“Industrial start-ups are recognized as spearheads of decarbonization and the return of industrial jobs, but we still do not take them seriously through these measures,” is annoyed by Alphadio Olory-Togbe, the president of the Industrial Start-Up Collective, and also co-founder of a young company specializing in laundry, Impekkable.
A JEI status “emptied of its substance”
The wrath of start-up representatives is aimed in particular at the removal of the exemption from employer contributions linked to the status of young innovative enterprise (JEI) and the non-renewal of the innovation tax credit (CII) which must expire at December 31, 2024. For industrial and deeptech start-ups, the reduction in JEI status is, however, the most penalizing measure. Under this status, many start-ups less than eight years old with intensive R&D expenditure benefit from an exemption from employer social security contributions on the remuneration paid to their employees active in innovation.
The social security financing bill (PLFSS) for 2025 plans to limit this advantage to start-ups run by students or young graduates. What “empty of its substance the status of JEI whose interest becomes minor”, according to Jean-Philippe Thierry. Young growth companies, a new category of JEI that came into force this year, will be subject to the same treatment.
More than 4,000 companies benefit from JEI status
According to the France Digitale association of start-ups and investment funds, around 4,900 companies benefit from JEI status. The PLFSS impact study estimates the cost of their exemptions from social contributions at 270 million euros in 2023 and mentions “an increasing burden on the state budget”. In fact, the cost of exemptions has doubled since 2014 and could reach 300 million euros in 2026.
Representatives of start-ups fear that the removal of this exemption will put a further strain on the cash flow of young start-ups in a context where fundraising is stalling. “An exemption from charges corresponds to cash available immediately. This allows us to benefit from the resources necessary for our activity, underlines Alphadio Olory-Togbe. The government is betting excessively on the resilience of industrial start-ups which will find themselves running out of cash even more quickly.. “Start-ups are starting to prepare their 2025 budget and they are already looking for extensions to extend their lifespan. From 1is January 2025, their employees in innovation will cost them more. Start-ups that were planning to raise funds in six months could only have three months left, it’s quite brutal,” comments Marianne Tordeux-Bitker, director of public affairs at France Digitale.
“The impact on employment will be immediate”
The innovation tax credit, which allows SMEs to deduct 30% of expenses linked to the design of prototypes from their corporate tax, is used more in the service sector, highlighted the Court of Auditors in 2021 in a report on public aid for innovation. In the days following the presentation of the Finance bill, the France Deeptech association surveyed its members. “The responding deeptech start-ups have 39 employees on average. 90% of them use the JEI and a little more than 30% use the CII», indicates Romain Roullois, the general director of France Deeptech, thus confirming the more secondary nature of the CII compared to the JEI.
Alerts from the ecosystem also relate to employment in start-ups. “They could revise their HR budget downwards for tech jobs with a possible snowball effect on support function positions which will not be created,” considers Marianne Tordeux-Bitker. “Companies are telling us that they are going to freeze recruitment. The impact on employment will be immediate even if it is difficult to say in what proportions. agrees Jean-Philippe Thierry. The PLFSS impact study mentions a “limited” contribution of the JEI status in terms of employment support. If it were eliminated, the reduction in workforce would be 23% per start-up on average, according to the France Deeptech survey. It would only be 7% on average with the disappearance of the CII. “In addition, a significant number of start-ups say they have frozen or canceled hiring after the announcements,” explains Romain Roullois.
The parliamentary battle begins
Faced with this outcry, the government seemed to open the door to changes through its Secretary of State for Artificial Intelligence and Digital Technology, Clara Chappaz. In an interview given to The Tribuneshe indicated that the government ” wish(ait) keep » the JEI system. “Its removal is not written in stone, but in a document which is at this stage only a draft budget, which we put together in a very short time, she added. It is now up to parliamentarians to build alternative solutions to preserve it.” But for this, “it will be necessary to propose other savings, perhaps on devices with less impact on the ecosystem”, said the former director of French Tech.
At the Industrial Start-Up Collective, Alphadio Olory-Togbe says he is rather open to a reduction in the research tax credit, which largely benefits large companies, on condition of obtaining, at a minimum, the maintenance of the CII. “Only the CII is abolished although it concerns SMEs and industrial start-ups”, he laments. This solution is however not supported by Start Industrie which defends the maintenance of the three systems, research tax credit, CII and JEI.
For its part, to maintain these last two systems, France Digitale has also proposed around a billion euros in savings. For example, it intends to exclude technological monitoring expenses from the base eligible for the research tax credit, remove the 5% rate of research tax credit for eligible expenses beyond 100 million euros or even reduce favorable taxation on patents. Several amendments have been tabled to this effect by MPs from all sides.
Source: www.usinenouvelle.com
