The CIR should it be taken into account in determining the amount of income tax withheld for the calculation of employee participation? The Council of State has answered in the negative in a judgment of 20 March 2013 which cancels the doctrine applicable administrative

Participation of employees is calculated from taxable income for the year, net of income tax at the ordinary rate. The question was whether the research tax credit should underestimate this tax.

Article L. 3324-1 of the Labour Code provides for the participation of employees is based on the "benefit minus the corresponding tax", without specifying the fate of tax credits including the research tax credit.

The administration considers in turn the research tax credit - like other tax credits - just underestimate the amount of income tax, or creates a "negative income tax" in case of reimbursement, which effect of increasing the amount of the special reserve.

According to the doctrine in the administrative recovery BOFiP, the research tax credit should be "deducted from the tax used for the calculation of the special reserve [...]" (D. adm. No. 4-N-1121, No. 43, August 30, 1997) and, in case of return, "is likely to generate a negative tax leading to an increase in earnings taken into account for the calculation of the special reserve of employees" (Ruling of April 13, 2010 , RES No. 2010/23).

Dealing with an application for judicial review, the Council of State has canceled this doctrine because it adds to the law. According to the Upper House, the tax covered by the Labour Code refers to "the corporate tax rate resulting from the common law rules of assessment and liquidation which ordinarily regulate the taxation of profits" or before imputation tax credits including the research tax credit.

Note that given the general formulation used, the State Council covers all tax credits and not only the CIR.

However, the administration has expanded its doctrine - now canceled - tax credit for competitiveness and employment (BOI-BIC-PTP-10-10-20-10-20130315, No. 200 and 210) . New twists are predictable.