Setting up your business in Montpellier

Companies that set up in regional aid zones, or AFR zones, can benefit from tax exemptions under certain conditions. Approved by the European Commission and set by decree, the zoning of this aid delimits territories within which public authorities, the State and local authorities, will be able to allocate, over the period 2022-2027, aid to companies to encourage investment and the sustainable creation of jobs.
This aid may take the form of tax benefits. 

Which eligible companies are concerned by the AFR scheme? 

In order to be eligible, companies must meet certain conditions:

• be newly created
• carry out an industrial, commercial or craft activity
• be located in an AFR zone before 31 December 2023
• be subject to a real tax system and be expected to make a profit.

Banking, financial and insurance activities (except brokerage), real estate management or leasing and maritime fishing activities are not included in the AFR scheme. It should also be noted that if the business is set up in the form of a company, its capital must not be held for more than 50% by other companies, in order to benefit from the AFR scheme. 

What exemptions are available to companies that set up in an AFR? 

Exemption from income tax

Two years in full and partially the following three years at 75%, 50% and 25%.
Ceiling: The amount of the tax advantage is subject to compliance with the regulations on de minimis aid. 

Optional temporary exemption from the business property tax (CFE)

Total or partial exemption over a maximum of five years (by decision of the municipalities and their EPCIs).
Ceiling: The limit of the exemption is set by community rules depending on the area concerned and the type of business. Contact your local business tax office.

Exemption from business value added tax (CVAE)

Companies eligible for CFE exemption may also benefit from an exemption from CVAE on the municipal share of this contribution, in the same proportions as the CFE. The regions and departments may also decide to exempt their share by deliberation.
Ceiling: to be defined with your business tax department.
The tax exemption scheme in AFR zones cannot be combined with the tax exemption scheme in ZFUs. If the company was created in an Urban Free Zone (ZFU) and also meets the eligibility criteria for the AFR zone scheme, it must decide in favour of one option or the other within six months of its creation.