right to error for businesses and punishing companies that encourage tax fraud.

💡 With this law, over 1,500 Full-Time Equivalent (FTE) jobs have been financed to combat fraud and assist companies with their tax affairs. The stated aim is to systematize the use of rescrits in order to secure companies' tax declarations and prevent potential errors upstream (notably concerning JEI status and tax niches such as the Research Tax Credit and the Innovation Tax Credit).

• Deletion of the Senate amendments concerning the Innovation Tax Credit, maintaining the ceiling of the eligible base at 400,000 euros, and a lifespan scheduled to run until December 31, 2024.

💡 Following the deletion of the Midy report measures on first reading, the Senate had at the same time proposed doubling the ceiling on the eligible base (from 400,000 euros to 800,000 euros) and extending the scheme until December 31, 2026. By deleting these provisions, the Finance Committee has announced that it will deal with the issue in the next Finance Bill, for the year 2025.

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• Extension of the Video Games Tax Credit until December 31, 2026.

• No reform of the Research Tax Credit or IPBox.

💡 A reform of the CIR should take place during the next Finance Bill, in order to optimize its efficiency, as should a reform of the IPBox (probably via a capping of the eligible base), in view of the Government's need to release 12 billion euros in savings during the next PLF.

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Read more: CIR reform: deciphering the changes to be expected

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• 1.6 billion increase in funding for France 2030 program

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💡 Endowed in 2023 with €6.09 bn, the France 2030 program benefits from a €1.6 bn increase in its credits, bringing funding for 2024 to €7.7 bn. All these funds are allocated in Payment Credits (CP).

The Dynergie strategy

In view of the new features introduced by the French Finance Act, such as the C3IV and anti-fraud measures, our experts, recognized by the French tax authorities, will be able to help you secure your tax returns and benefits (JEI, CIR, CII...).