The announcement of a reform to the taxation of patents is attracting the attention of companies. The currently highly advantageous regime will be restricted, with the aim of encouraging research and development in France. The Ministry of Economy and Finance has stated that an announcement will be made by Prime Minister Édouard Philippe on September 20, 2018.
An advantageous tax regime for income from the exploitation of industrial property rights
Since 1965, France has offered favorable tax arrangements for companies exploiting patents. Income from the exploitation of industrial property rights is taxed at 15% for companies subject to corporation tax, and 12.8% for those subject to income tax.
As a reminder, the standard tax rate on corporate profits subject to corporation tax is one-third (33.33%), excluding reduced rates depending on thresholds. The 2018 Finance Act also provides for a gradual reduction in corporate income tax to 25% by 2022.
➢ Infography: How much does a patent cost?
Encouraging investment in research and development in France
The OECD (Organisation for Economic Co-operation and Development), followed by the European Union, have introduced the so-called “nexus” vision, which enables companies that carry out their R&D work on their national territory to be rewarded.
The application of this approach in France is intended to maintain a tax advantage, but only for companies that derive income from their patents, having worked with teams based in France. In addition, inventions not patented as part of a defense secret would also be excluded from the tax reduction scheme.
Did you know?
If you are an individual (independent inventor), a non-profit organization in education and research, or an SME with fewer than 1,000 employees (and whose share capital is not more than 25% owned by an entity that does not meet this condition), you benefit from a 50% reduction on patent fees: patent application procedure, patent maintenance.
The CIR, a tax incentive for innovation in France
Tax benefits linked to patent exploitation will be restricted. At the same time, other measures to promote innovation in France will be maintained.
These include the Research Tax Credit (CIR), which enables companies to have part of their R&D expenditure financed by the French government. This public assistance also applies to the fees of an industrial property attorney, to help finance the costs associated with patent application procedures, from drafting to granting.
What’s more, JEI (young innovative companies) and JEU (young university companies) that create innovation in France benefit from tax breaks and social security exemptions, subject to certain conditions.
