Insight: Young Innovative Disruptive Company (JEIR)

In this article, we explore the status of a Young Innovative Disruptive Company (JEIR), how to check your eligibility, the associated tax and social security benefits, and how to obtain it.

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Definition: What is the "Young Innovative Disruptive Company" (JEIR) status?

The Young Disruptive Innovative Company (JEIR) status is an extension of the Young Innovative Company (JEI) status. It specifically targets companies that devote 30% of their budget to R&D. This new tax measure was introduced in the 2024 Finance Act following a report by Representative Paul Midy. The JEIR status has been available since January 1, 2024.

How can I tell if my business meets the requirements for JEIR status in 2024?

Wondering if your business qualifies for JEIR status? Here are the key questions to ask yourself:

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1. Is your company an SME? To be eligible, it must have fewer than 250 employees. Its annual revenue must be less than 50 million euros, and its total assets must be less than 43 million euros.

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2. Has your business been in operation for less than 8 years?

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3. Is more than 50% of your company’s capital held by individuals, another eligible company, recognized public-interest organizations, venture capital firms, investment funds, or other specific entities?

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4. Has your company launched a new business activity? It must be newly established and not the result of a merger, restructuring, expansion, or takeover.

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5. Does your company spend more than 30% of its annual budget on Research and Development (R&D)?

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If you can answer "yes" to all of these questions, you can apply for JEIR status and enjoy all of its benefits.

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What are the benefits of the JEIR program?

Tax Exemptions

Among the benefits mentioned, the most notable is that JEIR companies are eligible for a partial or total exemption from corporate income tax for their first profitable fiscal years. It should be noted that this exemption applies only to companies established on or after January 1, 2024.

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The JEIR status also offers benefits to investors. Specifically, those who invest in it are eligible for an income tax deduction equal to 50% of the amount invested. The cap is set at €50,000 per tax household, or €25,000 per person.

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JEIRs are also exempt from the business property tax (CFE). This exemption applies for the same period as the property tax exemption and under the same conditions.

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In addition, they may be exempt from property tax for a specific period, typically seven years. It is important to note that this exemption must be approved by the relevant local government.

Employee Benefits

It should also be noted that employees who spend at least 50% of their time on R&D projects are exempt from employer social security contributions and family allowances. This applies in particular to research engineers, technicians, and R&D project managers, but it also applies to corporate officers.

Other benefits

JEIRs are also eligible for the Research Tax Credit (CIR), which is refunded within one year and can amount to an average of 150,000 euros per year for a startup or SME.

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Finally, they have access to a simplified public procurement process for contracts up to €100,000.

How do I obtain JEIR status?

_{There are two ways to apply for JEIR status: with or without a ruling. If you choose the first option, you are requesting a guarantee of eligibility from the tax authorities. In the second case, you simply need to check a box to immediately receive the benefits. However, this could result in a more rigorous tax audit in two to three years.}

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If you choose the advance ruling route, here are the steps to follow:

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1. Check your business’s eligibility. Make sure your business meets all the criteria for JEIR status before submitting your application.

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2. Prepare your application. Gather all the necessary documents to support your application. This includes proof of your revenue, your research and development expenses, and the date your business was established.

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3. Submit your application. Once your application is complete, submit it to the appropriate tax authority. It is important to follow all instructions and provide all required information.

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4. Receive an official notification. If your application is approved, you will receive official confirmation of your status as a Young Disruptive Innovative Company. At that point, you will be able to take advantage of all the benefits associated with this status.

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What is a ruling?

It is important to note that you must apply for JEIR status through the JEI ruling. Since the other criteria are similar, you simply need to demonstrate that more than 30% of your expenses are R&D-related.

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The advance ruling approach is particularly important for businesses, offering two main advantages:

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1. This is an official response from the tax authorities confirming your eligibility for this status, which provides significant legal certainty. In the event of a future tax audit, your business can rely on this decision.

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2. Once your eligibility has been confirmed by the ruling, you can make informed strategic decisions about the future and thereby maximize your company’s tax benefits.

How long does JEIR status last?

You are eligible for JEIR status for the first 8 years following the establishment of your business. After this period, you are no longer eligible for this status.

Other Innovative Young Company Statuses

In France, there are several legal statuses designed to support startups, in addition to the Innovative Startup (JEI) and Disruptive Innovative Startup (JEIR) statuses. Each of these statuses has a specific purpose.

Status: JEU (Young University Enterprise)

The status of Young University Enterprise (JEU) specifically promotes university entrepreneurship in France. It targets student-run companies that are partially owned—up to 10%—by the university community. These companies must be self-sustaining and operate as small and medium-sized enterprises. The benefits of JEU status, which are fiscal and social, are similar to those of other legal statuses. They remain valid for eight years. To obtain this status, it is necessary to establish an official partnership with a university.

JEIC Status - Innovative Growth Startup

The JEIC is intended for companies that meet all the requirements of a JEI but whose research and development (R&D) expenses fall short of the required 20%. In return, the company must demonstrate its strong growth through:

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1. A100% increase in its workforce, with more than 10 full-time employees (FTEs) compared to the previous year.

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2. Anamount for research and development costs that must not be lower than in the previous fiscal year and must represent at least 5 to 20% of the company’s total expenses.

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Thus, the JEIC represents an extension of the JEI status, designed to continue supporting rapidly growing companies that invest heavily in research and development.

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