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Incentive deduction for the commercialization of innovations (IDCI)

The incentive deduction for the commercialization of innovations (IDCI) encourages the retention and valorization of Québec innovations by offering corporations a reduced tax rate on revenue derived from their commercialization in Québec.

Briefly, the IDCI takes the form of a deduction in the calculation of a corporation’s taxable income. This deduction allows a corporation to benefit from an effective tax rate of 2% on the qualifying portion of its income from the commercialization of a qualifying intellectual property asset. This represents a reduction of 9.5 percentage points from the general rate of 11.5%.

To claim the IDCI, eligible corporations must fill out the form CO 737.18.CI (2025-03) and attach it to their corporate income tax return.

Corporations eligible for the IDCI

To qualify for the IDCI, a corporation must notably:

  • have an establishment in Québec and carry on a business here;
  • earn income from the commercialization of a qualified intellectual property asset.

Intellectual property assets eligible for the IDCI

A qualified intellectual property asset is an incorporeal property of the corporation that can be:

  • an invention protected by a patent or a certificate of supplementary protection;
  • software protected by copyright;
  • a plant variety protected by a plant breeder’s rights certificate.

The asset must also result from R&D activities carried out in whole or in part in Québec. These activities must have significantly contributed to the creation, development or improvement of the asset.

Qualified profit under the IDCI

For the purpose of calculating the qualified profit, the corporation’s gross income must:

  • come from the commercialization of a qualified intellectual property asset;
  • be reasonably attributable to an establishment of the corporation located in Québec.

This gross income must also constitute one of the following:

  • income from the sale or lease of property that includes the asset;
  • income from the supplying of a service intrinsically related to the asset;
  • royalty, that is, a payment for the use of or the right to use the asset;
  • amount obtained as damages from judicial remedies relating to the asset.

Calculating the IDCI

In simplified terms, the amount of the IDCI is determined by applying the following formula:

Calculation of the IDCI

where:

A = net income for tax purposes;
B = gross income from the commercialization of an IP asset;
C = total gross income;
D = estimate of the profit not attributable to the IP asset;
E = qualified amount of R&D expenditures related to the IP asset and Québec;
F = overall amount of R&D expenditures related to the IP asset;
G = (corporate tax rate [11.5%] − 2%) / corporate tax rate.

See also