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The Research Tax Credit is likely to be spared from the tax shelter reform

Prime minister Edouard Philippe has dismissed the possibility of tweaking the research tax credit within the framework  of tax shelter reform.

However, the tax scale for the research tax rate could be revised: as mentioned in our previous article named "tax incentives in France", the tax credit rate for R&D expenditure is currently 30% of outlays up to €100 million per year, and 5% over this limit, but the budget recorder in the Assembly Joël Giraud has question these rates: he wants the threshold of 100 million euros to be assessed on the scale of a group instead of branches of a group, in order to avert big companies to divide their spendings in R&D so as to optimize their tax benefits.

The revision of thresholds for the research tax credit would yield 380 million euros to public finances, and the change in the scope of the assessment of the threshold would lead 180 companies to be affected by the, instead of 17 today.

With a view to keeping and improving its international rankings regarding its attractiveness, the revision of the research tax credit has been dismissed because it could be construed as a bad signal sent to potential investors while yield a moderate gain for public finances.

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