R&D tax credit and grants: why deduct them from the base in 2026
Public grants received for research are deducted from the research tax credit base, whether definitively acquired or repayable. Forgetting this deduction exposes you to a reassessment. The 2026 picture.
Expert note: This article was written by our chartered accountancy firm. Information is current as of 2026. For a personalised review of your situation, contact us.
Quick answer. Public grants received to finance research operations are deducted from the research tax credit base (Tax Code art. 244 quater B), whether definitively acquired or repayable. The credit is therefore calculated on expenses net of grants, at the rate of 30% up to 100 million euros. Forgetting this deduction is one of the most penalised mistakes in an audit.
The research tax credit is a powerful scheme, but its calculation hides a frequent trap: the treatment of public grants. Many companies calculate their credit on the gross cost of their work, without subtracting the aids received, which artificially inflates the credit and exposes them to a reassessment. Here is the rule, its subtleties and the precautions to take for 2026.
The principle: a credit on net expenses#
The research tax credit is calculated on eligible research expenses, net of public aids.
The public grants received for operations giving the right to the credit must be deducted from the calculation base (Tax Code art. 244 quater B). The credit is then determined at the rate of 30% of these net expenses up to 100 million euros, and 5% beyond. The logic is simple: the public aid has already financed part of the research, and the State does not intend to subsidise it a second time through the tax credit.
Calculating the credit on the gross cost, without deducting the grants, therefore overstates the credit. It is a mistake the tax authority spots easily, which translates into a reassessment with interest and penalties.
Acquired grants and repayable advances#
The rule distinguishes two types of aid, with a treatment specific to each.
Definitively acquired grants are deducted from the base in the year the corresponding expenses are taken into account. Repayable advances follow a two-step treatment: they are first deducted from the base when paid, like a grant, then reintegrated into the base of the year in which they are repaid to the body. This symmetry avoids a double penalty: the advance that will be returned ends up producing credit when it is repaid.
This mechanism must be followed rigorously over time, because the schedule of payment and repayment shifts the effect on the base from one year to another.
The definition of public grants since 2025#
The notion of public grant has been clarified recently, which broadens the scope of the deduction.
The finance law for 2025 defines public grants as aids paid by legal persons of public law, or by legal persons of private law entrusted with a public-service mission. This definition therefore includes certain aids paid by private bodies vested with a public mission, beyond aids from the State or local authorities alone. The nature of each funding body must thus be examined to determine whether its aid must be deducted.
| Type of aid | Treatment in the credit base |
|---|---|
| Definitively acquired public grant | Deducted in the year of the expenses |
| Repayable advance | Deducted when paid, reintegrated when repaid |
| Aid from a private body with a public mission | Deducted (2025 definition) |
| Purely private funding without public mission | In principle not concerned |
Our view#
The treatment of grants is one of the most audited points of the credit, and one of the simplest to secure once anticipated. The typical mistake is to reason on the full cost of a project without mapping the aids received, which mechanically leads to over-declaring.
Our method is to list, for each research project, all the public funding and its nature, then to build the net base accordingly, tracking repayable advances over time. This rigour, coupled with a solid technical file as we detail in our anti-reassessment technical file template, is the best protection. A credit correctly calculated on net expenses withstands an audit, where a credit inflated by forgotten grants collapses, as shown by situations of refused credit and appeal after rejection.
A common case#
An innovative company had received a regional aid and a repayable advance from Bpifrance for an R&D project, then calculated its credit on the total cost of the work, deducting nothing. The audit immediately noted the absence of grant deduction and rebuilt the net base, with a reassessment and interest. The analysis showed that part of the credit was indeed due, but on net expenses only. For the following years, a project-by-project tracking of aids, with the advance scheduled for reintegration on repayment, secured an exact and defensible credit.
Frequently asked questions
Must grants be deducted from the credit base?+
Yes. The public grants received for operations giving the right to the credit are deducted from the base (Tax Code art. 244 quater B), whether acquired or repayable. The credit is calculated on expenses net of these aids.
How are repayable advances treated?+
They are deducted from the base when paid, like a grant, then reintegrated into the base of the year they are repaid to the body. This two-step treatment avoids a double penalty.
What is the rate of the credit?+
The research tax credit is 30% of eligible expenses net of grants up to 100 million euros, and 5% beyond. The calculation is therefore always made on the net base, after deducting the aids.
Which aids count as public grants?+
Since the 2025 finance law, they are aids paid by legal persons of public law, or by legal persons of private law entrusted with a public-service mission. The nature of each funding body must be examined.
What is the risk of not deducting grants?+
A reassessment. The tax authority rebuilds the net base and reclaims the unduly received credit, with late interest and, where applicable, penalties. It is one of the most audited points of the scheme.
How do you secure the credit calculation?+
By listing all public aids per project, building the net base, tracking repayable advances over time, and documenting everything in a solid technical file. Rigour on grants is the best protection in an audit.
Key takeaways#
- Public grants are deducted from the credit base, whether acquired or repayable (Tax Code art. 244 quater B).
- The credit is calculated on net expenses, at 30% up to 100 million euros, 5% beyond.
- Repayable advances are deducted when paid then reintegrated when repaid.
- The 2025 finance law broadened the definition of public grants to private bodies with a public-service mission.
- Forgetting to deduct grants is a heavily audited mistake, penalised by a reassessment.
- Listing aids per project and documenting the net base is the best protection.
Article written by the Hayot Expertise firm, registered with the Order of Chartered Accountants of Ile-de-France. Updated for 2026. This article is for information purposes and does not replace an analysis of your own situation.
Article written by Samuel HAYOT
Chartered Accountant, registered with the Institute of Chartered Accountants.
Regulated French accounting and audit firm based in Paris 8, built to support companies across France with a digital and decision-oriented approach.
Sources
Official and operational sources cited for this page.
This topic is part of our service Tax accountant in Paris | CIT, VAT & tax audits
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