Exemptions on profits in urban free zone-entrepreneur territory (ZFU-TE)

Verified 21 February 2026 - Entreprendre Service Public / (Prime Minister)

Since the 1er January 2026, the urban free zones – entrepreneurial territories (ZFU-TE) shall be abolished. However, the companies who have settled in these areas until 31 December 2025 continue to benefit from the income tax exemption in force at the time of their installation.

The ZFU-TE correspond to neighborhoods with more than 8,500 or 10,000 inhabitants that are particularly disadvantaged.

Installation of a company in these areas until 31 December 2025 allows to benefit from tax advantages: exemption from income tax, annual tax on offices in Ile-de-France, tax for the creation of offices in Ile-de-France, annual tax on offices in Provence-Côte d'Azur.

Since 1erin january 2026, the urban free zones - entrepreneurial territories (ZFU-TE) are abolished. Companies who have settled in these areas until 31 December 2025 continue to benefit from the income tax exemption until the end of the scheme.

Warning  

Only the exemption from income tax is maintained. Other tax benefits are eliminated as of 1er January 2026: premises located in ZFU-TE therefore no longer benefit from the exemptions from annual office tax in Île-de-France, tax for the creation of offices in Île-de-France, additional tax on parking areas in Île-de-France and annual tax on offices in Provence-Côte d'Azur.

The conditions for exemption from income tax differ depending on the date of establishment of the company:

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Between 1 January 2015 and 31 December 2025

Any company that complies with all of the following conditions shall be entitled to the device:

  • Implant an activity in a ZFU-TE between 1er January 2015 and December 31, 2025 . The company must have an activity room (shop, cabinet, workshop). The company must also have the means of exploitation that enable it to carry out an economic activity and earn professional income. The creation of activity may also come from the transfer of an activity previously carried out outside the ZFU.
  • Engage in a commercial, craft, industrial or liberal activity
  • Employ up to 50 employees (49 employees for companies set up since 1er January 2019)
  • Have a turnover or a profit less than €10 million
  • Holding of capital less than or equal to 25% capital or voting rights from businesses not meeting the definition of PME
  • Respect a geographically determined employment or hiring clause. This means that it must, at the balance sheet date, complete one of the following two conditions :
    • At least 50% employees on permanent contracts (CDI) or fixed-term contracts (CDD) of at least 12 months resident in a ZFU-TE or Priority City Area (QPV)
    • At least 50% of employees hired as of 1er January 2015 in CDI or CDD of at least 12 months since the company was established resident in a ZFU-TE or Priority City Area (QPV)

Before 1 January 2015

Any company that complies with the following conditions may benefit from the tax advantages of the scheme:

  • Implant an activity in a ZFU before 1er January 2015. The company must have an activity room (shop, cabinet, workshop). The company must also have the means of exploitation that enable it to carry out an economic activity and earn professional income.
  • Carrying out a commercial, craft or industrial activity in the premises
  • Employ less than 50 employees
  • or profit less than €10 million
  • External parts less than or equal to 25% capital or voting rights, from companies with more than 250 employees and more than €50 million  of (or more than €43 million  of profits).

The company's workforce must be respected for each taxation year.

On the other hand, a company which is engaged in the manufacture of motor vehicles or ships, the manufacture of textile fibers, the steel industry or the transport of goods by road is excluded from the scheme.

The amount and duration of the exemptions differ depending on the date of establishment of the activity in ZFU-TE:

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Before 1 January 2015

The income tax exemption is total for the first 5 years.

During the following 9 years, the partial exemption is equal to:

  • 60% within the next 5 years
  • 40% in Grades 6 and 7
  • 20% in Grades 8 and 9

Tax relief cannot exceed €100,000 per 12-month period, not to exceed €200,000 over three years.

This ceiling shall be increased by €5,000 per new employee residing in the neighborhood and hired full-time for at least 6 months.

Reminder

The profit of a company is the amount that is the subtraction of revenue less business operating expenses (also known as deductible expenses).

Between 1 January 2015 and 31 December 2025

The exemption from income tax is fixed at:

  • 100% for the first 5 years
  • 60% benefits during the 6e year
  • 40% benefits during the 7e year
  • 20% benefits during the 8e year

Profits from activities outside a ZFU-TE are excluded from the exemption.

The exempt profit may not exceed €50,000 per company and per 12-month period. This amount shall be increased by €5,000 per new employee residing in the ZFU-TE: titleContent or in a QPV and hired full-time for at least 6 months.

If the exemption follows a transfer, takeover, concentration or restructuring of activities that have already benefited from the tax relief, the tax relief continues for the remainder of the period.

Reminder

The profit of a company is the amount that corresponds to the subtraction of revenue less professional operating expenses (also called deductible expenses).

The company that benefits from the profit exemptions falls within the scope of the European de minimis aid.

Minimis are financial aid granted to a company by a public authority (government, local authority, public institution, etc.). The total amount of aid must not exceed €300,000 over 3 fiscal years according to the application of the de minimis rule.

The period must therefore include the current fiscal year, as well as the 2 previous fiscal years. Compliance with this ceiling shall be assessed at the time when each new de minimis aid is granted. For each new de minimis aid granted, account must be taken of the total amount of aid de minimis granted in the previous 3 years.

Beyond this amount, the aid must be notified to the European Commission.

The company that starts activities in the ZFU-TE must indicate on its income tax return, in a specific box, whether it benefits from the income tax exemption.

The company must also attach a form called the "Statement of Determination of Exempt Profit". This document must be attached to the income statement of the company in the tax book. For more information, please refer to normal real regime tax book or to the tax book of the simplified real regime. This form is to be sent to the company Tax Office (SIE):

Who shall I contact

In the case of hiring, the company must send Urssaf via the website net-companies.fr a pre-hiring declaration (DPAE):

Notice of hiring (DPAE) on the Net-companies website

Finally, when the company makes a new hire and wishes to benefit from the exemption, it must make a specific hiring declaration to the Urssaf and the Dreets: titleContent, within 30 days at the latest following the effective date of the employment contract.

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