France’s R&D centres boosted by attractive tax-credit scheme

By: BUSINESS FRANCE UK  13/12/2010
Keywords: Business Development

France has increased its commitment to research and development, with a gross domestic spend of US $48 billion on R&D (OECD data) in 2008, which represents 2.1% of GDP. This placed France second only to Germany in Europe. According to Ernst & Young’s annual Attractiveness Survey (June 2010), in 2009, France was the second most attractive country in Europe for foreign R&D centres, and the leader in terms of the number of jobs created. France’s success in this respect has been underpinned by the country’s tax-credit scheme and innovation clusters.


David Appia, Chairman and CEO of the Invest in France Agency (IFA), explains: "France has made R&D a national priority with the best R&D tax credit in Europe, increasingly influential innovation clusters and funding for tomorrow’s technology industries. This policy makes France more attractive to investors. In the last two years, the number of investment projects involving foreign R&D centres has increased sharply, rising to 42 in 2009."


The French government has been implementing a proactive policy to increase the industrial crossover of research projects. This policy has three main strands: innovation clusters, the R&D tax credit, and investment in the industries of the future.


In 2008, changes were made to simplify and improve France’s R&D tax-credit regime. Businesses now receive an initial 50% tax break on R&D spending (40% in the second year, and 30% in the third year). In 2008 alone, over 2,000 foreign companies took advantage of this new framework.


There has been a recent influx of new foreign R&D centres in France. IFA, France’s inward-investment agency, has tracked 350 foreign R&D investment projects since 2000 that have created nearly 15,000 jobs for researchers and technicians. The electrical, electronics, IT and medical-equipment sectors have seen the largest concentration in spending.


Innovation clusters have been an important focus. Since 1995, France’s 71 innovation clusters have brought together teachers, researchers and industry stakeholders to develop collaborative R&D projects across all key technology sectors, which are eligible for state aid (€2 billion granted over three years) and regional support.


The rise of these high-technology clusters has been supported by the reform of higher education, launched in 2008, which helped to strengthen regional ties between universities and industry. Nearly 7,000 companies, including 500 foreign companies, now belong to a hi-tech cluster in France. World-class technology parks have sprung up around the Parisian suburb of Saclay (IT technologies and biotechnologies), in Grenoble (nanotechnologies) and in Toulouse (aerospace), to name but a few.


Since 2010, the French government has been financing investments in the industries of the future to the tune of €35 billion, including €7.9 billion earmarked for research. This state funding will, in turn, leverage private-sector investment, with a view to achieving a twofold increase.


France’s national research and innovation strategy is built around three key sectors: health, well-being, food and biotechnologies; environmental imperatives and clean technologies; information, communication and nanotechnologies.


This strategy has proved attractive in the international arena. In 2009, 42 foreign companies – including Novartis’ European oncology clinical research platform in Rueil-Malmaison, Sorin SpA’s medical and cardiology equipment facility in Clamart and Huawei’s fundamental research centre in Cergy – opted to set up or to expand an R&D centre in France. This amounts to an increase of almost 300% since 2007.


Subsidiaries of foreign companies have greatly contributed to France’s research landscape. Their R&D activities currently account for 22.5% of all research spending in France.


France also ranked sixth in the world for the number of international patents filed in 2009, and third in Europe for the number of Nobel science laureates. French-based researchers have been awarded 11 of the 52 Field Medals in mathematics since 1936, making France the second most honoured country in the world after the United States in this respect.

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Keywords: Business Development