Young innovative company (jeune entreprise innovante)

The young innovative company is a tax and social security status defined in Article 44 sexies-0 A of the French General Tax Code, reserved for recently created small and medium-sized enterprises that devote a significant share of their expenses to research and development. The status confers an exemption from employer social security contributions on the pay of research staff and, depending on the date the company was set up, tax relief, as well as benefits for investors.

Conditions of access

The status requires several conditions to be met, assessed at the end of each financial year.

• The company must be a small or medium-sized enterprise within the meaning of EU law, with fewer than two hundred and fifty employees and either turnover below fifty million euros or a balance sheet total below forty-three million euros.
• It must have been in existence for less than eight years.
• Its research expenditure, defined by reference to that taken into account for the research tax credit, must represent a minimum share of its tax-deductible expenses, set at twenty per cent by the Finance Act for 2025 after long standing at fifteen per cent.
• At least half of its capital must be held by individuals, by other young innovative companies, by investment vehicles or by research institutions.
• It must be genuinely new and not the result of a merger, a restructuring or the takeover of a pre-existing business.

Benefits attached to the status

The main benefit is an exemption from employer social insurance and family allowance contributions for researchers, technicians, research project managers, in-house counsel in charge of industrial property protection and staff assigned to pre-competitive testing, within certain caps. The exemption from tax on profits, first total then partial, that historically accompanied the status was abolished for companies created from 2024. Subscriptions to the capital entitle individual investors to an income tax reduction at an enhanced rate, subject to conditions. The Finance Act for 2024 created the related status of young growth company, available with a lower research expenditure threshold.

The young company’s intellectual property

The status confers no intellectual property rights. The research expenditure taken into account is that which leads, where applicable, to patents, software or know-how, ownership of which must be secured from the outset, in particular as regards founders, employees and partner laboratories. Loss of the status, by exceeding the age limit or failing the expenditure threshold, is assessed year by year. Eligibility can be secured by an advance ruling from the tax authorities.

Key points

A young innovative company is a small or medium-sized enterprise less than eight years old that devotes a minimum share of its expenses to research, and its main benefit is an exemption from employer social security contributions on its research staff. The thresholds and benefits were amended by the Finance Acts for 2024 and 2025. Check compliance with the conditions every year and seek an advance ruling in case of doubt.

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This glossary entry is general in scope and does not constitute legal advice.

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