The evolution of the definition of R&D is directly linked to societal changes and policies for R&D and innovation efforts contributing to improving economic growth and job creation in states. These policies aim to enhance their global competitiveness.

The European policy on competitiveness and innovation, called the "Lisbon Strategy," has set the goal of each European state's R&D budget at 3% of its GDP.

Definition by the Organisation for Economic Co-operation and Development (OECD)

The OECD Frascati Manual has been the global reference since 1963 for defining R&D and the methodology for collecting R&D statistics. New versions of the manual are often issued to complement the definition of R&D and its scope. The definition has evolved significantly over the last decades. Only in the 3rd edition of 1976 were humanities and social sciences included in the scope of R&D activities.

The latest definition is as follows: "Experimental development and research (R&D) encompass creative and systematic activities undertaken to increase knowledge— including knowledge of humanity, culture, and society— and to design new applications based on available knowledge."

The latest and 7th edition was released in 2015. It highlighted five criteria to consider an activity as R&D:

• Being new compared to the existing state of the art
• Being inventive, creative
• Introducing uncertainties in terms of results (addressing technological barriers), cost, and time distribution
• Being systematic, i.e., planned, budgeted, and recorded
• Being transferable and/or reproducible

Additionally, the Frascati Manual divides R&D into three types of activities:

• Basic research, which "consists of experimental or theoretical research work undertaken primarily to acquire new knowledge on the fundamentals of observable phenomena and facts, without considering a specific application or use."
• Applied research, which "consists of original research work undertaken to acquire new knowledge and directed primarily towards a specific practical goal or objective."
• Experimental development, which "consists of systematic work—based on knowledge derived from research and practical experience, and producing new technical knowledge—aimed at resulting in new products or processes or improving existing products or processes."

Definition by the Tax Administration (Article 49 septies F of the CGI)

The definition of R&D activities is presented in Article 49 septies F of Annex III of the General Tax Code. Like the OECD definition, the French tax administration has identified the same types of activities grouped in R&D. However, their definitions differ:

• Activities with a character of basic research that contribute, through theoretical or experimental research, to solving technical problems, contributing to the analysis of properties, structures, physical and natural phenomena, in order to organize, through explanatory schemes or interpretative theories, the facts derived from this analysis.
• Activities with a character of applied research that aim to discern possible applications of the results of basic research or to find new solutions allowing the company to achieve a predetermined goal chosen in advance.
• Activities with a character of experimental development carried out using prototypes or pilot installations, to gather all the necessary information to provide the technical elements of decisions, for the production of new materials, devices, products, processes, systems, services, or for their substantial improvement. Substantial improvement refers to modifications that do not result from a simple use of existing technical knowledge and have a novelty character.

Our Conclusion:

Compared to the Frascati Manual, the French tax administration brings a much more scientific and technical connotation to activities considered as R&D. This difference thus narrows the scope of the Research Tax Credit measure.

In 2014, a law firm that benefited from funding from ANRT under the CIFRE scheme (Industrial Agreements for Training through Research) for the recruitment of a law doctoral student was denied the right to the Research Tax Credit. This decision, in accordance with French laws, confirms, however, the French tax administration's desire to confine the Research Tax Credit to companies conducting scientific and technical activities in the strictest sense.