The French parliament has recently approved the final segment of the 2025 budget, which carries significant implications for the startup ecosystem in the country.

While the budget preserves the JEI exemption for early-stage innovative enterprises, it increases the R&D spending requirement from 15% to 20% to qualify for this status.

In a notable change, the criteria for what constitutes R&D spending have been redefined, now excluding costs such as GPU usage, which could adversely affect many startups.

France Digitale has reported that nearly half of French startups currently hold JEI status, and the new tighter conditions may lead to significant job losses.

The government projects that these budget changes will save €50 million; however, critics warn that this could result in increased unemployment within the tech sector.

Startup associations have voiced their concerns that the budget cuts will stifle innovation and competitiveness, particularly against countries like the US and China, which are increasing their technology investments.

This budgetary upheaval comes in the wake of France facing pressure from the European Council for violating budget deficit rules, highlighting the urgent need for financial reforms.