R&D tax credit and grants: why deduct them from the base in 2026

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 these aids, at the rate of 30% up to 100 million euros and 5% beyond. 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 recurring trap in the files we take over: the treatment of public grants. Many companies calculate their credit on the gross cost of their research and development work, without subtracting the aids received. The declared credit is then artificially inflated, and a reassessment is almost automatic in an audit. This article walks through the rule, its subtleties, the worked calculation and the precautions to take for the 2026 filing season.

The research tax credit is calculated on eligible research expenses, net of public aids.

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. This standard scale is confirmed by the administrative doctrine updated in August 2025, after the 2025 finance law: contrary to a widespread belief, the 30% rate has not been lowered. The logic of the deduction 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 an anomaly the tax authority spots easily, by cross-checking aid agreements against the accounting entries, and which translates into a recovery with late interest and, where applicable, penalties. To secure the eligibility of the expenses themselves, building a solid technical file remains the foundation, as we detail in our anti-reassessment technical file template.

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, not the year of cash receipt if it differs. 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.

An essential point, often overlooked: only the share of the grant allocated to CIR-eligible operations must be deducted. For a mixed project, funded partly for eligible work and partly for out-of-scope activities, the deduction is made in proportion to the eligible fraction. Conversely, an aid that does not relate to any eligible research expense need not be subtracted. 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 best way to grasp the stake is to put figures on a simple case, in two scenarios.

An SME incurs 500,000 euros of eligible research expenses over the year. It receives a definitively acquired regional grant of 80,000 euros and a repayable advance from Bpifrance of 120,000 euros, both allocated to the same, fully eligible project. Here is the gap between a gross calculation, wrong, and the net calculation, correct.

The gap is 60,000 euros of credit. That is exactly the amount an audit would rebuild, plus late interest. The year the 120,000-euro advance is repaid to Bpifrance, it will increase the base of that year, and therefore the corresponding credit, at the rate then in force. The credit is therefore not lost: it is deferred, which makes it as much a cash-flow issue as a compliance one.

The notion of public grant was clarified by the 2025 finance law, which secures but also broadens the scope of the deduction.

Law no. 2025-127 of 14 February 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, the regions or Bpifrance alone. The legal nature of each funding body must now be examined to determine whether its aid must be subtracted from the base.

The same finance law tightened the CIR perimeter on other points worth knowing for 2026, because they change the base even before the grant question arises: the operating-expense flat rate was cut from 43% to 40% of payroll costs, the doubling of the base for young doctorate holders was removed, as was the inclusion of technology-watch expenses and of patent and plant-variety certificate costs. These adjustments, combined with the grant deduction, reduce the net base and call for an update of calculations carried over from year to year.

Our view#

The treatment of grants is one of the most audited points of the credit, and paradoxically one of the simplest to secure once anticipated. The typical mistake we see is to reason on the full cost of a project without mapping the aids received, which mechanically leads to over-declaring, sometimes in good faith, because the aid was booked in a separate income line from the R&D charges.

Our method is to list, for each research project, all the public funding and its legal nature, to check the share allocated to eligible work, then to build the net base accordingly, scheduling the reintegration of repayable advances in the right year. A credit correctly calculated on net expenses withstands an audit, where a credit inflated by forgotten grants collapses, with the consequences described in our analysis of the refused credit and appeal after a DGFiP rejection. This rigour falls squarely within our corporate tax support mission.

An innovative company had received a regional aid of 80,000 euros and a repayable advance from Bpifrance of 120,000 euros 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 recovery of 60,000 euros of unduly received credit, plus late interest. The analysis confirmed that a substantial part of the credit was indeed due, but on net expenses only.

For the following years, we set up a project-by-project tracking of aids, with one sheet per funding (nature of the body, amount, eligible share, acquired or repayable status, repayment schedule). The Bpifrance advance was scheduled for reintegration in the year of its repayment, thereby restoring to the client the corresponding credit at the right time. The credit became exact, traceable and defensible again, without giving up a single legitimate euro.

In practice: securing the base net of grants#

• List, for each project, all the public funding received or notified during the year, before calculating anything.
• Qualify the legal nature of each funding body, including legal persons of private law entrusted with a public-service mission.
• Clearly distinguish acquired grants from repayable advances, and keep a repayment schedule for the latter.
• Calculate the share of each aid actually allocated to eligible operations, especially for mixed projects.
• Build the net base, then apply the scale (30% up to 100M€, 5% beyond) and keep the worksheet justifying each adjustment.
• Document everything in the technical file and reconcile it with the accounts, so the aid booked as income matches the deduction made.

• Deduct the aid in the year of the expenses, not the year of cash receipt: a timing gap in cash does not move the year of adjustment.
• Do not forget to reintegrate the repayable advance in the year of its actual repayment: this oversight durably deprives the company of a credit that is in fact due.
• Check the public-service mission of the funding body since the 2025 finance law: some aids from private bodies become deductible.
• On a mixed project, deduct only the fraction allocated to eligible work, no more, no less.
• Account for the tightened 2025 perimeter (operating flat rate at 40%, removal of the young-doctorate doubling, of technology watch and of patent costs) before applying the deduction.
• Do not confuse the research credit with the innovation tax credit: the latter has its own rates and caps, and the grant deduction also applies there but on its own base.