Debate on the orientation of public finances: the RTC in the Economic and Finance Ministry sights

Towards a reduction in the rate applicable to general and administrative expenses?

As part of the debate on the orientation of public finances in view of the 2020 Finance law project, Bruno Le Maire, minister of economy and finance, indicated that the Research Tax credit will be included among the tax niches that would be reduced to finance the reduction of the income tax in 2020.

If Bruno Le Maire stated that the RTC will remain stable, adjustments would be considered regarding general and administrative expenses. He indicated that he would follow, in that respect, the recommendations of the “Cour des Comptes” “which proposes to reduce the general and administrative costs to a rate of between 40% and 46%. The rate will be 43% and will generate a return of € 200M as of 2021”.

As a reminder, the formula for General and administrative expenses is currently equal to the sum of 50% of all innovation researcher and technicians’ expenses (100% for young PhD) and 75% of the depreciation allowance of assets used in the innovation activities in France.

To be noted also, another point proposed by Joël Giraud, the budget rapporteur in the National Assembly, consists of an appreciation of the threshold of 100 million euros (threshold beyond which the RTC rate is equal to 5% instead of 30%) at the group level and no longer at the individual level.

These measures must be followed with attention in view of the undesirable impacts that these could have on the economic equations of companies.

Lucille Chabanel

Lucille has more than 14 years’ experience in tax law. She is a member of the corporate tax department since 2002 and joined the R&D group in 2004. She has […]