1 – The CII: what the scheme actually covers (and what it excludes)
The innovation tax credit is a French tax scheme reserved for SMEs. It covers 20% of expenses incurred for the design of prototypes or pilot installations of new products, capped at 400,000 euros in expenses per year. That is a maximum credit of 80,000 euros. Here is what this means when you work with an offshore provider.
1.1: What the CII funds — the tax definition of a "new product"
A new product within the meaning of the CII is not just one more feature in your SaaS. It is a product that stands apart from existing products on the market through superior technical performance — functionality, ergonomics, eco-design, materials. The criterion is the "state of the art" of the market, not innovation in the academic sense.
In concrete terms, if you are developing a logistics flow management tool with a novel calculation engine, it is eligible. If you are developing a standard e-commerce site with Shopify templates, it is not.
Eligible expenses include the salaries of engineers and technicians assigned to the project, depreciation allowances on equipment used, and — the key point for you — subcontracting expenses. The French general tax code (article 244 quater B) explicitly includes subcontracting in the CII tax base. This is where your offshore provider enters the equation. Not as a bonus. As a fiscally optimisable expense line.
1.2: Subcontracting outside the EU — the sticking point that everyone over-interprets
Here is the confusion that is costing you money. For the CIR (research tax credit), subcontracting to a private organisation outside the EU/EEA has no longer been eligible since 2022. Many CFOs apply this rule to the CII by reflex. That is a mistake.
The CII has its own framework. Subcontracting expenses entrusted to companies — approved or not, in France or abroad — remain within scope, under certain conditions. The main condition: the contracting company must retain ownership of the results, and the subcontractor must not further subcontract without agreement.
Note: the subcontracting cap is 400,000 euros (identical to the overall cap), and subcontracting expenses are counted at double their amount when the subcontractor is a public research organisation, but at their actual amount for a private provider — whether French, European, or Malagasy. The geographic location of the provider is not an automatic exclusion criterion for the CII. What matters is the link between the service and the design of the new product.
1.3: The conditions your accountant must verify before filing
Three non-negotiable conditions for an offshore subcontracting expense to enter the CII tax base. First, the subcontracting contract must clearly identify the nature of the work related to the design of the new product. "Application development" is not enough. The innovative features developed, the technical challenges resolved, and the targeted performance levels must be described.
Second, intellectual property ownership of the results must remain with you — the contracting party. This is a contractual clause to lock in upfront. If you work with a provider that retains the IP, your expense falls outside scope. To understand the IP stakes in an offshore context, cet article sur la propriété intellectuelle et offshore details the clauses to require.
Third, you must compile a technical supporting file. Not a novel. A structured document describing the new product, what distinguishes it from existing market offerings, the work carried out by the subcontractor, and the link between that work and the novelty of the product. Without this file, in the event of a tax audit, your CII claim will be disallowed.
2 – How to structure the relationship with your Madagascar or Maurice provider so that it holds up
Knowing that the CII is accessible is one thing. Structuring the relationship with your provider so that the expense is genuinely eligible is another. Most arrangements fail at tax audit not because the scheme does not apply, but because the contract, documentation, or project management does not meet the requirements of the tax authorities.
2.1: The contract — the mandatory clauses that secure your file
Your contract with the offshore provider must contain four specific elements to withstand a tax audit. One, a precise description of the design work entrusted — not a blanket service, but the tasks related to prototyping or the pilot installation. Two, an intellectual property clause assigning the results to the contracting party. Three, a prohibition on further subcontracting without written agreement. Four, a reporting mechanism allowing hours and deliverables assigned to the innovative project to be tracked.
If you use a provider that bills at a flat rate without itemisation, you will have a problem. The tax authorities want to see the correlation between the invoice and the eligible work. This is why the "1 dedicated team member = 1 client" model used by Taram works better: each team member has an identifiable scope, traceable tasks, and individualised reporting. Your CFO can isolate the hours devoted to designing the new product without any accounting gymnastics. For verrouiller les indicateurs contractuels dès le départ, SLA framing is essential.
2.2: The technical documentation — what the tax authorities actually expect
The CII technical file is not a scientific document. It is a structured argument in four parts. The state of the art: what products exist on the market, what their performance levels are, what their limitations are. The new product: how your product exceeds those performance levels — features, technical architecture, user approach. The work carried out: description of design, prototyping, and testing tasks, with identification of what was done in-house and what was subcontracted. The results: functional prototype, pilot installation, performance metrics.
For the subcontracted portion, you must be able to show that the provider worked on the design of the product — not on maintenance, not on standard integration, not on support. If your offshore team member in Antananarivo develops the recommendation engine of your platform (a new component), it is eligible. If they are fixing bugs on an existing feature, it is not. The granularity of project tracking makes the difference between a validated CII claim and a tax reassessment.
2.3: Micro-scenario — an SME SaaS company that recovers 36,000 euros per year
An SME publishing construction site management software. 28 employees. It outsources 3 developers in Madagascar via Taram to design a new predictive planning module based on historical site data. Monthly cost of the 3 dedicated team members: 4,500 euros. Over the year: 54,000 euros. These team members work exclusively on the predictive module for 10 months. Expense attributable to the CII: 45,000 euros (10/12 of the annual invoice). They also spend 2 months on routine maintenance — not eligible.
The company also incurs 90,000 euros in internal salaries (2 senior developers at half-time on the project) and 15,000 euros in testing equipment. Total CII tax base: 150,000 euros. Tax credit: 30,000 euros. Immediately refundable if the SME is in deficit or has fewer than 250 employees and revenue below 50 million — which is the case here.
Result: the SME funds 3 dedicated offshore developers, recovers 30,000 euros in tax credit, and launches a module its competitors do not have. For comprendre le coût réel des profils à Madagascar, 2026 benchmarks are documented.
3 – What Taram changes in the tax equation (and what other providers do not do)
The CII is not a marketing argument. It is a concrete tax advantage that depends on how your relationship with the provider is structured. And this is where the Taram model creates an advantage that traditional IT services companies or offshore freelancers cannot replicate.
3.1: 1 dedicated team member = native tax traceability
When your developer is shared among three clients at a Malagasy IT services company, good luck proving to the tax authorities that they spent 80% of their time on your innovative project. You have no traceability. No individualised reporting. Just a global invoice.
At Taram, each team member is dedicated to a single client. Their time is traceable. Their deliverables are identifiable. Their scope of assignment is documented in the contract. For your CFO, this changes everything: they can allocate hours to the CII project without guesswork.
The European management structure based in Maurice guarantees standardised weekly reporting. Governance rituals naturally produce documentation — meeting notes, backlogs, sprint validations — which is exactly the type of evidence the tax authorities expect. You do not build the CII file after the fact. It is constructed during the project. See les rituels de gouvernance qui structurent le pilotage to understand how this traceability works in practice.
3.2: Intellectual property is locked in from the contract
Taram transfers IP to the client by default. It is in the standard contract. The dedicated team member produces for you, not for Taram. The deliverables — code, mockups, prototypes — belong to you. This is the sine qua non condition of the CII, and it is met without additional negotiation.
Compare this with a freelancer found on Upwork. No systematic IP clause. No contract governing further subcontracting. No solid legal structure in the event of a dispute. Your CII file is built on sand.
Compare this with a traditional offshore IT services company. IP is often shared or unclear. The contract mentions a licence of use, not a transfer of ownership. When the tax inspector asks "who owns the prototype code?", you do not want to search for the answer in an ambiguous contract drafted in approximate English. You want a clear document, in French, signed by an entity managed from Maurice with a robust legal framework.
3.3: The "3 for the price of 1" formula amplifies the tax return
For the price of one French employee, Taram deploys 3 dedicated team members. Do the maths. A senior developer in France costs between 55,000 and 75,000 euros all-in per year. For the same budget, you get 3 dedicated developers via Taram — triple the production capacity on your innovative project.
The CII tax base remains based on what you actually spend. If you spend 60,000 euros on 3 offshore developers assigned to designing a new product, your tax credit on that line is 12,000 euros. But you have produced three times as much design work as with a single French developer. The effort/innovation/tax advantage ratio is unbeatable.
And if you combine this with internal expenses (CTO time, testing equipment, patent filing costs), you quickly approach the 400,000 euro tax base cap — and therefore the maximum 80,000 euro tax credit. For évaluer le montage complet d'une équipe dédiée, the B2B offshore decision guide covers the operational and financial aspects.
Every month without a CII file is money you are leaving with the government
You are already paying your offshore developers. You are already designing new products. The scheme exists. The tax framework allows it. The only things missing are a correctly drafted contract, clean reporting, and a technical file your CFO can defend before the tax authorities.
Every month you do not declare these expenses, you are giving up between 1,000 and 6,000 euros in tax credit. Over three years, that represents the salary of an additional team member — free of charge.
Your competitors who use the CII with their offshore providers are not more innovative than you. They have simply structured their relationship with the right provider and the right contract. The question is not "does this apply to me?". The question is "how much have I lost by not doing this sooner?".
