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

Qualifying CIR expenses are R&D staff costs, depreciation of R&D assets and approved subcontracting within statutory caps, plus a 40% flat operating overhead on staff. Patent and technology-watch costs left the base in 2025. The credit is 30% of eligible expenses up to 100M euros and 5% beyond (50% in the overseas departments).

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 assets allocated to R&D; flat-rate operating expenses (40% of eligible staff costs and 75% of eligible depreciation); and subcontracted research placed with approved organizations. Caution: under the 2025 Finance Act, for expenses incurred on or after February 15, 2025, patent costs and technology-monitoring costs were removed from the base, and the flat-rate overhead coefficient was cut from 43% to 40% of staff costs. The credit rate is 30% on qualifying expenses up to €100M, and 5% beyond (50% in the French overseas departments).

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?#

Here is how each personnel category is treated, in the proportion of time dedicated to qualifying R&D:

• Researchers: engineers or senior specialists who design and lead the research
• Research technicians: staff who implement the experimental phases of projects
• Project managers and lab managers: only where they hold the required qualification and take a direct, personal part in the research work (they are then treated as researchers)
• Support staff: expressly excluded from the base by the BOFiP doctrine, their costs being deemed covered by the 40% flat-rate operating allowance; only the maintenance of research equipment may fall within the definition of a research technician

What compensation elements are included?#

• Gross salary and all pay elements
• Benefits in kind
• Mandatory statutory and contractual employer-side social contributions
• Profit-sharing (intéressement and participation)

By contrast, the tax administration's doctrine accepts neither stock options nor free share grants: do not include them in the base. Only one recent first-instance court decision, not yet final, has admitted free shares; the position is too fragile to build a filing on.

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:

• 40% of qualifying staff compensation (cut from 43% to 40% by the 2025 Finance Act, for expenses incurred on or after February 15, 2025)
• 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 × 40%) + (60,000 × 75%) = €120,000 + €45,000 = €165,000. Total qualifying base = €300,000 + €60,000 + €165,000 = €525,000. CIR = €525,000 × 30% = €157,500. Under the former 43% coefficient, the same fact pattern produced €174,000 of overheads and a €160,200 credit: the lower flat rate costs €2,700 of credit here.

Expense by expense: in or out of the CIR base in 2026#

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 or assimilated research bodies (universities, CNRS, Inserm, CEA and equivalent), approved by the French Minister for Research
• Approved private research organizations
• Approved individual scientific or technical experts

For expenses incurred on or after January 1, 2022, ministerial approval is required from all providers, including public bodies. The list of approved organizations and experts can be consulted on the website of the French Ministry in charge of Research.

Caps on outsourced expenses#

Outsourced R&D costs count:

• within a limit of three times the total amount of the company's other qualifying research expenses
• and within an overall ceiling of €10 million per year where the provider is not a related party, reduced to €2 million where a dependency link exists (the threshold turns on the dependency link, not on the provider's public status)

Caution: the doubling of expenses placed with public research bodies, long presented as the main attraction of public subcontracting, was abolished for expenses incurred on or after January 1, 2022. Those expenses are now counted at their actual amount.

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 costs: removed from the base on February 15, 2025#

This is the least well-known change of recent years. Filing, maintenance and defense costs for patents and plant variety certificates (INPI or EPO fees, industrial property advisory fees, translation costs for international extensions) are no longer part of the CIR base for expenses incurred on or after February 15, 2025: the 2025 Finance Act removed them from the scheme outright. The former specific caps of €60,000 per year (one for legal-protection insurance premiums covering patent litigation, the other for technology monitoring) are therefore obsolete; patent filing and maintenance costs themselves were not capped before the reform.

In practice, a company that simply rolls forward last year's filing risks an overstated base, and therefore a reassessment with late-payment interest. These costs of course remain deductible from taxable profit: they leave the tax-credit base, not the accounts.

Technology monitoring (veille technologique): also removed from the base#

Same fate for scientific and technology-monitoring costs (scientific database subscriptions, attendance at technical conferences and professional exhibitions, specialized journal subscriptions): they are no longer eligible for the CIR for expenses incurred on or after February 15, 2025, and the former €60,000 annual cap no longer exists.

The same act also abolished the "young doctor" (jeune docteur) regime, which allowed the payroll costs of recently qualified PhDs to be counted twice over during their first two years. Those salaries remain eligible, but at their actual amount only.

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, the Innovation Tax Credit) is a separate mechanism, reserved for EU-definition SMEs. It covers prototype design and pilot installation for new products, without requiring the scientific rigor of the Frascati definition. The CII rate is 20% in mainland France (60% in the overseas departments, 35% or 40% in Corsica), within an annual expense ceiling of €400,000 (maximum credit: €80,000 per year). The scheme has been extended until December 31, 2027. The two credits can be combined on separate projects, but never on the same expenses. One useful clarification, because the mistake is common in business plans: JEI status increases neither the CII rate nor its cap. What JEI status does bring, and the conditions attached to it since the 2024-2026 reforms, are covered in our article on France's young innovative company (JEI) status in 2026.

That boundary is where every engineering firm file starts: routine engineering work, however technical, does not qualify for the research tax credit. Our accountant for engineering firms page sets out how we build that qualification, from time records kept project by project.

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 2069-A-NOT-SD notice (impots.gouv.fr) and the CIR guide published each year by the French Ministry for Research detail the documentation standard.

The CIR can be combined with several other regimes:

• JEI status (Jeune Entreprise Innovante, Young Innovative Company): grants a full exemption from employer social-security and family allowance contributions on R&D staff, until the last day of the 7th calendar year following the year of incorporation, and is cumulative with the CIR. That social exemption is not subject to the de minimis state aid ceiling (the scheme's tax exemptions are: €300,000 over three rolling financial years under EU Regulation 2023/2831). By contrast, JEI status no longer provides any corporate income tax exemption for companies incorporated on or after January 1, 2024, and it does not increase the CIR rate.
• 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, never on the same expenses.
• Collaborative research tax credit: a scheme distinct from the CIR, applying to collaboration contracts signed with approved research bodies. Expenses claimed under it cannot be declared a second time under the CIR. Caution: there is no enhanced CIR rate attached to JEI status, and the doubling of expenses placed with public research bodies was abolished for expenses incurred on or after January 1, 2022.

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.

We help French companies identify their qualifying R&D expense base, strengthen documentation, and reconcile tax positioning with operational reality. Our process includes: a preliminary audit of qualifying expenses, a scientific eligibility analysis against BOFiP doctrine, and full support for the technical file and the 2069-A-SD CIR declaration form.

Secure your CIR filing with Hayot Expertise

France's CIR is one of the most generous R&D incentive regimes anywhere — 30% on qualifying expenses up to €100 million is exceptional by international standards. But the credit is claimed by filing the 2069-A-SD form and defending it, potentially, in front of the DGFiP. Every euro declared must be traceable, documented, and consistent with the applicable doctrine. Getting the base right from the outset is the only reliable strategy.

(Official sources: CGI Article 244 quater B — French Tax Code; BOFiP BOI-BIC-RICI-10-10 — eligible research expense doctrine, updated 13/08/2025; entreprendre.service-public.gouv.fr — Research Tax Credit (CIR), file F23533; économie.gouv.fr — R&D incentives and financing; Ministry of Higher Education and Research — annual CIR guide; impots.gouv.fr: the 2069-A-NOT-SD notice; Légifrance — Article 244 quater B CGI)