The French National Assembly has adopted an anti-delocalization amendment making entitlement to the Research Tax Credit (Crédit d'Impôt Recherche - CIR) conditional on maintaining R&D activities in France.
The Government and the General Rapporteur opposed the measure, warning that it would be "counter-productive" and likely to dissuade international groups from investing in France.
Despite these reservations, the amendment was adopted (93 votes in favor, 63 against) and now introduces a penalty system for companies which, after having benefited from the CIR, transfer their activities abroad.
A double penalty for relocation
Without modifying the calculation of the CIR, the text introduces a repayment clause accompanied by a temporary ban:
Full repayment of tax credits received in respect of the previous three years ;
Exclusion from the scheme for the following three years.
In other words, a company that relocates its R&D exposes itself to a tax boomerang effect: not only does it lose the future benefit, but it also has to pay back past gains.
Triggering the sanction requires two cumulative conditions:
- Total or partial closure of an R&D site in France;
- A significant reduction in the number of employees in the region.
The stated aim is to target "economically and socially harmful" relocations, i.e. those that result in job losses and a weakening of the French industrial fabric.
Contested retroactive application
Even more surprising: the amendment provides for retroactive application from January 1, 2024.
In practical terms, a company transferring R&D activity in 2024 or early 2025 could be forced to repay CIRs received in 2021, 2022 and 2023.
Such retroactivity, which is rarely accepted in tax matters, is likely to raise serious constitutional difficulties, particularly with regard to the principle of legal certainty and the non-retroactivity of tax laws.
Two opposing visions of industrial policy
This adoption illustrates the divide between two approaches:
The attractiveness rationale defended by the Government: the CIR must remain a lever for attracting international investment and encouraging the creation of R&D centers in France. Adding punitive constraints would undermine this competitive advantage.
The logic of conditionality advocated by the authors of the amendment: the 7 to 8 billion euros of public money devoted each year to the CIR must not finance companies which, in the end, cut French jobs to develop their research abroad.
Critical analysis: between political symbolism and legal risk
This text reflects a growing unease about the effectiveness of the CIR, which is regularly accused of benefiting large corporations rather than the national innovation ecosystem.But by linking the tax advantage to an obligation to maintain activity, the legislator has transformed an incentive into a punitive instrument.
In addition to the difficulties of interpretation (what proportion of activity constitutes "relocation"? What is the timeframe for control?), the risk is twofold:
A lack of interest on the part of foreign investors, for whom a stable and predictable tax framework is essential;
An avalanche of litigation, notably concerning the retroactivity and proportionality of sanctions.
Our reading
Under the guise of economic patriotism, the scheme threatens to weaken one of the few tax instruments unanimously acclaimed for its impact on research.The debate has only just begun, but the symbolism is strong: theera of unconditional incentives seems to be coming to an end.
We'll be keeping an eye on this issue as it makes its way through parliament... and probably before the French Constitutional Council.
