Key points
- The JEI (young innovative company status, jeune entreprise innovante) is aimed at SMEs less than 8 years old whose R&D expenditure accounts for at least 20% of their expenses (Article 44 sexies-0 A of the French Tax Code, CGI).
- The exemption from tax on profits (100%, then 50%) is reserved for JEIs created before 31 December 2023.
- The exemption from employer social security contributions on R&D staff remains the main benefit for JEIs created since 2024.
- Exemptions from property tax (taxe foncière) and CFE, subject to a decision by the local authorities, apply to companies created up to 31 December 2028.
- Investors are entitled to a 30% tax reduction for subscriptions to the share capital of JEIs between 2024 and 2028 (Article 199 terdecies-0 A bis of the CGI).
- The research tax credit (30%) and the innovation tax credit (20%) can be combined with the status.
The young innovative company (JEI) status allows a start-up to cut its social security charges sharply and, depending on its date of creation, its taxes. The conditions and benefits have changed considerably since 2024: the research expenditure threshold has risen to 20%, the exemption from tax on profits has been closed to new companies and a tax reduction has been created for investors. Here is the applicable regime.
JEI status conditions in 2026
The status is defined by Article 44 sexies-0 A of the French Tax Code (Code général des impôts) (in French). At the end of the financial year, the company must meet all of the following conditions at the same time:
- Be an SME: fewer than 250 employees, with revenue below €50 million or a balance sheet total below €43 million.
- Be less than 8 years old.
- Incur research expenditure representing at least 20% of its expenses. Related categories exist for companies whose expenditure is between 5% and 20%, subject to economic performance indicators or social utility criteria.
- Be at least 50% owned, continuously, by individuals or certain entities (other JEIs, investment funds, research foundations, public institutions).
- Carry on a genuinely new activity: not created through a merger, restructuring, extension or takeover of pre-existing activities.
The 20% research expenditure threshold has replaced the former 15% threshold. The former threshold still applies to financial years ending before 1 March 2025 for companies subject to corporate income tax, and up to and including the 2024 financial year for those subject to personal income tax. Qualification is assessed year by year, which requires rigorous cost tracking of R&D expenditure.
Exemption from tax on profits: reserved for JEIs created before 2024
Article 44 sexies A of the French Tax Code (in French) provides for a 100% exemption from income tax or corporate income tax for the first profitable financial year, then 50% for the following financial year. This tax component is, however, closed to companies created on or after 1 January 2024: only JEIs created before 31 December 2023 can still benefit from it, as confirmed by the official service-public.gouv.fr information sheet (in French) checked on 1 June 2026.
For start-ups created since 2024, JEI status remains attractive, but its centre of gravity has shifted towards social security exemptions and appeal to investors.
Exemption from employer contributions: the core of the scheme
A JEI benefits from an exemption from employer social insurance and family allowance contributions on the pay of staff assigned to research: research engineers, technicians, R&D project managers, in-house lawyers responsible for industrial property protection, and staff assigned to prototypes.
According to the service-public information sheet updated in 2026, the exemption applies to the portion of monthly pay below €8,401.58, up to an annual cap of €240,300 of exempted contributions per establishment. For a start-up whose payroll is concentrated on R&D, the saving often represents the equivalent of one or more salaries a year.
Property tax and CFE: local exemptions by decision of the local authority
Local authorities may, by a decision of their council, exempt JEIs from property tax on built property (taxe foncière sur les propriétés bâties) and from the CFE (business property contribution, cotisation foncière des entreprises) for 7 years. This component applies to companies created up to 31 December 2028. The exemption is never automatic: it requires a decision by the municipality or the inter-municipal authority, which should be checked locally before setting up.
CIR and CII: tax credits that can be combined with JEI status
JEI status can be combined with the research tax credit (CIR, crédit d’impôt recherche), provided for by Article 244 quater B of the French Tax Code (in French): 30% of research expenditure up to €100 million, 5% above that. The innovation tax credit (CII, crédit d’impôt innovation), reserved for SMEs, amounts to 20% of eligible expenditure (design of prototypes and pilot installations of new products), for expenditure incurred up to 31 December 2027.
These credits are set off against the tax due and, subject to conditions, can be refunded early to SMEs. They are a direct cash-flow lever, including for JEIs created after 2023 that no longer benefit from the exemption from tax on profits.
Attractive tax treatment for JEI investors
Since 2024, individuals who subscribe in cash to the share capital of a JEI are entitled to a 30% income tax reduction, provided for by Article 199 terdecies-0 A bis of the French Tax Code (in French). Payments are taken into account up to an annual limit of €75,000 for a single person and €150,000 for a couple. Combined with the reduction under Article 199 terdecies-0 A ter, this reduction may not exceed €50,000 over the period from 1 January 2024 to 31 December 2028.
This scheme makes JEIs more attractive in seed funding rounds. It needs to be prepared in advance: the company’s JEI qualification at the time of subscription determines the investor’s benefit. Our teams act on these transactions alongside our fundraising practice.
Protecting JEI status: points to watch
JEI status applies without prior approval, but the tax authorities can challenge it during a tax audit. The sensitive points come up again and again: qualification of research expenditure, meeting the 20% threshold, the shareholding condition after a fundraising, and whether the activity is genuinely new. A tax ruling (rescrit fiscal) makes it possible to confirm the qualification in advance.
Leaving the status also needs preparation: on the 8th anniversary, or if a condition is no longer met, the exemptions end. Budgeting ahead for this deadline avoids a cliff effect on cash flow. These choices form part of the overall legal structuring of the start-up, alongside incentive tools such as BSPCE (French start-up share warrants, Article 163 bis G of the CGI).
JEI status often goes hand in hand with other tax matters: research tax credit, founders’ remuneration, preparation of a fundraising. Our tax lawyer helps you make these choices legally sound before they are examined in a tax audit.
FAQ: JEI status
Can a start-up created in 2025 be exempt from corporate income tax?
No. The exemption from tax on profits is reserved for JEIs created before 31 December 2023. A company created in 2025 can, however, benefit from the exemptions from employer contributions, the local exemptions by decision of the local authority, the CIR and the CII.
What percentage of R&D expenditure must be reached?
At least 20% of the financial year’s expenses must be research expenditure (Article 44 sexies-0 A of the CGI). Related regimes exist between 5% and 20%, subject to economic performance indicators or social utility criteria.
Is JEI status compatible with the research tax credit?
Yes. JEI status and the CIR can be combined. The same research expenditure can both qualify the company for JEI status and give entitlement to the 30% tax credit.
Can a fundraising cause a company to lose JEI status?
Yes, if it brings the shareholding held by individuals (or equivalent entities) below the 50% threshold. The composition of the funding round must be analysed before closing. Every situation is different.
Official sources
- Article 44 sexies-0 A of the French Tax Code, definition of the JEI: Légifrance (in French)
- Article 44 sexies A of the French Tax Code, exemption from tax on profits: Légifrance (in French)
- Information sheet “Jeune entreprise innovante (JEI)” (Young innovative company (JEI)), updated 1 June 2026: service-public.gouv.fr (in French)
- Article 199 terdecies-0 A bis of the French Tax Code, 30% tax reduction for subscriptions to the share capital of a JEI: Légifrance (in French)
- Article 244 quater B of the French Tax Code, research tax credit and innovation tax credit: Légifrance (in French)
- Article 163 bis G of the French Tax Code, BSPCE regime: Légifrance (in French)
Law verified as at 5 October 2026. This content provides general information and does not constitute legal advice. Every situation is different: to assess whether your company qualifies or to obtain a tax ruling (rescrit), our start-up lawyers assist you.
For assistance: corporate tax audit lawyer.
