RESEARCH TAX CREDIT
COMPETITIVENESS AND EMPLOYMENT TAX CREDIT
It should be noted that, when the research tax credit and the competitiveness and employment tax credit recognized in the year cannot be charged against income tax, they are treated as a receivable on the French tax administration (Trésor public). If unused in the ensuing three years, it is repaid in the course of the fourth year. At December 31, 2014, the company held a receivable of €23,046,000 on the French tax administration. The company had until then deducted the most aged (2010) receivable relating to the research tax credit from its corporate income tax. However, as the company learnt in October 2014 when it was reimbursed for its 2010 research tax credit, the French tax administration operates in a different way, deducting the tax credit from the corporate income tax of the same ﬁscal year. Thus, and since no corporate income tax was recorded for 2010, the company received the reimbursement in full of the research tax credit recognized in 2010 (€5,729,000). According to this rule, the €23,046,000 receivable held on the French tax administration at December 31, 2014, now comprises: – the remaining amount of the research tax credit, after deduction of the corporate income tax due by Lectra SA in the same year, for 2014 (€5,724,000), 2013 (€6,083,000), 2012 (€5,082,000) and 2011 (€4,812,000); – the competitiveness and employment tax credit accounted for and not used in 2014 (€825,000) and 2013 (€520,000). Furthermore, the company incorporated proﬁt-sharing expenses in the annual calculation base for the research tax credit it accounted for. Due to the French tax administration’s position in questioning the eligibility of such expenses, the company had booked, for the relevant years (2010 to 2013), a provision equal to the part of the annual research tax credit calculated on these bases. In its decision of March 12, 2014, the French Council of State (Conseil d’État, the supreme court for administrative justice), conﬁrmed that the said expenses were eligible for the ﬁscal years in question, thus rejecting the French tax administration’s position adopted until then. As a result, the company reversed in the ﬁrst quarter of 2014 the previously booked €716,000 provision. This amount has no impact on the receivable booked, since it did not include this provision. In light of its estimates of tax credits and corporate income tax for the next three ﬁscal years, the company does not expect to make any payment in respect of corporate income tax, which will be deducted in full from the research tax credit and the competitiveness and employment tax credit, if any, of each ﬁscal year. It therefore expects to receive reimbursement of the balance outstanding of these tax credits not deducted as follows: in 2015 (in respect of the 2011 tax credit), 2016 (in respect of the 2012 tax credit), 2017 (in respect of the 2013 tax credits) and 2018 (in respect of the 2014 tax credits). This situation will last for as long as the amount of the annual tax credits exceeds the amount of income tax payable. If the income tax expense were to rise above the amounts of tax credits for the year, the company would continue not to pay the corporate income tax until deduction of the corresponding receivable in full. Thereafter it would deduct these tax credits each year from the income tax expense for the same year in full and would be required to pay the residual amount.
OTHER TAX RECEIVABLES
Other tax receivables at December 31, 2014 comprised the recoverable value-added tax for parent company and its subsidiaries.
OTHER CURRENT ASSETS
Other current assets comprise prepaid rental expenses, insurance premiums and equipment rental charges.
138 – 2014 Financial Report
Consolidated ﬁnancial statements