Innovation Tax Credit (CII) in 2026: Complete Guide for SMEs
LALucien Arbieu7 min read
The Innovation Tax Credit (CII) is a tax scheme that allows French SMEs to recover 20% of their expenses related to the design of innovative products. If you are developing a SaaS, a mobile application or software with new features, you can potentially recover up to €80,000 per year in tax credits.
Key figures to remember
The CII has been extended until 31 December 2027 by the 2025 Finance Act. The rate dropped from 30% to 20% as of 1 January 2025, but the cap on eligible expenses remains at €400,000 per year. In concrete terms, this means that for every euro invested in an eligible innovative project, the government gives you back 20 cents. On a €200,000 project, you recover €40,000. At the maximum cap, that’s €80,000 flowing directly back into your cash flow.
And this is not a deferral: SMEs benefit from immediate reimbursement. You file your return, and within 3 to 6 months, the money is in your account. You don’t need to wait until you owe tax to benefit from it. Even if your company is not profitable, you still receive the tax credit.
Who can benefit
The CII is reserved for SMEs as defined under European criteria. The requirements are straightforward:
Fewer than 250 employees
Annual turnover below €50 million or a balance sheet below €43 million
If your company meets these criteria, you are eligible. The majority of French SMEs tick these boxes without even knowing it. A 30-person company with €5 million in turnover developing a SaaS tool for its clients? Eligible. A 10-person startup building an innovative mobile app? Eligible. And if you exceed a threshold in one year, you don’t lose your status: you must exceed the thresholds for two consecutive financial years to exit the scheme.
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The CII funds the design of prototypes and pilot installations of new products that demonstrate superior performance compared to what already exists on the market. In plain terms, if you are building something that outperforms the competition on at least one of the following dimensions, your project may qualify for the scheme:
Technical: your product is faster, more reliable, or more accurate than existing solutions. For example, a predictive diagnostic algorithm that outperforms current tools.
Functional: you are introducing features that do not yet exist. An app that uses motion recognition to compose messages is exactly the type of example the tax authorities themselves cite as eligible.
Ergonomic: your interface delivers a radically different user experience that is measurably superior.
Eco-design: your product significantly reduces environmental impact compared to alternatives.
Software and SaaS applications are explicitly recognised as eligible products by the tax authorities. Qualifying expenses include the salaries of the technical team, equipment depreciation, subcontracting costs from approved providers, and patent filing fees.
Working with a CII-approved provider
This is where things get interesting if you have your project developed by an agency or an external provider.
When your provider holds CII approval, you can include their invoices directly in your tax credit base. In concrete terms, if you entrust the development of your innovative SaaS to an approved agency and the engagement costs €100,000, you recover €20,000 in tax credits. Your project effectively costs you €80,000.
This changes the game in a competitive tender. For an equivalent scope of work, a CII-approved provider is de facto 20% cheaper for the SME client. This is not a commercial discount — it is a tax advantage guaranteed by the government.
Approval is granted by the Direction Générale des Entreprises following an assessment process that verifies the provider has the technical expertise required to carry out innovation work. It is valid for 5 years. For you as a client, it is a guarantee: the tax authorities officially recognise that work carried out by this provider can fall within the scope of the CII.
Without your provider’s approval, your subcontracting invoices are simply not eligible.
Retroactivity: recovering what you have already invested
This is probably the most underestimated aspect of the CII. You can claim the tax credit retroactively for the previous 3 years. If you developed an innovative product in 2023 or 2024 without ever filing for CII, you can still recover that money.
Even better: expenses from 2023 and 2024 benefit from the former rate of 30%, which is more favourable than the current rate of 20%. On a €200,000 project completed in 2024, that’s €60,000 you can go and claim, instead of €40,000 at the current rate.
The process involves filing a contentious claim with the tax authorities. You need to put together a technical file justifying the innovative nature of the project and a financial file detailing the expenses. It takes effort, but the return on investment is considerable. For an SME that invested €400,000 in innovative development in 2024, that’s €120,000 in tax credits to claim at the 30% rate.
And above all, this is not a one-off opportunity. The CII is filed every year. As long as you are running innovative projects, you can build a file each year and recover your credit at the start of the following year. The cycle is simple: you incur your innovation expenses throughout the year, you structure your file towards year-end, and you recover the amount at the start of the following January.
CII versus CIR: two schemes not to confuse
Criterion
CIR
CII
Beneficiaries
All companies
SMEs only
Rate (mainland France)
30%
20%
Cap
None
€400,000
Maximum credit
Unlimited
€80,000
Nature of work
Research (scientific uncertainty)
Innovation (superior performance)
Scheme duration
Permanent
Until 31/12/2027
The CIR covers fundamental and applied research, with a component of scientific uncertainty. The CII targets innovation — that is, the creation of new products with superior performance. The two schemes can be combined, provided the same expense is not declared twice.
Why act now
The CII is guaranteed until 31 December 2027. And it is very likely to be extended beyond that date. Why? Because the scheme remains largely underused by French SMEs. Many eligible companies simply do not file for it, either because they are unaware of it or because they think it is too complicated. The government has no interest in scrapping a scheme that costs little to the budget and encourages innovation. This is precisely what happened in 2025: the CII was due to expire at the end of 2024, and the government ultimately renewed it for three more years.
But waiting means losing money. Every year you don’t file, a tax credit goes unclaimed. And the 3-year retroactive window moves forward with time: expenses from 2023 at the 30% rate will no longer be claimable after 31 December 2026.
PeakLab is CII-approved
At PeakLab, we hold CII approval. This means that if you are an SME with a SaaS, mobile application or innovative software project, our development invoices are directly eligible for your tax credit. You recover 20% of the amount you invest with us.
We don’t just build your product. We also support you in putting together your CII file: identifying eligible expenses, technically documenting the innovative nature of the project, and coordinating with your accountant or tax advisor. The file is prepared at year-end for reimbursement at the start of the following year, and we handle this part so you don’t have to.
If you have innovative projects underway or in the pipeline, or if you think you have expenses from previous years to recover, book a meeting with us. We carry out a free initial audit to assess your eligibility and estimate the amount you can claim. You have nothing to lose and potentially tens of thousands of euros to gain.
