The 2024 Finance Act introduces a new tax system to encourage investment in young innovative companies.
The EarlyDeepTech that Valeureux finances are the core target.
The SPVs, Investment Holdings that we set up invest, can benefit from this system.
This compatibility (or not) is specified to you on the investment platform to which you have access when you joined Le Cercle Valeureux.
To benefit from the JEIR tax reduction, you must:
This 30% R&D intensity must be maintained over time.
The 2024 finance law introduces a new tax system to encourage investment in young innovative companies.
The reference text of the JEIR system is defined in article 199 terdecies-0 A of the General Tax Code, amended by the 2024 Finance Law.
Investing in innovative businesses can benefit from a reduction in income tax for the individual investor.
It is 30% for JEI - Young Innovative Companies - who are less than 8 years old and spend at least 15% of their expenses on R&D.
If the company is a Breakthrough Innovative Young Company, this reduction reaches: 50% of the amount invested.
Up to €100,000 between January 1, 2024 and December 31, 2028 - i.e. a total possible reduction of €50,000 over 5 years.
This reduction is not included in the calculation of the ceiling of tax loopholes.
So how do you explain such generosity?
First of all, the business must be truly innovative
It must devote more than 30% of its expenses to R&D
DeepTechs with a high degree of innovation are typically concerned.
This is often the case early in their development. And this is typically the case for a large number of EarlyDeepTech companies financed by Valeureux.
Second, the investor has to take risks.
There can be no form of guarantee on the capital invested in any form
The investor must undertake to keep his shares for 5 years except for example in the event of a merger/acquisition of the company or in the event of judicial liquidation.
If the investor withdraws first, without being forced to do so, the tax reduction may be called into question.
In some cases, he will have to reinvest in another JEIR to finish the 5 years.
? First of all, every investment involves risks.
Even more so in highly innovative companies.
Secondly, these tax arrangements have counterparts and in particular a commitment to hold them over time.
Finally, here we have a lever on the capital invested in many Early DeepTech who can claim this JEI-R status:
If I invest €10,000 in a JEI-R - I will “get back” 50% of my investment as a tax reduction next year.
What really determines the performance of an investment is the success of the startup.
And that's why we select them carefully, and provide the most relevant support possible to enable them to succeed.
This is not tax advice or investment advice.
Take care to consider your personal situation and, if necessary, contact a tax or wealth management professional.
Below for practical purposes:
The IR-JEIR system makes it possible to exempt 50% of the investment from tax, within the following limits:
The procedures for deducing the “IR-JEIR” tax reduction comply with the same rules as the “IR-JEI” tax reduction (specific ceiling, of €50,000 tax reduction until December 31, 2028 in combination, in particular).
This reduction is not affected by the ceiling of tax loopholes.
QUESTIONING THE PRINCIPLE OF TAX ADVANTAGES
The tax benefits that you receive are subject to compliance with a retention period for your shares (until December 31 of the 5th year following that of subscription).
As a general rule, the tax reduction obtained is called into question if, before 31 December of the fifth year following subscription:
In some cases, non-compliance with the preservation of titles in a timely manner is not called into question. These are mainly the following exceptions:
1.Non-compliance with the retention period for titles due to judicial liquidation
The tax advantage is not called into question when the disposition of the shares you have subscribed follows the judicial liquidation of the SME in which you subscribed directly or indirectly, through a holding company.
2. Non-compliance with the retention period for securities due to their sale more than 3 years after subscription AND reinvestment
In the event of the sale of your shares, the tax advantage you received is not called into question if:
Attention: no new tax advantage on this reinvestment.
3.Non-compliance with the retention period for titles due to dismissal, disability or death of the policyholder
In the event that the subscriber (or his spouse if he is married or in a civil partnership) is dismissed, becomes disabled or dies, non-compliance with the retention period for the titles does not call into question the tax advantage.
In accordance with the provisions of article 150-0 D of the General Tax Code, the subscription price of securities is reduced by the amount of the tax reduction to which you were actually entitled.
Example: You invest €10,000 in an eligible EarlyDeepTech JEIR de Valeureux via an SPV which is an SAS holding company.
In 5 years, your shares are sold and you get €50,000
The basis taken into account for the calculation of your capital gain will be 50,000 €-10,000 (your investment) +5,000 € (your tax advantage = 5,000€) i.e. a capital gain of 45,000€ - your tax advantage is well reintegrated for taxation due to your capital gain.
Tax conditions may be called into question over time. Consider your personal circumstances by seeking the help of a tax or wealth professional.
For Valeureux, the tax advantage, when it exists, should be considered as a bonus and not as the primary reason to invest. Make investment decisions informed by the potential of the companies in which you invest.
This is not investment advice.
Invest only what you are prepared to lose.Investing in unlisted businesses involves the risk of capital loss and illiquidity.
