The Jeune entreprise de croissance (JEC) is an offshoot of the Jeune entreprise innovante (JEI). Eligible companies can benefit from social and local tax exemptions for several years. This status has recently been clarified. This article explains the requirements and criteria for becoming a JEC in 2024.
A new category of company
The French Finance Act for 2024 created a new category of JEI called "Jeune entreprise de croissance". This status is designed to boost support for research and innovation within small and medium-sized businesses, by offering them tax benefits and an exemption from social security contributions for highly-skilled jobs.
A JEC is a company whose research expenditure represents between 5% and 15% of its tax-deductible expenses, and which is considered to have high growth potential on the basis of certain criteria.
A decree dated May 24, 2024, which came into force on June 1, 2024, specifies the performance indices that must be met by these companies:
- Firstly, they must have increased their workforce by at least 100%, and by at least 10 full-time equivalent employees, compared with the workforce at the end of the N-3 financial year.
- Secondly, companies' research expenditure must not have fallen since the previous year.
These criteria are assessed at the close of financial years ending on or after June 1, 2024.
A company can declare itself a JEC. However, it is preferable to ask the tax authorities to verify its eligibility for the scheme. To do this, you need to file a tax rescript with your local tax authority. The tax authorities have 3 months from the date of submission of the application to issue their opinion.
Jeune entreprise de croissance (JEC): the Bulletin officiel des finances publiques (Bofip) has just clarified the application of this new status. https://t.co/l3cLnJQgG9 via @servicepublicfr
- Cedef documentation (@DocCedef) August 2, 2024
JEC status: tax and social benefits
Companies that meet the JEC definition benefit from tax and social advantages. They are eligible for an exemption from corporate income tax, provided they were created before 2024. This exemption applies to financial years ending on or after June 1, 2024.
Young growth companies are eligible for an exemption from local taxes, regardless of when they were set up. The exemption applies to taxes levied for 2025 and subsequent years.
Taxpayers are eligible for an income tax reduction for subscriptions to JEC's capital. This reduction applies to subscriptions made on or after June 1, 2024.
In addition to these tax advantages, JECs benefit from an exemption from employer contributions, social insurance and family allowances on their business account for remuneration subject to contributions paid to eligible employees and corporate officers. The exemption can be applied until the 8th anniversary of the SME.