Insight: Young Innovative Growth Company (JEIC)

Learn about the Young Innovative Growth Company (JEIC) status, a program established by the French government to support rapidly growing companies that make significant investments in research and development (R&D). This article will guide you through the eligibility criteria, the tax and social security benefits associated with this status, and the application process.

What is the Young Innovative Growth Company (JEIC) status?

The Young Innovative Growth Company (JEIC) status is a category within the JEI status specifically designed to support companies in a rapid growth phase that invest significantly in research and development (R&D).

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It was introduced as part of the 2024 Budget Act at the same time as the JEIR status and took effect on June 1, 2024.

How can I tell if my business meets the requirements for JEIC status?

To determine whether your company meets the requirements for Young Innovative Growth Company (JEIC) status, you must verify several criteria:

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1. Your company must have fewer than 250 employees, and its annual revenue must be less than 50 million euros, or its total assets must be less than 43 million euros.

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2. It must have been established within the last 8 years. After that period, you will no longer be eligible for this status.

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3. At least 50% of your company’s capital must be held by individuals, venture capital firms, venture capital mutual funds, foundations or associations recognized as public-benefit organizations, research and educational institutions, or their subsidiaries.

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4. It must engage in a new business activity that does not result from a restructuring, a merger, an expansion of existing activities, or a takeover.

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5. Your research and development expenses must account for between 5% and 20% of your company’s total expenses. Certain specific expenses, such as foreign exchange losses and gains on the sale of securities, are not included.

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6. Your workforce must have grown by at least 100% and by 10 full-time equivalent (FTE) employees compared to the year N-3, and your R&D expenditures must not have decreased compared to the previous fiscal year.

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What are the benefits of JEICs?

Companies that qualify for the status of Young Innovative Growth Company (JEIC) are eligible for both tax and social security benefits.

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They are designed to reduce the financial burden on your business in order to encourage your investment in research and development activities, which are essential to your competitiveness and market expansion.

Tax Exemptions

Property tax exemption: You may be exempt from property tax on built properties for up to seven years, subject to a decision by the municipalities or the public intermunicipal cooperation institutions (EPCI).

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Exemption from the Business Property Tax (CFE): Upon decision by local authorities, you may also be exempt from the CFE for a maximum period of seven years.

Exemption from employer contributions

In addition, you may also be eligible for an exemption from employer contributions on the wages of eligible employees, subject to certain limits:

• Monthly compensation cap: The portion of monthly compensation taken into account must not exceed €7,951.12 per employee.
• Annual cap per institution: The total amount of the exemption must not exceed €231,840 per institution per calendar year.

Other benefits

Like other young innovative companies (JEI), young innovative construction companies (JEIC) are eligible for assistance in accessing public procurement through the innovative procurement procedure: this procedure allows buyers to award contracts for innovative works, supplies, or services valued at less than 100,000 euros (excluding tax) without prior advertising or competitive bidding.

JEIC Status Application Process

The process for obtaining JEIC status has been simplified, eliminating complex administrative procedures. Here’s how you can apply for this status:

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1. Eligibility Check: First and foremost, make sure you meet all the eligibility criteria, such as company size, years in business, ownership structure, R&D spending, and workforce growth.

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2. Self-reporting: Unlike other forms of assistance that require a formal application, for JEIC status, you can claim the exemptions directly. This is done when filling out the URSSAF contribution summary form.

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3. No prior steps required: You do not need to submit a specific application or prior declaration to qualify for this status. The exemption applies on a monthly basis as soon as your business determines that it meets the required criteria.

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4. Keeping your information up to date: Be sure to stay current with your reporting obligations and social security contribution payments to maintain the exemptions associated with your status.

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_{To ensure you qualify for this status and avoid strict tax audits, we recommend consulting with experts in innovation financing. This will help you ensure that you comply with the program’s requirements and maintain compliance over time. You can contact us via our contact page if you’d like to benefit from our expertise.}

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How long does JEIC status last?

As mentioned earlier, you are eligible for JEIC status during the first 8 years after your business is established. After this period, you are no longer eligible for this status.

Other Innovative Young Company Statuses

In addition to the status of Young Innovative Growth Company (JEIC), there are other classifications designed to support startups in France. Each of these categories aims to stimulate innovation and growth at different levels and in different sectors. Here are some of these designations:

Young Innovative Company (YIC) Status

Like the JEIC status, the status of Young Innovative Company (JEI) encourages startups and SMEs that incur R&D expenses in France. It also offers several tax and social security benefits, such as exemptions from taxes and social security contributions for R&D employees.

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To be eligible, companies must be SMEs, have been in operation for less than eight years, and not have undergone a restructuring. In addition, at least 20% of their expenses must be allocated to R&D.

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It is important to note that the company must maintainits eligibility and business activities in order to retain the benefits for eight years.

Status: JEU (Young University Enterprise)

The status of Young University Enterprise (JEU), on the other hand, encourages entrepreneurship within the academic community in France. It is intended for university-spun-off companies that are 10% owned by the academic community, independent, and operating as SMEs. The status is valid for eight years and offers tax and social benefits similar to those of other statuses. A formal partnership with a university is required.

JEIR Status - Young Innovative Disruptive Company

The JEIR are recently established companies (less than 8 years old) that devote more than 30% of their expenses to R&D. This status is designed to help companies conduct more ambitious research and invest more indisruptive innovation by providing them with the means to finance their activities, which are more costly. To this end, JEIRs benefit fromenhanced tax incentives to stimulateprivate investment in their favor.