Young Innovative Company: how to qualify?

The status of Young Innovative Company (JEI) is open to all companies whose R&D investments account for at least 15% of their costs. In return, they benefit from numerous tax advantages, including exemption from corporate income tax and territorial economic contribution, as well as social benefits in the form of no social security contributions.

Created in 2004, this status aims to sustainably support economic growth by rewarding the efforts of small and medium-sized companies that support dynamic research and development activities in their sector. In this way, the monopoly on innovation is not left to the larger groups, which have greater financial and technological resources.

This scheme is a real incentive, offering significant advantages for SMEs, particularly in the face of market opening and increasing competition on a global scale.

How can you benefit from this status?

To obtain the status of Young Innovative Company, the following conditions must be met:

• Be less than 8 years old;
• Be an SME, i.e. have fewer than 250 employees;
• Annual sales of less than 50 million euros, or total assets of less than 43 million euros;
• Be independent , with at least 50% of the capital held by individuals or other start-ups themselves held by at least 50% of individuals, associations recognized as being of public interest or research organizations;
• Not have been created as part of a merger, restructuring, business expansion or takeover of pre-existing activities;
• Above all, a minimum of 15% of total tax-deductible expenses must be invested in R&D.

Applications for status must be submitted by December 31, 2019.

It is therefore necessary to know the R&D expenditure recognized in order to reach the threshold authorizing the granting of the status.

These include :

• Depreciation of fixed assets created or acquired for direct use in scientific and technical research, including prototypes and pilot plants;
• Personnel costs such as researchers or research technicians exclusively assigned to these operations;
• Additional remuneration for employees who are the authors of inventions resulting from research operations ;
• Expenditure on research entrusted to recognized third-party organizations such as research centers, educational establishments, foundations or recognized associations.
• Amortization of patents and plant breeders' rights acquired for research and experimental development purposes. The costs of acquiring, maintaining, defending and obtaining these certificates are also taken into account.

Who grants this status?

To obtain this status, you need to contact thetax authorities directly, using the official form entitled "Modèle de demande d'avis au titre du dispositif de jeune entreprise innovante (JEI)".

You will be asked to fill in all the information required to verify your eligibility for JEI status, based on the selection criteria set out above.

The tax authorities then issue a notice confirming or refusing the granting of status within 4 months of the date of dispatch.

This can be used against URSSAF to benefit from promised tax exemptions.

What are the advantages?

On the one hand, companies with JEI status can benefit from a number of tax advantages:

• Total exemption from corporate income tax for the first period following the granting of status, then application of a 50% allowance for the following period;
• Exemption for 7 years from property tax on built-up properties (TFPB), business property tax (CFE) and business value-added tax (CVAE);
• Capital gains on the sale of shares held by individuals may also be exempt from taxation under certain conditions.

It is important to note that it is possible to combine the corporate income tax exemption with the research tax credit.

They are also eligible for a number of social benefits. Indeed, they are eligible for an exemption from employers' social security and family allowance contributions if at least 50% of employees' working time is devoted to innovation-related activities .

This exemption is available until the last day of the company's 7th year of existence, and only if the gross monthly compensation per employee does not exceed €6,661.20, and up to a maximum of €196,140 in contributions per company with JEI status.

The Young Innovative Company status is therefore an opportunity to be seized by young companies whose growth business model requires substantial R&D investment.

It's a concrete solution for making significant savings every year, and opening up new sources of revenue.