Innovation Tax Credit: is your digital development eligible?

Launching an innovative digital project, whether it is a SaaS, an ERP or a custom web application, is a significant investment. Many innovative companies put it off for fear of the costs, even though there is a tax lever designed specifically for them: the Innovation Tax Credit (Crédit d'Impôt Innovation, CII).

This scheme, introduced by the French finance law and written into the French General Tax Code, lets small and mid-sized businesses deduct part of their innovation spending. In practice, it is a tax credit offset against corporate income tax (or against personal income tax for certain structures), which directly improves cash flow and the ability to fund digital projects.

What is the Innovation Tax Credit?

The CII is an extension of the Research Tax Credit (Crédit d'Impôt Recherche, CIR), as Bpifrance Création points out. Whereas the CIR targets fundamental and applied research projects, the CII targets design and experimental development operations that lead to a prototype or a new product with performance or features superior to those that already exist.

It is aimed at French companies that meet the European definition of an SMB (fewer than 250 employees, revenue under €50M or a balance sheet total under €43M). These companies can benefit from a tax credit of 20% of their innovation spending, capped at €400,000 per year, for a maximum tax benefit of €80,000 per fiscal year.

This credit is calculated on a calendar year basis and gives rise to a tax receivable: it can be offset against the tax due or, in some cases, lead to an immediate refund (in particular for young innovative companies with JEI status).

Which expenses are eligible for the innovation tax credit?

Not all expenses incurred by an innovative company qualify. Tax regulations precisely define the base of expenses eligible for the credit:

• Personnel costs assigned to carrying out design or experimental development operations.
• Depreciation allowances for the hardware and software used in the project.
• Expenses related to industrial property: patent filings, plant variety certificates, designs and models.
• Subcontracting costs for work entrusted to service providers approved by the French Ministry of Higher Education and Research.

In other words, the development spending you entrust to Fragments Studio, as an agency holding CII/CIR approval, is considered eligible for the tax credit.

How do you secure your CII?

The innovation tax credit is a tax scheme: it must be properly documented and declared through a special return (Cerfa form 2069-A-SD). The company must put together a supporting file describing the projects, the design operations, the expenses incurred and the evidence of their innovative nature.

In the event of a tax audit, the administration may ask for clarification or a more in-depth review. To limit the risk of a reassessment, you can request a tax ruling (rescrit fiscal) from the administration (a formal position confirming the project's eligibility). Although optional, this step provides strong protection.

In any case, we recommend working with a chartered accountant or a specialized consulting firm to align your supporting documents with the expectations of the Direction générale des finances publiques (the French tax authority).

CII, JEI and other tax incentives for innovation

The CII works alongside other tax and social incentives:

• Young Innovative Company status (Jeune Entreprise Innovante, JEI) lets you benefit, in addition to the CII, from tax and social security exemptions (employer contributions, corporate income tax, property tax).
• The CIR (Research Tax Credit) can sometimes apply in parallel for projects with a strong scientific and technical research dimension.
• Additional funding schemes are available through Bpifrance (the French public investment bank), some CCIs (chambers of commerce and industry) or regional innovation grants.

Together, they form a true support ecosystem for innovation funding in France, designed to strengthen the competitiveness of young companies as well as more established ones.

Why work with Fragments Studio?

At Fragments Studio, we do more than custom development: we are CII-approved by the French Ministry of Higher Education and Research. This means that the spending you entrust to our teams is directly eligible for the scheme.

We go further by supporting you with:

• Preparing the supporting file (technical scoping, highlighting the innovative nature of the project).
• Communicating with your tax office or your chartered accountant.
• Securing your process, including a tax ruling request if needed.

It is a double advantage: you build an innovative digital tool that makes you more productive and competitive, and at the same time you reduce your costs thanks to a tax credit on your research and innovation spending.

Conclusion

The Innovation Tax Credit is a tax scheme that is still too little known, yet it can be worth up to €80,000 per year for an SMB. Accessible and governed by the French General Tax Code, it lets you fund your innovative digital projects in a concrete way.

By entrusting your development to Fragments Studio, you work with an approved agency that helps you not only innovate, but also benefit from the tax credit and secure your process with the tax authorities.

If you have an ambitious digital project, now may be the right time to make it happen: thanks to the CII, your spending becomes a much more accessible investment. And to maximize the impact of this tax benefit, solid product scoping also helps you save time and avoid cost overruns.

Going further on the Innovation Tax Credit and your digital project

To understand concretely how the CII can fit into your project:

• Discover our page dedicated to the Innovation Tax Credit and our support.
• Use our CII simulator for an initial estimate of your eligibility.
• And if you would like a broader cost estimate for your project (beyond the CII), you can use our digital project estimator or contact us directly to discuss it with the team.