A Senate Finance Committee report proposes evaluating tax expenditures and refining the research tax credit for SMEs, highlighting France's high R&D support and the need for better targeting.
Senate report outlines tax review proposals
A report from the Senate Finance Committee suggests regularly evaluating tax expenditures and refining the research tax credit for small and medium-sized enterprises (SMEs). The report looks at 465 tax expenditures, which are estimated to cost 88 billion euros in 2026. These figures represent lost tax revenue due to special measures, not direct spending on taxpayers.Research tax credit becomes a focus
The research tax credit (CIR) is the first French tax expenditure since 2022, with an estimated cost of 8 billion euros in 2026. It is more expensive than the tax credit for home care employees, which is estimated at 7.2 billion euros. France is noted for providing the most public support for business research and development among OECD countries, though private investment in research is below the average.Improving targeting of the CIR
Pascal Savoldelli, the rapporteur, suggests examining European models to better target the CIR. One idea is to consider both the volume and growth of research spending, inspired by Spain. Others aim to focus more on SMEs, like some German and Dutch systems. The report also proposes evaluating research spending at the group level rather than each subsidiary.Broader review of tax expenditures
The report recommends evaluating all tax expenditures based on their economic, social, and environmental impacts. It also calls for greater transparency on "structural" tax reductions, which are not always included in the inventory of tax expenditures. This aligns with the Court of Audit's concerns about the clarity and cost of these measures.Future steps and data transparency
The rapporteur wants more accessible data on how many people benefit from tax expenditures and their costs, separating the effects of government decisions from economic changes. He suggests looking at Ireland’s model for an independent evaluation framework and rethinking how tax expenditures linked to VAT are accounted for.No immediate changes for CIR users
Currently, no new rules or reporting requirements apply to companies using the CIR as a result of the report. The proposals focus on future government and legislative decisions. The senator also suggests studying British and Italian models that tie tax benefits to job preservation or repayment. The report emphasizes reviewing existing benefits and improving their management.
