Innovation Tax Credit (Crédit d'Impôt Innovation, CII)

Innovation Tax Credit (Crédit d'Impôt Innovation, CII)

Funds French small and medium enterprises focused on innovative prototyping, technology development, and pilot commercialization.

The Crédit d'Impôt Innovation (CII) extends France's CIR framework to cover SME-specific innovation activities that fall below the threshold of formal scientific research. It applies to prototype design and pilot installation for new products not yet commercialized that are distinguished by superior technical performance, eco-design, ergonomics, or functionality. Prototypes developed under CII serve as development models only and must not be sold commercially. The scheme was extended by the 2025 Finance Law through December 31, 2027, though the credit rate was simultaneously reduced from 30% to 20% effective January 1, 2025.

Eligibility is restricted to companies meeting the EU SME definition: fewer than 250 employees and annual turnover at or below €50 million, or total assets at or below €43 million. Companies must be subject to the standard tax regime (IS or IR) or qualify for a tax-exempt status such as Jeune Entreprise Innovante (JEI). The annual cap on eligible expenses is €400,000, yielding a maximum credit of €80,000 in metropolitan France (20% rate), €240,000 in overseas departments (60% rate), and €160,000 or €140,000 in Corsica depending on company size. Expenses claimed under the CIR cannot also be claimed under CII — the two credits are mutually exclusive for the same expenditure line. Public subsidies reduce the eligible base.

Declaration uses Form 2069-A-SD, the same form used for the CIR, filed with the annual tax return via EDI-TDFC. Unused credit may be carried forward three years; early reimbursement is available for startups under two years old, JEI-status companies, and companies undergoing restructuring. The CII is scheduled to expire on December 31, 2027 unless further extended by the French legislature.