Conditions for exemption

In order to benefit from the income tax (IR) and business tax (IS) exemptions, the company must set up a new activity and comply with a condition of headcount or turnover.

The exemption rules are different depending on whether the company has a new activity or exercises new and non-sedentary activity (i.e. outside of business premises, mainly at customers' premises).

New Activity

To benefit from the exemption, the company must set up a new activity, not previously available in the ZRD.

The exemption shall be reserved for new or existing companies which create new activities in DRZs for a period of six years starting:

• From the date of publication of the order delimiting the ZRD
• If the date of this order is after the activity, from 1^er January of the year preceding the year for which the ZRD is recognized. For example, if the municipality where the activity is carried out is recognized as ZRD in 2020, then the period for benefiting from exemptions begins on 1^er January 2019.

The new activity must relate to one of the following areas:

• Industrial, artisanal or commercial,
• Liberal if it is exercised in a business subject to the IS,
• Rental of professional buildings equipped with their equipment (examples: factory with manufacturing machines, restaurant with kitchen and equipment for the public, warehouse with storage and shipping equipment).

New and non-sedentary activity

In addition to the conditions associated with the new activity, the company that has non-sedentary activity but who is implanted in a DRZ must also comply with one of the following 2 conditions:

• Employ at least one sedentary full-time employee who performs his duties in the premises located in the ZRD (no business travel outside ZRD)
• Achieve at least 25% of its turnover excluding VAT from customers located in the ZRD

If the activity is carried out partly outside the ZRD (taxis, building trades, personal services activities), the company is entitled to tax exemption only on its profit made in the ZRD (office, workshop, etc.).

Amount and duration of the exemption

The exemption from income tax or business tax is total for 5 years from the start of activity in the area.

For the following 2 years, the exemption is equal to:

• 2/3 of the profits la 1^re year,
• 1/3 of profits la 2^e year.

This exemption is subject to the de minimis rule. Minimis are financial aid granted to a company by a public authority (government, local authority, public institution, etc.). The total amount of aid paid under the minimis is limited to €300,000 over 3 rolling fiscal years.

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.

How to benefit from the exemption?

A special declaration must be attached to the income tax return and the necessary information must be completed to qualify for this tax exemption.

Calculation sheet to be attached to the income statement - BOFIP - taxes - ZRD

Directorate-General for Public Finance (DGFiP)

Pour en savoir plus

These documents must be submitted to the company Tax Office (SIE) during the annual income tax return.

Duration of the exemption

The exemption from the CFE is total. It lasts 5 years.

It starts either the year following the creation of the company or, in case of extension of the establishment, the 2^e year following this one.

This exemption is subject to the de minimis rule. Minimis are financial aid granted to a company by a public authority (government, local authority, public institution, etc.). The total amount of aid paid under the minimis is limited to €300,000 over 3 rolling fiscal years.

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.

Procedure to obtain the exemption

The request is made to the company Tax Office (SIE).

The company must apply for the exemption for each of the establishments concerned:

• either in the initial declaration of the CFE (cerfa n°14187) by 31 December of the year of establishment or change of establishment operator:

Initial Declaration 1447-C-SD (CFE)

• or in the declaration of amendment of the CFE (cerfa n°14031) by 2^e working day next to 1^er May of the year after the extension of establishment.

Amending Declaration 1447-M-SD (CFE)

Conditions for exemption

Local authorities and EPCI may adopt a resolution that exempts buildings located in defense restructuring zones (DRZs) from property tax on built-up properties (TFPB).

This tax advantage applies to immovable property connected to an establishment that qualifies for the CFE exemption.

This exemption from property tax on built properties (TFPB) is subject to the de minimis rule. Minimis are financial aid granted to a company by a public authority (government, local authority, public institution, etc.). The total amount of aid paid under the minimis is limited to €300,000 over 3 rolling fiscal years.

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.

Procedure to obtain the exemption

The company must complete the property tax return on built properties form n°6693-SD . This form must be sent to the company Tax Office (SIE) before 1^er January of the year of exemption.

Conditions for exemption

Concerning the employer

To benefit from the exemption, the company must set up a new activity, not previously available in the ZRD.

The exemption shall be reserved for new or existing companies which create new activities in DRZs for a period of six years starting:

• From the date of publication of the order delimiting the ZRD
• If the date of this order is after the activity, from 1^er January of the year preceding the year for which the ZRD is recognized. For example, if the municipality where the activity is carried out is recognized as ZRD in 2020, then the period for benefiting from exemptions begins on 1^er January 2019.

The new activity must relate to one of the following areas:

• Industrial, artisanal or commercial,
• Liberal if it is exercised in a business subject to the IS,
• Rental of professional buildings equipped with their equipment (examples: factory with manufacturing machines, restaurant with kitchen and equipment for the public, warehouse with storage and shipping equipment).

Concerning the activity of the employee

The employee must exercise a real and regular activity partly or totally in the area. The employee must be in one of the following situations:

• It carries out its activity exclusively in the establishment located in the area.
• It carries out its activity outside the establishment but it carries out part of its activity in a ZRD (that of the establishment's establishment or another).
• It carries out its activity partly in the establishment located in the area and regularly uses elements of exploitation or stocks present in that establishment. The employee must be present each month for at least half of the working time set out in his contract. The employee may also carry out his activity in part in this establishment provided that it is real, regular and indispensable.

Amount of exemption

The exemption from employer contributions varies according to wages.

It is total for gross monthly remuneration less than €2,613.82 (corresponding to 1.4 Smic).

It is degressive for gross monthly remuneration ranging from €2,613.82 à €4,480.84 (i.e. 2.4 Smic).

It is granted for 5 years from the establishment or creation of the company in the ZRD. If the hiring takes place after that date, the application of the exemption is not postponed accordingly.

The first 3 years, the exemption is at full rate (at 100%). The 4^e year, it is reduced by 1/3, and the 5^e year of 2/3.

Procedure to obtain the exemption

In order to obtain the exemption from employer contributions, the employer declares in the registered company declaration (DSN): ‘ZRD exemption’ with the personnel type code (CTP) 593.

Registered company declaration (DSN)