The research tax credit

Last refined data available are related to the year 2015. In 2015,  20,179 businesses benefited from the research tax credit, declaring €22,576 billion of research expenditure in 2015. Overall, from 2007 to 2015, the number of businesses declaring research expenditures has been multiplied by 2.6: 25,600 companies in 2015 and 9,890 in 2007. Total tax relief for research tax credit recipients amounted to €6.25 billion in 2015. Since 2008, the annual amount of the tax credit recipient is each year over €4.5 billion in comparison to less than €1 billion until 2005.

This evolution is confirmed by the latest (but still provisional) figures available regarding year 2017: in 2017, the total tax relief for research tax credit amounts to 6.49 billion euros. SMEs are the main beneficiaries of this credit: over the period 2009-2015, the weight of SMEs (fewer than 250 employees) has increased to the detriment of large companies.  In 2017, they represent 82% of the companies benefiting from this measure, i.e. 12,542 SMEs. The research tax credit is mainly available to businesses in the manufacturing industries (58.3% in 2015 and 61% in 2017), and especially electrical and electronics industry first and then pharmacy and perfumery industry.

More generally, a clear increase in both the total amount of R&D expenditure and in the cost of the measure can be observed over the period1990-2014, accompanied by an increase in R&D activities in firms subscribing to this instrument (Salies, 2017). The research tax credit is now analysed as a tool which has contributed to the recovery of an R&D effort that was tending to diminish as a result of the deindustrialization process observed in France in recent years.

As it is also the case regarding the impacts of the research tax credits on R&D expenditures or on patents applications, the impacts of the research tax credit on employment have raised a lot of debates and are not fully clear. However:

1. the research tax credit leads to a reduction in the employment cost.
2. R&D employment had been growing continuously from 2001 to 2011, this was clearly not the case of global employment. The research tax credit thus seems to have a positive impact on R&D employment. A recent study (Salies, 2017) estimates that 37,472 research jobs have been created thanks to this measure from 2008 to 2015.
3. Especially since 2008, the research tax credit may have positively contributed to an increase in employment opportunities for young academics (PhD), but specifically for engineers with PhD (Margolis, Mott, 2015), as a result of the implementation of a specific sub-measure targeting 'young doctors'. At the same time, this seems to have come at the expenses of young engineers without PhD.

Overall, available studies conclude that the research tax credit has a positive effect on the growth of firms' research and development (R&D) expenditure and, albeit to a lesser extent, on their R&D personnel, the employment of young doctors, the propensity of firms to file patents and their productivity gains.