France: Tax-Efficient Sectors
This page was last updated on 6 Nov 2018.
While France is at the forefront of proposals to end fiscal distortions through the harmonization of world tax systems, it nonetheless offers a considerable number of discriminatory tax regimes which give certain sectors of the domestic economy a significant financial advantage over others. These tax incentives overlap but broadly fall into one of three categories:
- Reduced or nil rates of corporate income tax for favoured sectors. Included in this category at the time of writing are energy conservation companies, patent holding companies, business start-ups and companies locating to free trade zone areas (established in mainland France, Corsica & the French colonies). However, the free zone schemes in Corsica and the metropolitan colonies (part of EU territory) came partially to an end in 2002 as a result of EU moves to limit state aid schemes and unfair tax competition. Local investment funds were introduced in 2003 to mobilise individual savings.
- Unusually generous tax-deductible allowances (including accelerated depreciation): This incentive has the effect of significantly reducing taxable income. The principal beneficiaries of these allowances are companies operating in the fields of mineral extraction, oil & gas exploration and publishing. Accelerated depreciation allowances are also available to all sectors in respect of certain products (e.g. software purchases).
- Artificially created investment tax credits which can be set off and credited against corporate income tax assessments. These are granted to companies involved in scientific & technical research and to all sectors of the economy engaged in staff training.
(N.B. Only a few of the most significant tax incentives are referred to here).