Financial support for setting up your business in France

The French government has created several financial incentives to support your expansion to France. Both tax advantages and grants are available to companies looking to set up in France. They vary depending on the region and on the size of the investments, the number of jobs created, etc. The public financial incentives in France also differ depending on where you decide to invest and your type of company. You may be able to receive more funding from a specific region if that region is actively trying to attract businesses like yours, or if you are developing an innovative product or service. We will introduce some of the most well-known financial incentives in France here. Please do contact us if you are interested in finding out more or have any questions regarding your company’s particular case.

Regional financial incentives in France

These financial incentives are available to companies which set up in particular regions of France with special conditions. Here are the most common French regional incentives:

• Urban Free Zones (Zones Franches Urbaines): setting up your business in an “urban free zone” grants you exemption from company taxes (100% for the first 5 years, 60% the 6th year, 40% the 7th year and 20% the 8th year.)
• Employment Area to be Revitalized (Bassins d'Emploi à Redynamiser): companies which set up their business in a French “employment area to be revitalized” are exempt from paying social security charges for their employees.
• Rural Zone to be Revitalized (Zones d’Aide à Finalité Rurale ): businesses with up to 10 employees who decide to set up within a “rural zone to be revitalized” in France receive exemptions on company taxes. The exemption is 100% for the first 2 years then is reduced to either 75%, 50% or 25% during the following 3 years.
• Priority City Districts (Quartiers de la Politique de la Ville): setting up your business in a Priority City District in France allows you to benefit from reduced company tax rates.
• Finance your expansion to France: a special economic zone

The Caux Seine urban area in Normandy in the north of France decided to conduct an experiment which was a first for France: a special economic zone. This was established in 2018 and is located between two of Normandy’s key cities, le Havre et Rouen.

This zone offers attractive economic and fiscal advantages for industrial companies from both France and abroad. Companies who set up in the zone are completely exempt from paying various regional and municipal taxes for the first year. They then receive a 30% tax reduction for the two following years, and a reduction of 50% for their fifth year.

If you set up your business in this zone, you will also benefit from the ‘welcome pack’ for your employees and their families, to facilitate their arrival in France.

Financial support for R&D and innovation in France

Further financial incentives are available for companies which do research & development in France or which develop innovative technologies.

France is Europe’s no.1 destination for international research and development projects. There are multiple reasons for this high level of investment in France, which include the infrastructure, quality of research and France’s generous R&D tax credit.

France’s research tax credit

France has a unique research tax credit system, which is the most generous in Europe. The French research tax credit which is available to companies doing research and development in France is ranked as the number 1 funding measure for European companies and is Europe’s most generous R&D tax system. Due to the research tax credit, France has the world’s lowest effective corporate tax for R&D operations.

France’s research tax credit is available to all companies doing research and development in France regardless of size, industry and nationality. It covers 30% of all R&D expenses up to €100 million, as well as 5% above this threshold. The research tax credit is applied to all R&D operating costs at a rate of 50% and to investments in R&D operations at 75%.

Research staff salaries are fully covered by the research tax credit, and it is applied to junior final-year doctoral and post-doctoral research staff salaries at a rate of 200% for 2 years, if they are on their first personal contract. This means that the research tax credit is effectively quadruple-counted in these cases. Any expenses that are outsourced to public-sector bodies are double-counted, meaning that in effect the research tax credit has twice as much value for your company.

The research tax credit base covers all research and development spending expenses, SMEs working on innovative technologies can also apply for an additional innovation tax credit which is applied at a rate of 20% and covers expenses of up to €400,000 per year.

Young Innovative Company/Jeune Entreprise Innovante status and exemptions

On top of France’s generous research tax credit, it is also possible to access further financial support in France by obtaining the status of a “Young Innovative Company”. To obtain this status, companies need to be less than 8 years old, employ under 250 people, earn under €50 million per year and spend at least 15% of their outgoing spending on R&D.

“Young Innovative Companies” in France also benefit from fiscal exemptions on their R&D spending as well as general fiscal exemptions on their overall revenue. They are eligible for a revenue tax exemption of 100% for the first year, and 50% the following year. Furthermore, French “Young Innovative Companies” benefit from social security exemptions for research staff.

It can, of course, be difficult to navigate the different financial incentives which are available to you if you are thinking about setting up your business in France. If you have any questions or want to know more about your particular situation, please contact invest-HUB. Our team of experts is happy to advise you.