JEI 2026: What the Finance Act Changes for Startups

Quick answer. In 2026, the young innovative company (JEI) status remains solid: the R&D threshold stays at 20% of expenses, the employer payroll exemption is preserved for companies incorporated up to 31 December 2028, and the 2026 Finance Act creates a new category for the social economy, the JEII.

Many founders reach us convinced that the JEI has been gutted or that startups incorporated in 2026 no longer qualify for anything. That is wrong, and the mistake can be costly: giving up a payroll exemption that is in fact still available, or conversely building a budget around a corporate tax exemption that no longer exists. This article separates what has genuinely changed from what outdated secondary sources keep repeating.

The topic matters because it bears directly on a young company's cash position: the JEI payroll benefit often represents tens of thousands of euros per year on the salaries of research engineers. Getting the conditions wrong means risking a URSSAF reassessment, or missing a perfectly legal lever to finance innovation.

The JEI is a status defined in Article 44 sexies-0 A of the French General Tax Code. It has not been abolished: it has been adjusted at the margin and supplemented by a new category. For 2026, the eligibility conditions remain cumulative and identical to those of 2025.

A company qualifies as a young innovative company when it meets, at the close of each financial year, all of the following criteria.

The ownership condition covers individuals, but also certain structures: other JEIs, eligible research bodies, or venture capital companies. This is a point that founders who have raised funds must check after each funding round.

The R&D threshold stays at 20%: do not read 25%#

This is the first misunderstanding to dismiss. The R&D expense threshold was raised from 15% to 20% by the 2025 Social Security Financing Act (Act no. 2025-199 of 28 February 2025), with effect from 1 March 2025. The proposal to raise it to 25% under the 2026 Social Security Financing Bill was not adopted.

In practice, the threshold applicable in 2026 therefore remains 20% of tax-deductible expenses. Any source quoting 25% is incorrect. This 20% threshold has become the pivot of the entire scheme, including for distinguishing the JEI from neighbouring categories.

The JEI status opens three families of benefits: social, tax and local. Their fate differs according to the company's date of incorporation, and that is where most errors occur.

The social benefit: the payroll exemption is preserved#

This is the core of the JEI status today. The exemption covers employer social insurance contributions (sickness, maternity, disability, death) and family allowances, for employees and company officers who take part in R&D on a principal basis.

It targets research engineers, technicians, R&D project managers, industrial property lawyers and staff assigned to pre-competitive testing. The exemption applies until the last day of the 7th year following the year of creation, as long as the company is under 8 years old.

The benefit is capped at two levels: the gross monthly pay taken into account per person is limited to 4.5 times the minimum wage (i.e. 8,401.58 euros per month in 2026), and the exemption amount is capped at 5 times the annual social security ceiling per establishment, i.e. 240,300 euros in 2026 (the ceiling being 48,060 euros).

The underestimated risk. Many founders believe 2026 incorporations have lost this payroll exemption, because outdated articles quote a deadline of 31 December 2025. The official reference date is 31 December 2028. A startup created in 2026 therefore retains the contribution exemption in full. Failing to apply it means leaving tens of thousands of euros on the table every year.

The tax benefit: the profit tax exemption is gone#

This is the major change to absorb. The exemption from tax on profits (100% in the first profitable year, then 50% in the following one) was abolished for companies created from 1 January 2024 by the 2024 Finance Act.

Only JEIs created up to 31 December 2023 keep this corporate or income tax exemption. A standard JEI created in 2024, 2025 or 2026 therefore no longer has any profit tax benefit under the status. It is precisely this gap that the 2026 Finance Act fills, but for a narrow audience.

The local benefit: business property tax and property tax, by local vote#

Local tax exemptions are optional: they apply only if the relevant local authority has voted them. They cover the exemption from the business property contribution (Article 1466 D of the Tax Code) and the exemption from property tax on built premises (Article 1383 D of the Tax Code).

Both exemptions have been extended to 31 December 2028. For a young company occupying premises, the saving can be real, but the local authority's vote must be checked beforehand.

The 2026 Finance Act (Act no. 2026-103 of 19 February 2026, Articles 23 and 40) creates a new category: the young impact innovation company (JEII). It came into force on 21 February 2026.

The JEII targets social and solidarity economy (SSE) companies that meet criteria 1, 2, 4 and 5 of Article 44 sexies-0 A of the Tax Code (size, age, genuinely new character and capital ownership), but with an R&D effort of between 5% and 20% of expenses, instead of at least 20% for the standard JEI.

Its value is to restore an exemption from tax on profits, the very one the standard JEI lost in 2024. This exemption applies to financial years ending from 21 February 2026 and up to 31 December 2028, the scheme being repealed on 1 January 2029. It comes with the local tax exemptions.

Do not confuse JEII and JEC. The young growth company (JEC), created by the 2024 Finance Act, also targets an R&D effort of between 5% and 20%, but it comes with growth criteria and is a separate category. The JEII is reserved for the SSE. Confusing the two leads to claiming a benefit one is not entitled to.

In the startup files we follow, the value of the JEI status has shifted. The days of selling the JEI for its profit tax exemption are over for any company created since 2024. Today, the JEI is above all a scheme to reduce the cost of R&D employment, and on that ground it remains very powerful.

The JEII, for its part, is a clear signal in favour of impact innovation. For an SSE structure carrying even a moderate R&D effort, between 5% and 20%, it reopens a door closed for two years. But it is time-limited, until 31 December 2028, making it a window to seize rather than a lasting entitlement.

Trade-off. A young innovative company sometimes hesitates between claiming the JEI and focusing on the research tax credit. The two are not mutually exclusive: the JEI acts on social contributions, the research tax credit on tax via a tax claim. The right reflex is to quantify both together, because the R&D expense base feeds both lines of reasoning. This is one of the angles we address when we help companies finance their innovation through the CIR, CII and JEI.

The JEI status is not an approval requested once and for all: it is assessed at the close of each financial year. A company may be a JEI one year and lose the qualification the next if its R&D ratio drops below 20%. Documentary rigour is therefore essential.

1. Check, at each year-end, that the five cumulative conditions are met, in particular the 20% ratio of R&D expenses to deductible charges.
2. Track R&D expenses precisely and reconcile them with the accounts, so the ratio can be justified in the event of an audit.
3. Identify by name the employees and officers assigned to R&D on a principal basis, function by function, to apply the exemption to the right salaries.
4. Apply the caps: 4.5 times the minimum wage per month and per person, and 5 times the social security ceiling per year and per establishment.
5. Document the capital structure after each funding round to confirm the 50% ownership threshold.
6. Secure the qualification through a ruling request to the tax authorities in case of serious doubt about eligibility.

Checklist of conditions to verify before applying the exemption#

• The company is an SME within the European meaning.
• It is under 8 years old at year-end.
• Capital is held at least 50% by individuals or eligible structures.
• The company does not result from a restructuring, concentration, extension or takeover.
• R&D expenses reach at least 20% of tax-deductible charges.
• The targeted employees take part in R&D on a principal basis.

A founder of a software company created in early 2026 contacted us convinced the JEI was no longer of any use, persuaded by an online article that recent incorporations had lost all exemptions. He was about to hire two engineers without factoring any benefit into his budget.

After checking his incorporation date and his R&D ratio, the picture was the opposite: he had indeed lost the profit tax exemption, but he fully retained the employer contribution exemption on the salaries of his research engineers. The quantified annual saving changed the balance of his hiring plan. This kind of situation is common among the tech companies we support as an accounting firm for tech companies.

Beyond the figures, a few errors come up regularly in our support for startups.

First, confusion between the JEI status and the research tax credit: these are two distinct schemes, one social, the other fiscal, each governed by its own rules. Next, failure to reassess eligibility each year, even though the R&D ratio can shift. Finally, the temptation to apply the exemption to employees whose participation in R&D is not principal, which the URSSAF can challenge.

For a company preparing a fundraising round or an audit, these points deserve careful preparation: they are among the topics we cover in the guide to auditing a startup. The JEI status should also be read alongside the rest of the Finance Act: we set out the whole in what to remember from the 2026 Finance Act and in the key measures for SMEs.

Hayot Expertise, a chartered accounting firm registered with the Order of Chartered Accountants of Île-de-France, supports innovative startups on the research tax credit, the innovation tax credit and the JEI, from qualifying for the status to monitoring the exemptions.