12. Financial Assistance for Starting a Business in France
- Start-Up Social Security Relief
- Regional Development Schemes
- Bank Finance
- Assistance with Employee Costs
12.3. Regional Business Development Schemes
There are various forms of assistance available to those located in urban and rural development areas. You might also be pleasantly surprised at just how widespread are these areas.
There are some schemes that operate on a nationwide basis and other administered by the regional or local authorities.
The main national development areas (and their acronyms!) are:
- Zones de revitalisation urbaine (ZRU)
- Zones de revitalisation rurale (ZRR)
- Zones Prime d’Aménagement due Territoire (PAT)
- Territoires ruraux de développement prioritaire (TRDP)
- Zones Franches Urbaines (ZFU)
The assistance available in these areas is often generous, although in recent years the rules have been tightened, and, in particular, micro-entrepreneurs are excluded from many of them.
It may be in the form of grants, but the main type of aid is through taxation relief and full or partial exemption from the payment of social security contributions.
In most cases these concessions are time limited, but they can be available for five or more years.
Zones de Revitalisation Rurale (ZRR)
In relation to rural development areas business start-ups can obtain complete exemption from income tax for 5 years.
Established in France since 1996, the Zones de Revitalisation Rurale (ZRR) are areas of the country of low population density or which otherwise suffer structural economic deficiencies.
The zonage is widespread, across all corners of France, incorporating around 13,000 of the 35,000 communes, some 6 million inhabitants.
As a result, you may well be surprised to find that the area in which you set up your business benefits from this classification.
To find out if your commune is within a ZRR you can visit observatoire-des-territoires, but it might also be prudent to obtain confirmation from your local mairie or tax office.
Before you rush to confirm with your local council, the bad news for a great many prospective business owners is that the exemption from income tax does not apply to those who have micro-entrepreneur tax status.
Only if you are planning to run the business either as a sole trader or through a company, in which the business is taxed on the basis of actual profits (régime réel), does the exemption apply.
If you are proposing to adopt the régime réel the relief is not ungenerous, providing:
- Total exemption from income tax for 5 years;
- Exemption at a decreasing rate for the following three years - 75%, 50% and 25% in year 8.
Where the business realises some of its sales outside of the ZRR, then it can still benefit, provided these sales do not exceed 25% of total sales. If above 25% then sales above this threshold are subject to tax.
If you operate as a sole trader then the exemption applies to personal income tax (impôt sur le revenu) on business income, and if through a company it applies to company income tax (impôt sur les sociétés).
The overwhelming range of business activities are eligible for relief, except for:
Financial, banking or insurance activities; The management or letting of property; Marine fishing; Agricultural activities; Extension of an existing activity; Family successions (although some may gain exemption).
To obtain exemption there are no steps that need be taken; you merely complete (tick) the relevant box on your income tax return. If in any doubt you should obtain prior confirmation from your tax office.
If you are eligible for relief from income tax, then you will also be entitled to a 5-year exemption from business rates (Cotisation Foncière des Entreprises - CFE), subject to no contrary decision by the local council.
In order to obtain CFE exemption you need to submit Form Cerfa 1465-SD to your local tax office.
Accredited rural gites and meublés de tourisme, chambres d'hotes and certain hotels can also obtain exemption from local rates You need to make application by submitting each year Form 1205-GD-SD and Form 6671-D-SD to your local tax office before 31 Dec. The exemption applies provided the local council have made a policy decision to that effect.
Our strong advice is that, as part of your research and planning, you discuss with your accountant, the Chambre de Commerce and with the local public authorities, whether or not you might be located in one or another of the development zones.
Indeed, even though you may not be living in a development area, some local communes and Conseil Régional offer discretionary assistance to a new business becoming established in their area.
If you have a business start-up project that is has something innovative about it, then make contact with another national business development agency called OSEO/BIP.
Visit the web site of your Conseil Régional and enquire within.
Make a visit to their offices and discuss your project and your needs.
The regional councils are a surprisingly useful source of financial and other support.
One form of support often available is towards the cost of a market research study into the viability of your proposed business.
Rural Small Business Development Grant
In February 2023 the government also introduced a system of business development grants for commercial operations in rurual areas. You can read about this scheme a Rural Small Business Development Grant.
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