An Evaluation of the French Innovation Tax Credit

Simon Bunel and Benjamin Hadjibeyli

Working papers from Banque de France

Abstract: The Innovation tax credit (cr dit d imp t innovation, CII) is an extension of the Research tax credit (cr dit d imp t recherche, CIR) intended to boost the incentive effect of the latter on SMEs to encourage them to engage in the creation of new products via the development of prototypes or pilot plants. Introduced in 2013, it amounted to 120 million of tax credit in 2014 for some 5,300 recipients. This article seeks to measure the impact of the introduction of this scheme on its beneficiaries over the period from 2013 to 2016. Using a difference-in-differences method following propensity score matching, we find a greater increase in employment in the short term for firms benefiting from the scheme, along with a more pronounced increase in their sales turnover in the medium term. A greater increase in the number of new products produced by the beneficiaries is also observed. Finally, the introduction of the CII went along with a reduction in the research expenditure reported under the CIR.

Keywords: Innovation; Tax credit; Evaluation; Products (search for similar items in EconPapers)
JEL-codes: C21 D22 H32 L25 O31 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2022
New Economics Papers: this item is included in nep-ent, nep-eur, nep-ino, nep-pbe, nep-pub and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:bfr:banfra:887

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