2026 Budget Act: Between Fiscal Stability and Budgetary Discipline, How Can You Safeguard Your Innovation?

Between cuts to the CIR, a reduction in the CII rate to 20%, and stricter requirements for JEI status, the 2026 Finance Act marks a shift toward greater fiscal discipline.

The verdict is in. After weeks of intense parliamentary debate, the 2026 Finance Act is reshaping the landscape of France’s innovation ecosystem. While the government has sought to preserve key tax incentives such as the CIR and the CII, the time has undeniably come to streamline public spending.

‍

As part of the webinar co-organized by Dynergie and Paris Business Angels, our experts analyzed the latest legislative developments and their practical implications for startups, small and medium-sized enterprises (SMEs), and mid-sized companies. 

‍

Watch the webinar recording below so you don’t miss out on any of the practical tips and data-driven examples.

‍

1. Background and Key Issues of the Budget Act

An analysis of parliamentary debates reveals a major shift in rhetoric. While 63% of floor speeches remain positive toward innovation, a call for the "proper use of public funds" now resonates across the political spectrum, from the right to the left.

‍

The message is clear: innovation is no longer a "blank check." It is now required to demonstrate its impact on the country's industrial sovereignty and reindustrialization. This political pressure has led to a "crackdown on windfall profits" and a drastic tightening of tax audits.

2. Overview of changes in the 2025 and 2026 Budget Bills

The 2026 Finance Act codifies several "across-the-board" cuts initiated in 2025, while introducing strategic changes.

Research Tax Credit (CIR): A Major Overhaul

The CIR remains a key tool for supporting R&D activities, but its scope is being narrowed as part of efforts to streamline public spending, with the goal of saving the government €450 million.

‍

• End of technology monitoring: Expenses related to subscriptions to databases and technical journals, as well as participation in scientific conferences, have been eliminated. 
• Elimination of Intellectual Property Expenses: Expenses related to patents and plant variety certificates are no longer included in the CIR expense base.
• Reduction in operating expenses: The flat rate for operating expenses related to personnel costs has been reduced from 43% to 40%.‍
• Elimination of the "Young Doctor" status: The provision doubling personnel expenses for 24 months for Young Doctors (hired for their first permanent contract after earning a doctorate) has been eliminated, reducing the appeal of academic candidates to companies and further weakening the link between research and industry.

‍

Please note that these changes take effect on February 15, 2025. To optimize the calculation of your 2025 CIR, it is therefore necessary to fully understand the different calculation rules that apply depending on the relevant period. 

‍

These measures are likely to affect companies’ innovation efforts, particularly for those that have incorporated this program into their financing plans.

‍

The Innovation Tax Credit (CII): Extended but Reduced

Reserved exclusively for French small and medium-sized enterprises, the program has been extended through December 31, 2027; however, its appeal is waning:

‍

• Rate reduction: It is being lowered from 30% to 20%.
• No change to the cap: The threshold remains limited to €400,000 in expenses.
• Impact: The maximum ITC benefit for businesses drops to €80,000, down from €120,000 previously.

‍

It is important to note that the expenses eligible for the CII have not changed. In particular, unlike the CIR, intellectual property expenses (which, in addition to patent expenses, also cover designs) remain eligible.

‍

The JEI Status and the Creation of the JEII Status

The Young Innovative Company (YIC) status remains in place, but eligibility requirements have been tightened, with the minimum R&D threshold raised to 20% of expenses (up from 15% previously).

‍

The major change for 2026 is the creation of the JEII (Young Innovation and Impact Enterprise) category, which allows social economy enterprises (ESS) or ESUS-certified companies to qualify for the benefits of this status once their R&D expenditures reach 5%.

‍

Extension of the Research Collaboration Tax Credit (CICO or CRC) and the Tax Credit for Investments in Green Industry (C3IV)

• Good news for collaborative research: The Research Collaboration Tax Credit (CICO or CRC) has been extended through 2028. This extension of the program reaffirms the commitment to strengthening ties between public research and industry within a collaborative European framework. 

‍

• Accelerating the green industry: In effect since 2024, the Tax Credit for Investments in the Green Industry (C3IV) has been extended through December 31, 2028, with revised eligibility requirements and monitoring criteria to ensure the program remains compliant with European state aid law. This measure is part of a policy to support France’s ecological transition and green reindustrialization.

3. The Investor's Perspective (PBA): Focus on Fundamentals

Valentin Bernard (PBA) highlighted a paradigm shift among business angels. While tax incentives remain a key factor (with the IR-JEI tax reduction maintained at 30% to 50% depending on the case), they should no longer be the driving force behind the business model.

‍

Investors now prioritize the resilience of the business model—with less reliance on government aid—as well as the ability to execute, embodied by a team capable of pivoting quickly in the face of regulatory uncertainty. 

‍

Increasing importance will be placed on hybrid financing—that is, the ability of companies to effectively combine venture capital, bank debt, and European aid.

Conclusion: Planning Ahead to Better Fund Innovation in 2026

The year 2026 marks a turning point. With the reduction in the France 2030 budget, access to public funding has become more competitive. Tax incentives remain a reliable tool for supporting R&D&I activities, despite the narrowing of eligible expenses; however, stricter controls require the implementation of structured processes to safeguard cash flow.

‍

In this context, it is more important than ever to implement funding strategies that intelligently combine various mechanisms to maximize the potential of R&D&I efforts. This requires structuring projects early on to identify relevant opportunities as soon as possible and mobilize the right mechanisms at the right time.

‍

👉 To learn exactly how to adapt your strategy and secure your growth trajectory, we invite you to watch the recording of the Dynergie × Paris Business Angels webinar.

‍

Our experts will guide you every step of the way as you develop your innovation and financing strategy. Please feel free to contact them. 

‍