What is a Young Innovative Company (JEI)?
The Young Innovative Company (YIC ) status was created in 2004 to encourage the creation of small and medium-sized companies involved in research and development. When it was launched, the scheme benefited 1,300 companies. By 2021,URSSAF(the Frenchsocial security agency) counted 4,338 beneficiaries for a total of 248 million euros in tax exemptions.
According to the French Ministry of Higher Education, companies with JEI status generated domestic R&D expenditure of 1,507 million euros in 2021. They have an average R&D workforce of 5.9. To qualify as SMEs, these companies must have annual sales of less than 50 million euros, a criterion that is particularly important in the context of exemptions from social security contributions. In 2021, the total number of employees in the JEI category will be 20,600.
Companies eligible for JEI status
Conditions for qualifying for JEI status
To qualify for young innovative company status, the structure must have been created before December 31, 2025, and meet certain conditions.
- Have been created as part of a restructuring, takeover, concentration or expansion of a pre-existing business.
- For companies that actually set up between 2013 and 2022, proof of less than 11 years' existence is required at the time of application.
- For companies setting up on or after January 1, 2023, you must have been in business for less than 8 years at the time of application.
- Employ fewer than 250 people during the fiscal year of application.
- Have sales of less than 50 million euros or a balance sheet of less than 43 million euros.
- Research and development expenditure corresponding to at least 15% of tax-deductible expenses for the financial year. It is important to note that tax exemptions are not cumulative, meaning that an employee cannot benefit from several exemptions at the same time.
-
To be independent.
Details of research and development expenditure
Research and development expenditure may not include :
- expenditure on developing new collections ;
- technology watch expenses ;
- innovation spending.
Tax exemptions for innovative start-ups
A young innovative company can benefit from tax exemptions in terms of income tax(IR) orcorporation tax (IS). It can also benefit from specific tax and social security exemptions when it spends on research and development.
Exemption from corporate income tax
Thecompany is fullyexempt from corporate income tax for a period of 12 months, corresponding to the first profitable financial year or tax period. For the following year, the exemption is 50%. It can be combined with the research tax credit. However, the 2024 Finance Act abolished the income tax exemption for companies created on or after January 1, 2024.
Exemption from territorial economic contribution (CET)
Depending on the local authority, a young innovative company can benefit from an exemption from the territorial economic contribution (CET). This consists of two components:
Exemption from CET and property tax can extend over 7 years. Ceilings are set by the European Commission and may not be exceeded. Public aid may not exceed 300,000 euros over three consecutive financial years.
Exemptions from social security contributions for innovative start-ups
A young innovative company can benefit from an exemption from employer social security contributions under certain conditions. This exemption applies to salaries paid to research and development staff:
- lawyers in charge of industrial protection ;
- personnel in charge of pre-competitive testing ;
- research technicians ;
- research and development project managers ;
- researchers.
The exemption from employers' social security contributions applies to health insurance, maternity, invalidity-death, old age and family allowances. It does not apply to supplementary pension, industrial accident and occupational disease contributions. The exemption lasts for a maximum of 8 years.
Exemptions from social security contributions for young innovative companies are associated with two types of ceilings:
- they apply to gross remuneration of less than 4.5 times the SMIC;
- an annual ceiling per employee is set.
The Young Innovative Company (JEI) status is designed to enable young, innovative companies to benefit from tax and social security exemptions. The scheme offers companies a financial boost for research and development. It is also available under the JEU young university company scheme.
Written by our expert Editorial staff
September 9, 2024
