“Research support must be directed towards VSEs and SMEs, where they generate the most innovation, growth and competitiveness” | EUROtoday

LThe analysis tax credit score (CIR) and the innovation tax credit score (CII) are important mechanisms for supporting innovation in France. At a time when the federal government is in search of to make drastic budgetary financial savings, it’s nonetheless official to query their effectiveness and the best way wherein assist is distributed, particularly between giant and small companies (“The CIR in 2021”, MESR -DGRI, August 2023).

While the CIR exhibits very constructive results for small and micro-enterprises invested in know-how, a number of current financial research reveal that it has little influence on the analysis and growth (R&D) of enormous and mid-sized corporations. (ETI), for which it has no convincing impact both on employment or on funding in R&D. It is due to this fact essential to rebalance the system for the advantage of VSE-SMEs.

Private R&D is a vital lever for long-term productiveness. However, the share of R&D expenditure in French gross home product (GDP) stays at 2.2%, properly under the three% goal set by the Lisbon technique in 2000, and considerably decrease than that of our neighboring Germany (3.1%) or the United States (3%). It is due to this fact crucial to maximise the effectiveness of public assist, by directing assets in the direction of the businesses that want them most and the place these assets generate essentially the most outcomes.

Capping assist

Studies from the Economic Analysis Council present that the return on funding of the CIR is twice as excessive when it’s directed in the direction of VSE-SMEs, which rework this assist into concrete improvements, progress and certified jobs. To sustainably strengthen the French innovation material, it’s important to rethink the allocation of CIR assets.

Economists doubt that the CIR, which, past 100 million euros of R&D expenditure, sees its charge diminished to five%, doesn’t symbolize a robust incentive to take a position for giant corporations, which might in any case have already dedicated these bills (“Strengthening the impact of the research tax credit”, Philippe Aghion, Nicolas Chanut and Xavier Jaravel, Focus No. 090, Economic Analysis Council, 2022). The marginal incentive impact for these corporations is weak, and a reallocation of assets in the direction of smaller buildings (VSE-SME) could be far more efficient.

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