You founded a startup in France from London, New York, Dubai or Singapore. Your French company, usually a SAS (soci\u00e9t\u00e9 par actions simplifi\u00e9e, the flexible joint-stock company most foreign founders choose) or sometimes a SARL (soci\u00e9t\u00e9 \u00e0 responsabilit\u00e9 limit\u00e9e, the closed limited-liability company), burns cash on developers, engineers and prototypes. Then your French accountant tells you that 30% of that spending could come back as a tax credit, even if your company pays no corporate tax at all. That mechanism is the CIR (cr\u00e9dit d’imp\u00f4t recherche, the French research tax credit), and for a young foreign-owned company it is often the largest single source of public funding available in the first years. The catch is that the money only arrives if you claim it exactly as the law requires, and the French tax administration, the DGFiP (Direction g\u00e9n\u00e9rale des finances publiques, the public finances directorate), checks research credits closely. This guide explains, in plain English, how a foreign founder claims the CIR for a French company, how a loss-making startup gets the amount paid out in cash immediately instead of waiting three years, and how you defend the credit from abroad when the administration challenges it.<\/p>\n
French bureaucracy runs on acronyms, so here are the ones that matter in this article. The CIR is the research tax credit itself. The CGI (Code g\u00e9n\u00e9ral des imp\u00f4ts, the general tax code) contains the core rules. The DGFiP collects tax and pays refunds. The MESR (minist\u00e8re charg\u00e9 de la recherche, the ministry in charge of research) supplies the scientists whose technical opinion the DGFiP can request during an audit. The Kbis is the official company identity extract issued by the greffe (the registry office of the commercial court) proving your company exists. BODACC (Bulletin officiel des annonces civiles et commerciales, the official gazette of civil and commercial announcements) publishes company life events. IS (imp\u00f4t sur les soci\u00e9t\u00e9s) is French corporate income tax, and IR (imp\u00f4t sur le revenu) is personal income tax. A JEI (jeune entreprise innovante, young innovative company) is a special tax status for young research-heavy firms. The CAA (cour administrative d’appel) is the administrative court of appeal, and the TA (tribunal administratif) the first-instance administrative court. Keep these in mind and the rest of this article will read easily.<\/p>\n
Any industrial, commercial or agricultural company taxed on its actual profits can claim the CIR on research spending incurred during the year, at a rate of 30% for spending up to 100 million euros and 5% above that threshold, under article 244 quater B of the CGI<\/a>. The statute states this directly: “Le taux du cr\u00e9dit d’imp\u00f4t est de 30 % pour la fraction des d\u00e9penses de recherche inf\u00e9rieure ou \u00e9gale \u00e0 100 millions d’euros et de 5 % pour la fraction des d\u00e9penses de recherche sup\u00e9rieure \u00e0 ce montant.” For operations located in an overseas department, the first rate rises to 50%. A foreign-owned startup will normally stay far below the 100 million euro line, so the practical rate is 30% of every eligible euro. On 300,000 euros of eligible developer salaries and related costs, that is 90,000 euros of credit, which for a company paying no corporate tax becomes a cash claim against the French State.<\/p>\n Not all spending counts. The eligible base covers depreciation of new assets assigned directly to research, payroll for researchers and research technicians directly and exclusively assigned to research operations, other operating expenses calculated as a flat percentage, and, crucially for startups, the cost of entrusting research operations to approved bodies: public research organisations, universities, approved scientific cooperation foundations, and private research organisations or scientific experts approved by the research minister, under paragraphs d and d bis of article 244 quater B<\/a>. Spending entrusted to these approved subcontractors counts within an annual cap of 2 million euros, raised to 10 million euros where there is no dependency link between your company and the provider. Public subsidies received for the research operations must be deducted from the base before computing the credit. If Bpifrance or a region gave your company a 50,000 euro grant for the project, you subtract it first and compute 30% on the remainder.<\/p>\n The decisive question is what counts as research in the first place. The definition sits in article 49 septies F of annex III to the CGI<\/a>, which recognises three categories: fundamental research analysing properties, structures and natural phenomena; applied research seeking new solutions to a predetermined objective, whose result is a working model of a product, operation or method; and experimental development carried out through prototypes or pilot installations to gather the technical information needed to produce new or substantially improved materials, products, processes, systems or services. The text is explicit on the last category: “Les activit\u00e9s ayant le caract\u00e8re d’op\u00e9rations de d\u00e9veloppement exp\u00e9rimental effectu\u00e9es, au moyen de prototypes ou d’installations pilotes, dans le but de r\u00e9unir toutes les informations n\u00e9cessaires pour fournir les \u00e9l\u00e9ments techniques des d\u00e9cisions, en vue de la production de nouveaux mat\u00e9riaux, dispositifs, produits, proc\u00e9d\u00e9s, syst\u00e8mes, services ou en vue de leur am\u00e9lioration substantielle.” Routine software customisation using existing techniques does not qualify, but building a prototype that goes beyond the current state of the art does. As a foreign founder, you should force your technical team to describe every project in these terms from day one: the technical obstacle, why existing solutions failed, the prototypes built, and the tests run. That paper trail is what survives an audit three years later.<\/p>\n Procedurally, you claim the credit by filing form number 2069-A-SD with the corporate tax balance, no later than the 15th day of the fourth month following the end of the financial year<\/a>, as the official service-public guide on the research tax credit<\/a> confirms. The credit is computed per calendar year regardless of your year-end date. Companies must also attach form 2069-A-1-SD describing PhD holders funded or hired on the basis of the research spending. In practice your French accountant files both forms through the company’s professional account on impots.gouv.fr. A frequent and expensive mistake by foreign founders is to assume the CIR is automatic or can be reconstructed years later from invoices alone. It cannot. Miss the 2069-A-SD deadline and the credit for that year is lost; file it with vague project descriptions and you hand the administration its first reason to reassess. If you run a group, note that the parent of a French tax-integrated group claims on behalf of subsidiaries, which matters when your French holding owns the operating company.<\/p>\n Fashion and design-driven startups get a special extension worth knowing. The same article 244 quater B covers, in its paragraph h, spending on developing new collections by textile, clothing and leather firms, including stylists and style offices, and this scheme runs until 31 December 2027. The Conseil d’\u00c9tat confirmed in its decision of 18 July 2018, number 413314, Soci\u00e9t\u00e9 France Teinture<\/a>, that the two categories of staff costs in that scheme are independent: a company may count engineers and production technicians building unsold prototypes even if it employs no style-office staff at all, because the statute “autorisent la prise en compte distincte de ces deux cat\u00e9gories de d\u00e9penses de personnel”. If your foreign-owned brand develops collections in Paris, that ruling protects a narrow but valuable slice of your budget.<\/p>\n The standard fate of a CIR claim is set-off, not cash. Under article 220 B of the CGI, the research credit is first offset against the corporate tax owed by the company<\/a>, under the conditions of article 199 ter B. A profitable company therefore simply pays less IS. But a young startup usually pays no corporate tax at all, so the offset mechanism would be worthless without a second rule. That rule is the State debt: article 199 ter B of the CGI provides that any excess credit “constitue au profit de l’entreprise une cr\u00e9ance sur l’Etat d’\u00e9gal montant”, a debt of the State owed to the company for the same amount<\/a>. In the ordinary case this debt is used to pay corporate tax over the following three years, and whatever remains unused after that period is refunded. A mature profitable group waits; a startup cannot afford to wait, and the law knows it.<\/p>\n Four categories of companies get the cash immediately, and nearly every foreign-founded startup falls into at least one of them. The same article 199 ter B lists them: companies created since 2004 whose capital is fully paid up and at least 50% held by individuals or qualifying venture structures, which may claim immediate refund for the year of creation and the four following years<\/a>; companies under conciliation, sauvegarde, redressement or liquidation proceedings, from the opening judgment; JEI-status young innovative companies; and companies meeting the European definition of micro, small and medium enterprises under annex I of EU regulation 651\/2014. The official service-public guide confirms each case in plain terms: a new company gets direct refund for its first year and the four following years, a JEI gets direct refund, an SME gets direct refund, and a company in insolvency proceedings gets it from the opening decision. For a SAS created in Paris two years ago by two British or American founders holding 100% of the shares, the first category alone secures immediate cash: five years of CIR paid out instead of carried forward. For a slightly older startup, SME status usually takes over, since almost all startups meet the European SME thresholds.<\/p>\n One strict condition applies to the youngest companies. Companies less than two years old requesting immediate refund “doivent pr\u00e9senter \u00e0 l’appui de leur demande les pi\u00e8ces justificatives attestant de la r\u00e9alit\u00e9 des d\u00e9penses de recherche”<\/a>: they must attach supporting documents proving the reality of the research spending. In practice the SIE (service des imp\u00f4ts des entreprises, the local corporate tax office) examines these documents before releasing the money, and delays of several months are common. File the refund request through the company’s professional account on impots.gouv.fr<\/a> at the same time as the IS balance, attach employment contracts of the researchers, payroll summaries, subcontractor invoices with the provider’s approval references, bank statements proving payment, and the technical project memos described above. A non-resident founder should give the French accountant a formal mandate and make sure the SIE has a working contact: refund queries sent to an unmonitored inbox are the most common reason a legitimate refund sleeps for a year. If the SIE refuses or stays silent, that refusal or implied refusal becomes the decision you challenge in court, as explained in part II.<\/p>\n Two financial details complete the picture. First, the CIR debt is in principle non-transferable and non-assignable, except through the banking-law mechanisms of daily assignment of receivables, so you cannot simply sell next year’s expected credit to a third party outside those channels. In a merger during the carry-forward period, the unused fraction transfers to the receiving company, which matters if your French startup is absorbed by another group entity. Second, never confuse the immediate refund with an exemption from control: immediate cash means immediate attention. The DGFiP routinely audits refunded credits, sometimes years after payment, and a refund paid in year two can be reassessed in year five. The audit survival rules in part II therefore apply with full force precisely to the companies that got their money fastest.<\/p>\n A CIR audit usually begins as a standard accounting verification by the DGFiP, which then questions the scientific nature of the projects. At that point the tax office may call on outside scientists: article L 45 B of the book of tax procedures allows research-ministry agents to verify that spending was genuinely assigned to research, while the DGFiP alone remains competent to run rectification procedures<\/a>. In plain terms, MESR experts give a technical opinion on whether your work was genuine research, and the tax auditor decides the financial consequences. Their opinion carries heavy weight in practice but it is not the final word: courts regularly overturn reassessments built on a thin or generic expert report, and the burden and structure of proof before the judge follow rules the Conseil d’\u00c9tat has now settled in three important decisions you should know.<\/p>\n The first ruling every foreign founder with subcontractors must understand is Conseil d’\u00c9tat, 28 September 2022, number 452461, Soci\u00e9t\u00e9 Akka Technologies<\/a>, a case about an engineering group whose subsidiary claimed credits on research allegedly performed for the group. The court drew a sharp line: “les sommes re\u00e7ues par les organismes de recherche priv\u00e9s agr\u00e9\u00e9s mentionn\u00e9s au d bis du II de l’article 244 quater B du CGI pour la r\u00e9alisation d’op\u00e9rations de recherche qui leur sont confi\u00e9es par des entreprises entrant elles-m\u00eames dans le champ des b\u00e9n\u00e9ficiaires du cr\u00e9dit d’imp\u00f4t recherche constituent, pour ces entreprises donneuses d’ordre, des d\u00e9penses \u00e9ligibles \u00e0 ce cr\u00e9dit.” Money your company pays to an approved private research body for entrusted research is eligible for you, the client. Symmetrically, the approved subcontractor may not put spending done to perform those entrusted operations into its own credit base, but research it conducts on its own account stays eligible even if triggered by providing services to a third party whose contract is not itself about research. For a startup, the lesson runs both ways: if you outsource to an approved lab, keep the contract stating that research operations are entrusted to it and keep its approval references; if your startup itself sells engineering services and does its own research on the side, ring-fence the two budgets, because the administration will argue everything was non-eligible service work.<\/p>\n The same Akka decision also shows how cases are lost on proof, not on principle. The court upheld the reassessment because the technical documentation produced during the audit did not make it possible to identify clearly, among the works carried out across the whole Akka group, the works actually performed by the subsidiary AIP or their link with the expenses AIP had put into its credit base. The technical file could not show which works the claiming subsidiary had actually done, nor link them to the expenses in the credit base. The group lost over 16 million euros of credits for 2010 and 2011 on that ground. For a small foreign-owned startup the message is identical at a smaller scale: timesheets per project per researcher, project memos linking each invoice to a research task, prototype logs, test reports, and subcontractor deliverables. A pile of salary slips and a one-page project summary will not survive. Build the file as the work happens, in English if your team works in English, with a French summary for the auditor, and store it where your accountant can produce it within weeks of an audit notice.<\/p>\n The second ruling widens what you can outsource. In Conseil d’\u00c9tat, 22 July 2020, number 428127, FNAMS<\/a>, a federation conducting eligible research had entrusted analytical studies and tests to approved public and private bodies because it lacked the scientific equipment itself. The lower court had excluded the cost on the ground that the subcontracted tasks were not research operations in themselves. The Conseil d’\u00c9tat annulled that reasoning and held: “Lorsqu’une entreprise confie \u00e0 un organisme mentionn\u00e9 au d ou au d bis du II de l’article 244 quater B du code g\u00e9n\u00e9ral des imp\u00f4ts l’ex\u00e9cution de prestations n\u00e9cessaires \u00e0 la r\u00e9alisation d’op\u00e9rations de recherche qu’elle m\u00e8ne, les d\u00e9penses correspondantes peuvent \u00eatre prises en compte pour la d\u00e9termination du montant de son cr\u00e9dit d’imp\u00f4t quand bien m\u00eame les prestations sous-trait\u00e9es, prises isol\u00e9ment, ne constitueraient pas des op\u00e9rations de recherche.” Routine lab tests, analyses and measurements needed for your research programme count even if, viewed alone, they are not research. This is a powerful shield for biotech, food-tech and materials startups that rent specialised facilities: the main project must itself be eligible, and the subcontractor must be an approved body under paragraphs d or d bis, but the entrusted tasks need not independently qualify as research.<\/p>\n When the audit ends badly, you receive a rectification proposal reducing or cancelling your credit, or the SIE refuses your immediate refund. From that moment you are in a dispute, and French tax disputes follow a mandatory two-step path that a non-resident founder can walk entirely through a French lawyer and accountant, without moving back to France. The first step is the administrative objection. Article R* 190-1 of the book of tax procedures provides: “Le contribuable qui d\u00e9sire contester tout ou partie d’un imp\u00f4t qui le concerne doit d’abord adresser une r\u00e9clamation au service territorial” of the DGFiP for the place of taxation<\/a>. You write to the service that assessed you, or to the director of the specialised or national department where relevant, setting out the facts, the legal grounds and the amount claimed, with the supporting file. This prior objection is compulsory: as article R 421-1 of the administrative justice code<\/a> puts it for money claims, a court application seeking payment is admissible only after the administration has decided on a prior request. File the objection as soon as the assessment or refusal arrives, because limitation periods for the administration and the taxpayer run on strict clocks, and interest and penalties accumulate while you wait.<\/p>\n The second step is the TA, the administrative court for the area of taxation, which hears the case in full, on facts and law, and can order discharge of the extra tax or restitution of the credit. The same article R 421-1 sets the basic deadline: court action must be brought “dans les deux mois \u00e0 partir de la notification ou de la publication de la d\u00e9cision attaqu\u00e9e”, two months from notification of the decision rejecting your objection<\/a>. Miss that window and even a perfect scientific file becomes useless. Appeals go to the CAA and then, on points of law, to the Conseil d’\u00c9tat, whose three CIR decisions quoted in this article show the level of scrutiny applied: the FNAMS federation won discharge of four years of extra corporate tax after the court of appeal misread the subcontracting rules, while Akka lost sixteen million euros for want of identifiable documentation. Before the judge, everything turns on the file described in the previous section: project-by-project technical memos, timesheets, prototype evidence, approved-provider references, and a clear reconciliation between the expenses in the 2069-A-SD and the accounting records. A foreign founder adds one more layer of preparation: a bilingual mandate for the French counsel, certified translations of key foreign-language exhibits, and proof of the company’s current Kbis and registered office, since the court will check standing and the administration will check that the company still exists at the greffe.<\/p>\n Three practical defences decide most CIR disputes. First, eligibility framing: anchor every project in one of the three 49 septies F categories and use the exact vocabulary of the statute, because auditors and MESR experts test your work against that grid. Second, subcontracting compliance: prove the provider’s approval status at the date of the work, the absence of a dependency link where you claim the 10 million euro ceiling, and that the tasks served your own eligible programme, which is exactly the FNAMS pattern that wins. Third, symmetry control: make sure the same euro is not claimed twice, once by you and once by your provider, which is the Akka trap in reverse. Where the dispute concerns only the amount and the science is solid, a partial concession during the objection phase often shortens the fight: the administration may accept the core projects and drop the weakest line, and the court case then concerns a smaller, stronger claim. Where the SIE simply sits on a refund request from a young company, the implied refusal after the statutory period opens the same court route, and judges order restitution with full reasoning on eligibility, as the France Teinture referral back to the Nancy court illustrates.<\/p>\n Distance changes the logistics, not the law. Audit notices, rectification proposals and refund decisions are served on the French company at its si\u00e8ge social (registered office), so a foreign founder must keep a real domiciliation with mail forwarding and a person who scans everything the same day. Deadlines run from notification whether you are in Paris or in San Francisco. Responses can be signed and filed electronically by your French representative, hearings before the TA and CAA are handled by counsel, and your personal appearance is almost never required. What distance does punish is disorganisation: the administration treats a late or incomplete reply as confirmation that the file is weak. Set up a shared folder with your accountant on day one, keep every CIR year in a separate subfolder with its 2069-A-SD, payroll evidence, contracts and technical memos, and review it annually before filing. That discipline costs little and is worth, in a dispute, exactly the amount of the credit.<\/p>\n A foreign founder running a French startup should treat the CIR as a core funding line, not a bonus. The economics are simple: 30% of eligible research spending becomes a credit, a loss-making young company converts that credit into immediate cash under article 199 ter B as a new company, JEI or SME, and the claim is filed each year on form 2069-A-SD with the corporate tax balance. The legal protection is equally clear: outsourced tasks needed for your eligible programme count even if they are not research in isolation, each expense category stands on its own, and approved-provider spending belongs to the client that paid for it. The risk is documentation, as the Akka group learned at a cost of over sixteen million euros: unidentified works and unlinked expenses lose, however genuine the underlying science. Claim carefully, attach the proof the statute demands for companies under two years old, keep the project file audit-ready, and challenge refusals through the mandatory objection and the two-month court deadline. Managed this way from abroad, the French research credit does what it was designed to do: it pays a foreign founder back for doing real research in France. For the bigger picture of launching and running your French company, from bank account and Kbis to VAT and first hire, see our complete guide to setting up a company in France as a foreign founder<\/a>.<\/p>\n Our firm advises foreign founders and groups on French research tax credit claims, immediate refunds and tax audits. Telephone consultation: 80 EUR TTC, with a lawyer of the firm within 48 hours. Call +33 6 46 60 58 22<\/a> or contact us via our contact page<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":" Foreign founder? How your French startup claims the 30% research tax credit (CIR), gets an immediate cash refund and survives a DGFiP audit from abroad.<\/p>\n","protected":false},"author":251031309,"featured_media":16573,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_kj_source_type":"","_kj_official_id":"","_kj_official_url":"","_kj_judilibre_id":"","_kj_jur":"","_kj_lieu":"","_kj_chambre":"","_kj_rg":"","_kj_date":"","activitypub_content_warning":"","activitypub_content_visibility":"","activitypub_max_image_attachments":4,"activitypub_interaction_policy_quote":"anyone","activitypub_status":"federated","footnotes":""},"categories":[80314,80313],"tags":[],"class_list":["post-2127916","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-decryptage","category-doing-business-in-france"],"yoast_head":"\nB. How your loss-making French startup gets an immediate cash refund instead of waiting three years<\/h3>\n
II. How you keep the credit when the French tax administration challenges it while you live abroad<\/h2>\n
A. Surviving the audit: the MESR scientific opinion, your file, and what judges actually check<\/h3>\n
B. Contesting a reassessment or a refused refund from abroad: objection, court deadlines, and the cash at stake<\/h3>\n
Conclusion<\/h2>\n
Need a quick opinion on your case.<\/h2>\n