The French government looks set to exclude financial services from its R&D tax credit scheme, after a report submitted to the research ministry this week recommended as much.
The report, by socialist senator Michel Berson, makes a series of recommendations about simplifying the €5 billion tax credit system and making it more beneficial to small businesses, in line with the views of new president François Hollande.
This includes prohibiting any business from claiming credit on work aimed at the financial sector. Berson admits that the measure, which would affect 2 per cent of the money on offer and save €100 million, would be largely “symbolic”. However, he also says that it is unclear how much the credits actually benefit the sector.
Berson also suggests increasing the tax credit from 30 per cent to 40 per cent for small and medium sized businesses. These businesses could also receive their credits on a quarterly basis, rather than leaving a long delay between claim and credit. Large businesses would get a rate of 20 per cent.
The report says that the reduced 5 per cent rate on R&D spending over €100m should be scrapped, as it does not provide an incentive to carry out R&D work that would not otherwise take place. This credit wastes €800m per year, it estimates.
The Ministry for Higher Education and Research should also establish an ‘R&D observatory’ and make data on R&D more readily available, Berson adds.