Exemptions on profits in the urban free zone-entrepreneurial territory (ZFU-TE)
Verified 01 January 2024 - Legal and Administrative Information Directorate (Prime Minister)
A company that sets up shop and hires a local workforce in a urban free zone - entrepreneurial territory (ZFU-TE)may benefit from tax exemptions under certain conditions. This scheme is valid until 31 December 2024.
The rules differ according to the date of establishment of the company: from 2016 or in 2015 or before 2015.
From 2016
To find out if your company is located in an urban free zone, you can consult the list of municipalities located in ZFU.
How do I know if your municipality is located in ZFU (urban free zone)?
Companies wishing to benefit from the income tax exemption may prior inquiry with the tax authorities to verify their eligibility for this aid. In the absence of a reply within the three-month period, the silence of the tax authorities constitutes tacit acceptance.
Any company that meets the following requirements is entitled to the scheme:
- Business premises located in ZFU-TE: titleContent
- Have a commercial, craft, industrial or liberal activity
- Employ up to 50 employees (49 employees for companies set up since 1er January 2019)
- Turnover or profit less than €10 million
- Capital ownership less than or equal to 25% capital or the right to vote, from businesses which do not meet the definition of SMB
Please note
the company's workforce must be respected for each tax year.
However,, a company engaged in the manufacture of motor vehicles or ships, the manufacture of textile fibers, the iron and steel industry or the road haulage of goods is excluded from the scheme.
A company that meets one of the 2 conditions listed below may benefit from the income tax exemption:
- At least 50% of its employees are on CDI (or on CDD of at least 12 months) and reside in an ZFU-TE or in a priority area of the city (QPV)
- At least since its creation or establishment 50% of employees hired on a DTA (or on a DTA of at least 12 months) resident in an ZFU-TE or a QPV
Please note
the company's workforce must be respected for each tax year.
Compliance with one of the 2 conditions shall be assessed from the 2e employee hired.
Thus, a company entering a ZFU-TE and employing only an employee who does not reside in a ZFU-TE may benefit from the tax exemption. But a company in an ZFU-TE employing 2 employees benefits from the exemption only in the case where one of the employees resides in an ZFU-TE or in a QPV.
The exemption from income tax is set at:
- 100% for the first 5 years
- 60% during 6e year
- 40% during the 7e year
- 20% during 8e year
Profits from activities outside an SFU-TE are excluded from the exemption.
Tax relief cannot exceed €50,000 in any 12-month period, or exceed €300,000 over 3 years.
This ceiling shall be increased by €5,000 per new employee residing in the district and employed full-time for at least 6 months.
If the exemption follows a transfer, takeover, concentration or restructuring of activities which have already benefited from the tax relief, it shall continue for the remainder of the period.
Reminder
the profit of a company is the amount that is the subtraction of revenues less professional operating expenses (also referred to as deductible expenses).
The company must make the procedure in the first 6 months of its implementation in ZFU-TE.
To do so, it must send a statement of its exempt profit determination drawn up on free paper attached to its declaration of results.
Who shall I contact
If no response is received after 3 months, the exemption is considered accepted.
The company must send, before 30 April of each year, a annual declaration of movements of labor to theUrssaf: titleContent and the Dreets: titleContent on which it depends.
Annual reporting of labor movements in urban free zone (UFZ)
Who shall I contact
In the case of a hiring, the company must send to the Urssaf via the website net-companies.fr a declaration prior to hiring (DPAE):
Online Pre-Hire Declaration (PSTD)
Finally, the company must make a declaration of employment specific to the Urssaf and the Dreets: titleContent, within 30 days according to the effective date of the employment contract.
In 2015
Any company that meets the following 6 characteristics is entitled to the device:
- Created between 1er January and December 31, 2015
- Business premises located in ZFU-TE: titleContent
- Have a commercial, craft or industrial activity in the premises
- Employ fewer than 50 employees
- Turnover or profit less than €10 million
- External parts less than or equal to 25% capital or the right to vote from companies with more than 250 employees and more than €50 million of CA (or more than €43 million of profits).
Please note
the company's workforce must be respected for each tax year.
A company whose activity falls within one of the following sectors is excluded from the scheme: motor vehicle construction, shipbuilding, manufacture of textile fibers (man-made or synthetic), iron and steel, road haulage.
A company that meets one of the 2 conditions listed below may benefit from the income tax exemption:
- At least 50% of its employees are on CDI (or on CDD of at least 12 months) and reside in an ZFU-TE or in a priority area of the city (QPV)
- At least since its creation or establishment 50% of employees hired on a DTA (or on a DTA of at least 12 months) resident in an ZFU-TE or a QPV
Please note
the company's workforce must be respected for each tax year.
Compliance with one of the 2 conditions shall be assessed from the 2e employee hired.
Thus, a company entering a ZFU-TE and employing only an employee who does not reside in a ZFU-TE may benefit from the tax exemption. But a company in an ZFU-TE employing 2 employees benefits from the exemption only in the case where one of the employees resides in an ZFU-TE or in a QPV.
The exemption from income tax is set at:
- 100% for the first 5 years
- 60% during 6e year
- 40% during the 7e year
- 20% during 8e year
Profits from activities outside an SFU-TE are excluded from the exemption.
Tax relief cannot exceed €50,000 in any 12-month period, or exceed €300,000 over 3 years.
This ceiling shall be increased by €5,000 per new employee residing in the district and employed full-time for at least 6 months.
If the exemption follows a transfer, takeover, concentration or restructuring of activities which have already benefited from the tax relief, it shall continue for the remainder of the period.
Reminder
the profit of a company is the amount that is the subtraction of revenues less professional operating expenses (also referred to as deductible expenses).
The company must make the procedure in the first 6 months of its implementation in ZFU-TE.
To do so, it must send a statement of its exempt profit determination drawn up on free paper attached to its declaration of results.
Who shall I contact
If no response is received after 3 months, the exemption is considered accepted.
The company must send, before 30 April of each year, a annual declaration of movements of labor to theUrssaf: titleContent and the Dreets: titleContent on which it depends.
Annual reporting of labor movements in urban free zone (UFZ)
Who shall I contact
In the case of a hiring, the company must send to the Urssaf via the website net-companies.fr a declaration prior to hiring (DPAE):
Online Pre-Hire Declaration (PSTD)
Finally, the company must make a declaration of employment specific to the Urssaf and the Dreets: titleContent, within 30 days according to the effective date of the employment contract.
Before 2015
Any company that meets the following 6 characteristics is entitled to the device:
- Created before 1er january 2015
- Business premises located in ZFU-TE: titleContent
- Have a commercial, craft or industrial activity in the premises
- Employ fewer than 50 employees
- Turnover or profit less than €10 million
- External parts less than or equal to 25% capital or the right to vote from companies with more than 250 employees and more than €50 million of CA (or more than €43 million of profits).
Please note
the company's workforce must be respected for each tax year.
However,, a company engaged in the manufacture of motor vehicles or ships, the manufacture of textile fibers, the iron and steel industry or the road haulage of goods is excluded from the scheme.
The income tax exemption is total for the first 5 years.
For the following 9 years, the partial exemption shall be:
- 60% over the next 5 years
- 40% in grades 6 and 7
- 20% in grades 8 and 9
Tax relief cannot exceed €100,000 in any 12-month period, or exceed €200,000 over 3 years.
This ceiling shall be increased by €5,000 per new employee residing in the district and employed full-time for at least 6 months.
Reminder
the profit of a company is the amount that is the subtraction of revenues less professional operating expenses (also referred to as deductible expenses).
The company must make the procedure in the first 6 months of its implementation in ZFU-TE.
To do so, it must send a statement of its exempt profit determination drawn up on free paper attached to its declaration of results.
Who shall I contact
If no response is received after 3 months, the exemption is considered accepted.
The company must send, before 30 April of each year, a annual declaration of movements of labor to theUrssaf: titleContent and the Dreets: titleContent on which it depends.
Annual reporting of labor movements in urban free zone (UFZ)
Who shall I contact
In the case of a hiring, the company must send to the Urssaf via the website net-companies.fr a declaration prior to hiring (DPAE):
Online Pre-Hire Declaration (PSTD)
Finally, the company must make a declaration of employment specific to the Urssaf and the Dreets: titleContent, within 30 days according to the effective date of the employment contract.
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