Deprived of the support of the Research Tax Credit (Crédit d’Impôt Recherche – CIR), technology watch could see its role diminish in the innovation strategies of French companies. With the forced adoption of the Finance Bill 2025, the government has decided to exclude spending on technology watch and patents from the CIR. A measure that weakens the competitiveness of French companies and threatens their ability to innovate in the face of international competition. An economic absurdity?
The Research Tax Credit (Crédit d’Impôt Recherche – CIR) is an essential tax incentive for French companies, enabling them to benefit from a tax reduction on expenditure incurred in research and development (R&D). This mechanism is a strategic lever for boosting innovation and competitiveness, particularly in a difficult economic climate with intense international competition. However, the Finance Bill (PLF) 2025, which was recently adopted by force via Article 49.3, makes a major change to the CIR: expenses linked to technology watch, as well as the costs of taking out, maintaining and defending patents, will no longer be eligible for this tax incentive. While this decision is in line with the logic of rationalizing public spending, it is likely to have damaging consequences for the entire innovative economic fabric.
The CIR plays a very important role, covering 20% of domestic R&D expenditure by French companies. But it also represents a significant cost for the State: 7.6 billion euros in 2024, or around 10% of corporate income tax. It’s understandable that the government would like to find savings (savings from this refocusing are estimated at €450 million a year), but sacrificing innovation to correct its own past financial mistakes seems absurd: by removing this aid, the State is weakening an important lever that has until now enabled French companies to remain at the forefront of innovation and protect their technological advances.
Until now, the CIR supported these investments in recognition of their strategic importance. By excluding them, the government is undermining innovative companies, particularly those that rely on technology watch to guide their research and anticipate market trends. However, the CIR was the only tax incentive for this activity. It’s important to remember that technology watch is not a luxury, but a structuring element in the innovation process. It enables companies to detect emerging trends and technical developments in their sector, anticipate market changes and adapt their R&D strategies accordingly.
This reform raises a number of concerns about the capacity of French companies to innovate and export. Without tax support, some of them could reduce their R&D efforts, or even relocate to countries offering a more favorable environment. What’s more, this measure could penalize startups and SMEs, which rely heavily on the CIR to finance their research activities. Unlike large corporations, these companies have limited resources and can hardly compensate for this loss of funding.
Yet today’s innovation is tomorrow’s economic growth, and therefore future tax revenues. By weakening the potential for innovation, the State risks reducing the tax revenues it hopes to preserve through this reform. Such a decision therefore appears counter-productive from an economic point of view. It is imperative to find a compromise between budgetary rigor and support for innovation. The abolition of these subsidies could be offset by alternative measures or a more targeted reform that would not penalize the innovation dynamic in France. If the aim is to strengthen the country’s attractiveness and economic sovereignty, it would be more appropriate to adopt an approach that encourages investment in research, rather than discouraging the initiatives that are shaping tomorrow’s economy.
By Alexandre Sonnet
President of Humind
SYNFIE delegate for the AURA region
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