Innovation at the heart of businesses

A company is innovative when it has managed to implement an innovation during the period covered by the survey. Companies with product and/or process innovation activities are automatically included in the category of innovative companies. How does it work?

What is an innovative company?

What does this actually imply?

Above all, an innovative company is a company that innovates, in the broad sense of the term.

In other words, it is a company which:

Develops a new product (or software). In other words, it designs a product that stands out from the competition by providing novelty in terms of technique, performance, functionality, ergonomics and even eco-design. This is called product innovation.

And improves its production and organization methods (through its equipment, for example). In this case, we speak of process innovation.

And/or carries out research and development (R&D) work .

By innovating, a company can then claim some grants or calls for projects. This is particularly the case via the BPI or the regional councils. As a result, as soon as a company receives public aid for innovation, it is officially registered as an “innovative company” by the Ministry of the Economy and Finance. This status simplifies the recruitment process for foreign employees.

In what dimensions is it possible to innovate?

An innovative company focuses its material and human investments not only on the technological aspect, but also on the creation of innovations.

The goal ? Adapt to the market, create new markets, remain competitive, improve your operations…

In addition, a company has the possibility of innovating in one or more dimensions. This concerns innovation:

Product, service or use: improves existing products/services or designs new ones
Process or organization: changes the way the company organizes its work and its supply chain
Marketing and sales: modifies the presentation, distribution, pricing, promotion of the offer, etc.
Business model: reorganizes the structure of revenues as well as costs
Technological: designs or integrates one or more new technology(s)
Social: meets social needs, both in its goals and in its methods.

The innovative nature of a company

How is it defined?

The innovative character of a company is defined according to several criteria.

Firstly, the company must have spent a minimum of 10% of expenses on R&D during the previous financial year.

Secondly, it is also possible to obtain the innovative company qualification.

To do this, the company must be a creator of innovative products (or techniques). It must also be able to prove the investments made for these activities. Developments must be carried out internally within an R&D team. Note that part can be subcontracted. However, in all cases, the company must demonstrate that its strategy supports innovation and that this represents a significant part of its turnover .

What criteria must be respected?

It is essential to meet one of the following three criteria in order to be officially recognized as an innovative company:

Have received public aid for innovation for the last 5 years. Own capital held in full – or in part – by an entity whose main objective is to invest in innovative companies.

Be or have been supported over the last 5 years by a support structure specially dedicated to innovative companies (incubators, accelerators). And to satisfy one of these three characteristics, an innovation activity must be carried out beforehand, in the broad sense (products, processes or R&D).

The financial aspect of an innovative business

What tax aid for innovation concerns them?

As mentioned above, there are three main ways to innovate (product innovation, process innovation or R&D work). Consequently, depending on the type of innovation chosen, the device concerned is different.

If a company achieves product innovation

In this case, it can obtain innovation tax credit. Said credit allows the company to recover 20% of certain expenses relating to its innovative project.

Four categories of expenses are particularly concerned:

1- Salaries
2- Outsourced expenses
3- Industrial property fees
4- Depreciation charges

If a company carries out a process innovation

In this situation, it cannot receive tax aid for innovation. And for good reason, innovations in processes, organization or services do not give rise to the right to the CIR/CII.

However, there is an exception if:

  • These innovations are supported by product innovation (the company is then eligible for the CII);
  • These innovations are supported by R&D work (the company is then eligible for the CIR). 

If a company carries out R&D work

She can claim the research tax credit (CIR). The latter allows it to recover 30% of R&D expenses. 

There are four main expenditure items: 

  • Salaries of R&D staff;
  • Expenditures with an approved public or private service provider;
  • Industrial property fees;
  • And depreciation charges (purchase of equipment depreciated in accounting terms).

How to open your company’s capital to an FCPI?

The aim of the Innovation Mutual Funds (FCPI) is to convince investors to finance innovative SMEs. The FCPI’s commitment is to invest at least 70% of their assets in eligible SMEs.

Indeed, for innovative companies, financing needs are high (R&D, recruitment, etc.). The first financial years are therefore rarely positive.

The FCPIs are then a great help. To open its capital and qualify for the Common Fund for Investment in Innovation (FCPI), the company must nevertheless meet several criteria:

> The company must have at least two employees.
> The company’s maximum workforce is set at 2,000 employees.
> The head office of the company must be located in the European Economic Area (EEA).
>The company must be a commercial company with statuses such as a public limited company ( SA ) or simplified joint stock company ( SAS ).
> The tax regime must be that of corporate tax.

In addition, a legal entity cannot have the majority of the capital of the company. In the case of a listed company, the market capitalization must not exceed 150 million euros.

Finally, the case of holding companies is special. Since the holding company does not have research and development (R&D) activities, it must own more than 75% of the innovative subsidiaries.

James williams

He is admin and content writer at BigNewsMagazine, he covers news, tech, education, entertainment, business and other topics. With a journalistic background and a passion for staying ahead of trends, James delivers insightful and engaging content. Explore a world of diverse topics through James' unique perspective and informed analyses.

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