The process of claiming IR-PME is as follows:
1. Check to make sure that you qualify for IR-PME.
You need to invest as an individual, being a French tax resident and holding the shares for at least 5 years. The tax relief depends on each investor’s individual situation and is offered in return for a risk of total or partial loss of the capital invested and of illiquidity.
2. Check to make sure that the company qualifies for IR-PME.
1) In order to be eligible for IR-PME with a 18% or 25% of tax relief on funds invested (depending on the investment date), a company must fulfil several conditions listed in the French tax Code such as:
Having its effective center of management located in the EU (and Norway, Island and Liechtenstein). UK companies are excluded from the IR-PME scope.
Carrying out its activities for less than 7 years.
Being a SME (i.e, less than 250 employees and an annual turnover not exceeding 50 M€ or a total balance sheet not exceeding 43 M€).
Carrying out manufacturing, commercial, artisan, farm or liberal activities.
Not falling into the scope of excluded activities such as: asset management, financial activities and property construction.
Not being a troubled company.
Being liable to Corporate Income Tax and having 2 employees at least.
2) In order to be eligible for IR-PME with a 30% of tax relief on funds invested, the company must qualify as a Young Innovative Company and must therefore fulfil several conditions listed in the French tax Code such as:
Being a SME (i.e. less than 250 employees and an annual turnover of less than 50 M€ or a total balance sheet of less than 43 M€).
Have been established for less than eight years.
Being genuinely new, i.e. not having been created as part of a merger, restructuring, business expansion or takeover of pre-existing activities.
Carrying out research and development (R&D) expenditure representing at least 15% of tax-deductible charges OR carrying out research and development (R&D) expenditure representing between 5% and 15% of tax-deductible charges and being in strong growth (economic performance indicators specified by decree).
At least 50% of the company's capital must be held by one of the following: individuals, another Young Innovative Company at least 50% owned by individuals, a public scientific association or foundation, a public research and education establishment or one of its subsidiaries, an investment company.
3) In order to be eligible for IR-PME with a 50% of tax relief on funds invested, the company (also called Young Disruptive Innovative Company) must meet the following requirements:
Being a Young Innovative Company (as described above) and;
Carrying out research and development (R&D) expenditure representing at least 30% of tax-deductible charges.
If the company is IR-PME eligible, you will see an “IR-PME” flag on the investment opportunity, as well as in the FAQ section of the company’s pitch page.
3. Make the investment.
The investment must be in ordinary or preferred shares of the company and be bought in cash. The investment shall confer only the rights attached to the status of shareholder and offer no consideration in return (e.g. preferential rates or priority access to goods produced or services rendered by the company).The investment made must not be part of a PEA or a PEA-PME.
4. Wait to receive your Etat Individuel certificate.
After a company completes its fundraise on Crowdcube, Crowdcube will work with the company to complete details required for your Etat Individuel. We make the Etat Individuel available electronically to investors via your Crowdcube portfolio. This may take approximately 1 month after the issuance of your Beneficial Ownership statement.
If one of your investments is eligible for IR-PME, you will receive an email from us informing you of the availability of your Etat Individuel in your Crowdcube portfolio.
5. Use the Etat Individuel certificate to claim tax relief.
Once available in your Crowdcube portfolio, you will need to download your Etat Individuel. You will then be able to attach the Etat Individuel in your annual tax return. You must declare your investments made in year N on your tax return for year N+1.
It is important to note that receiving an Etat Individuel in your Crowdcube portfolio does not guarantee you will receive tax relief. The accuracy, validity and reliability of the statements made by the company as to its IR-PME eligibility will not be verified by Crowdcube. It is also your responsibility to ensure that you are eligible for tax relief.
Please note that this page is for information purposes only and cannot be interpreted as legal or tax advice. Investors are advised not to make any decision based on fiscal considerations without first obtaining the advice of a legal professional or a tax advisor.