Qualifying Expenses for France's Research Tax Credit (CIR): Complete 2026 Guide

Updated April 2026 — France's Credit d'Impôt Recherche (CIR) — the Research Tax Credit — provides over €6 billion in annual support to French companies investing in R&D. For foreign-owned companies, joint ventures with French subsidiaries, and startups established in France, understanding what qualifies is critical: both to capture the full credit and to withstand the DGFiP's increasingly detailed verification process.

The defining question is not whether your company does "research" in the everyday sense. It is whether your activities meet the definition set by the Frascati Manual — the international standard for R&D measurement adopted by France's BOFiP tax doctrine (BOI-BIC-RICI-10-10, updated August 13, 2025). This guide covers every qualifying expense category, the applicable rates, and the documentation standard the DGFiP expects.

Summary: CIR-qualifying expenses include: research staff compensation (researchers and technicians); depreciation on R&D equipment; flat-rate operating expenses (43% of eligible staff costs and 75% of eligible depreciation); subcontracted research placed with approved organizations (capped at €10M or double the company's own internal R&D spend); patent defense and filing costs (up to €60,000/year); and technology monitoring (up to €60,000/year). The credit rate is 30% on qualifying expenses up to €100M, and 5% beyond.

The CIR is governed by Article 244 quater B of the French Tax Code (Code General des Impôts, CGI). It applies to industrial, commercial, and agricultural companies subject to actual-profit taxation that incur qualifying R&D expenditure.

The mechanics:

• 30% of qualifying research expenses up to €100 million
• 5% on any excess above that ceiling

For a company declaring €500,000 in qualifying R&D: the credit is €150,000 (€500,000 × 30%). This sum reduces the corporate tax liability (impôt sur les sociétés, IS — France's corporate income tax, levied at 25% standard rate, or 15% on the first €42,500 for qualifying SMEs). If the CIR exceeds the IS liability, the surplus is immediately refundable for EU-definition SMEs (under 250 employees, revenue under €50M or balance sheet under €43M). For larger companies, the surplus carries forward across three financial years.

What qualifies as R&D: the Frascati categories

The BOFiP adopts the Frascati Manual's three-tier classification:

1. Basic research: experimental or theoretical work with no specific application target
2. Applied research: investigations aimed at acquiring new knowledge toward a defined application
3. Experimental development: systematic work based on existing knowledge to produce new materials, products, devices, or processes

Key boundary: Iterative product development — improving an existing product through standard engineering — does not qualify. You must demonstrate the existence of genuine technical obstacles (verrous technologiques) that the project is designed to resolve, and an experimental approach. This distinction is the single most common ground for CIR disallowance on audit.

In practice, staff compensation accounts for 60–80% of most companies' CIR base. Getting the documentation right for this category is the highest-value preparation you can do.

Who qualifies?

Compensation for the following personnel, in the proportion of time dedicated to qualifying R&D activities:

• Researchers: engineers or senior specialists who design and lead the research
• Research technicians: staff who implement the experimental phases of projects
• R&D project managers: team leads and lab managers
• Technical support staff: scientific documentation specialists, maintenance technicians for research equipment

What compensation elements are included?

• Gross salary and all pay elements
• Benefits in kind
• End-of-career allowances
• Mandatory and contractual employer-side social contributions (the French employer social charge rate typically adds 40–45% to gross salary)
• Profit-sharing (intéressement and participation)
• Stock options and free share grants (restricted to conditions in the CGI)

The time-tracking requirement

This is the point most frequently challenged on audit. The company must be able to demonstrate — with contemporaneous records — the exact proportion of each R&D employee's time attributable to qualifying activities. Acceptable documentary formats include:

• Individual or collective timesheets with weekly or monthly entries
• Project reports with named engineers and time allocations
• Employment contracts specifying an R&D mission
• Functional organization charts per project

Example: A French software company has 15 engineers working on an algorithmic optimization project across 120 total headcount. Time is tracked weekly via a project management tool. Those 15 engineers average 70% of their time on the qualifying project — so 70% of their total compensation packages enter the CIR base. The remaining 30% does not.

Depreciation allowances on tangible assets dedicated to research are qualifying, subject to conditions.

Qualifying assets

• Test machines, prototypes, and custom tooling
• Calculation servers, measurement instruments, and scientific equipment
• Buildings — only in the proportion of floor area exclusively used for R&D (the BOFiP doctrine restricts this)

Rules

• Only straight-line (economic) depreciation is recognized
• For assets partially used in R&D, only the pro-rata portion is eligible
• Assets nominally depreciated on a declining-balance basis must be restated to straight-line for CIR purposes

Example: A biotech startup acquires a mass spectrometer for €250,000, depreciated straight-line over 5 years. The annual depreciation charge of €50,000 enters the CIR base in full — provided the instrument is used exclusively for qualifying R&D.

Operating expenses for CIR purposes are not recorded at actual cost. They are calculated as a flat-rate percentage of the above categories:

• 43% of qualifying staff compensation
• 75% of eligible depreciation charges

This flat rate covers all indirect costs: laboratory supplies, energy, scientific documentation, publication fees, and project-related travel. No additional supporting documents are required for this category — which significantly simplifies the filing.

Worked example: €300,000 in qualifying staff costs + €60,000 in eligible depreciation → operating expenses = (300,000 × 43%) + (60,000 × 75%) = €129,000 + €45,000 = €174,000. Total qualifying base = €300,000 + €60,000 + €174,000 = €534,000. CIR = €534,000 × 30% = €160,200.

R&D outsourced to third parties can qualify, but the framework is strict (BOFiP BOI-BIC-RICI-10-10-20-30).

Who can be a qualifying subcontractor?

• Public research bodies: universities, CNRS, Inserm, CEA, and equivalent
• Higher education institutions
• Research umbrella companies holding Ministry of Research approval
• Individual expert researchers — capped at 10% of total outsourced R&D costs

Caps on outsourced expenses

Outsourced R&D costs count within the lower of:

• €10 million
• Twice the company's own internal R&D spend

Critical point: A company with no internal R&D activity of its own cannot build a CIR entirely on outsourced expenses. The BOFiP doctrine requires direct involvement in the research: defining the scientific specifications, monitoring progress, and engaging with the technical results — at minimum.

Documentation requirements

Each invoice must specify the nature of the work, its connection to the company's R&D project, and the cost attributed to each activity. A written agreement must govern the arrangement, including provisions on intellectual property ownership of results.

Patent filing and defense costs

Up to €60,000 per year for costs related to filing and protecting patents:

• Filing fees with France's INPI (Institut National de la Propriété Industrielle) or the European Patent Office (EPO)
• Industrial property advisory fees
• Translation costs for international patent extensions

Note: litigation costs (counterfeiting disputes, invalidity actions) are not eligible.

Technology monitoring (veille technologique)

Up to €60,000 per year:

• Scientific database subscriptions
• Attendance at technical conferences and professional exhibitions
• Specialized journal subscriptions

Standardization activities

Costs of participating in standardization committees are eligible when the working group's output directly relates to the company's own R&D activities.

CIR vs. CII: do not confuse the two credits

The Credit d'Impôt Innovation (CII — Innovation Tax Credit, Article 244 quater C CGI) is a separate mechanism. It covers prototype design and pilot installation for new products — without requiring the scientific rigor of the Frascati definition. The CII rate is 20% with a €400,000 expense ceiling for qualifying SMEs (maximum credit: €80,000). The two credits can be combined on separate projects.

The DGFiP reviews CIR filings with close attention. The most frequently observed grounds for partial or full disallowance:

• Misclassification: iterative product development or standard adaptation work claimed as experimental research
• Missing scientific justification: the technical file does not demonstrate genuine technological barriers or an experimental process
• Inadequate time tracking: no time records, or undocumented aggregate estimates
• Unqualified subcontractor: the third party lacks ministry approval or does not fall within the qualifying categories
• Operating expenses filed at actual cost rather than the flat-rate formula
• Missing contractual documents: no written agreement with the subcontractor, or invoices without line-by-line detail

Hayot Expertise note: A CIR does not stand up to audit on the basis of a claimed amount. It stands up on the basis of a rigorous scientific method, a complete technical file, and a clean, traceable expense base. The technical guidance form (CERFA Notice 2006, revised) details the documentation standard.

The CIR can be combined with several other regimes — subject to de minimis state aid caps:

• JEI status (Jeune Entreprise Innovante — Young Innovative Company): provides social charge exemptions on qualifying R&D staff and corporate tax reductions. Cumulative with the CIR where de minimis thresholds are not exceeded.
• Public grants and subsidies: expenses covered by a public grant must be excluded from the CIR base. The remainder — the uncovered portion — stays eligible.
• CII (Credit d'Impôt Innovation): combinable on separate projects, as described above.
• Collaborative research rate (CGI Article 244 quater B-3°): a 50% enhanced rate applies to qualifying research expenses placed with public research bodies under a structured partnership agreement.

For broader context, see our guides on new French tax incentives for businesses in 2026, business financing in France 2026, and the 2026 French corporate tax overview.