Tax reduction (IR-SME) for subscription to the capital of a business

Verified 03 October 2025 - Directorate of Legal and Administrative Information (Prime Minister)

A natural person who subscribed in cash to the capital of a business may benefit from a tax reduction. Since 1er january 2024, this “ Madelin discount ’ shall also benefit payments intended for Young innovative companies (JEI or JEIR).

General case

Subscription to the capital consists of cash contribution (deposit of money) in favor of a business. As from this contribution, the subscriber (or rapporteur) becomes a partner or shareholder and obtains the rights attached to this status (right to dividends, right to vote...).

Please note

One current account advance (loan from a partner to the business) don't open straight the tax cut.

In order for the tax reduction to be applicable, the subscriber, the beneficiary business of the subscription and the subscription itself must specific criteria.

Subscriber Conditions

To benefit from the tax reduction, the subscriber must meet the following conditions :

  • Be a natural person (or individual)
  • Be domiciled for tax purposes in France
  • Make a commitment to keep the securities received in exchange for the subscription (shares or shares) for 5 years.

Please note

The tax reduction benefits in particular the company creators who bring the funds of their own business. The capital increases are also affected by the scheme, but on condition that they are new members or shareholders.

Conditions linked to the business benefiting from the subscription

The beneficiary business of the subscription must complete all of the following conditions :

  • She's a SME.
  • It has been operating since under 10 years of age after registration, or under 7 years old from the opening date of the financial year in which the company's turnover exceeds for the first time the threshold of €250,000.
  • It shall have its seat in a Member State of theEuropean Union or in a State ofEuropean Economic Area.
  • It is subject to thebusiness tax (IS) or would be subject to it under the same conditions if its activity were carried out in France.
  • It is not qualified ascompany in difficulty. In concrete terms, the company must not have lost more than half of its share capital or be subject to a collective procedure (backup, turnaround or bankruptcy).
  • She employs at least 2 employees at the end of the financial year following the subscription or at least 1 employee in the case of a craft company.
  • She doesn't own of assets preponderantly constituted (i.e. more than 50%) by precious metals, works of art, collectors' items, antiques, racehorses or competition horses or, unless the very object of its activity consists in their consumption or retail sale, wines or spirits.
  • She's not not admitted to a regulated market (i.e. unlisted)
  • It carries out a commercial, industrial, craft, liberal or agricultural activity, except for the following activities :
    • Activities that provide guaranteed revenues due to the existence of a regulated feed-in tariff
    • Financial activities
    • Movable assets management activities
    • Real estate activities, including the construction of buildings with a view to their sale or rental.

Conditions related to the subscription

The subscription must meet all of the following conditions :

  • It is carried out in cash (deposit of money).
  • It is carried out either during the constitution of the business, or during a capital increase provided they are new partners or shareholders.
  • It confers only the rights attached to the status of partner or shareholder. The subscription must not offer any additional consideration (e.g. preferential rates for goods or services of the business).
  • She's bringing no capital guarantee agreement to members or shareholders in consideration of their subscription. This condition must be met on the date of subscription and continuously until the end of the 5e year following the year of this subscription.
  • It is not realized after repayment of contributions in favor of the subscriber made by the business within the preceding 12 months.
  • The total amount of payments received by the beneficiary business shall not exceed €15 million.

Please note

Subscriptions to the capital of a business holding host entitle to the tax advantage when the holding company has been incorporated and controls at least one subsidiary for at least 12 months.

The tax reduction for subscription to the capital of a SME must respect various limits and ceilings.

Applicable rates

The rate of the tax reduction varies depending on the type of company for the benefit of which the payment was made.

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General case

The amount of the tax reduction is equal to 18% payments made in respect of subscriptions to the capital of a SME.

Solidarity companies of public utility (ESUS)

The amount of the tax reduction is increased to 25%. It applies to payments made between 28 June 2024 and 31 December 2025.

Please note

In order to preserve historic monuments, this system has been extended to subscriptions to the capital of land businesses for the preservation and enhancement of historic monuments and protected sites, parks and gardens.

This tax reduction applies to payments made since 28 september 2025.

A joint and several company produces goods or services to strong social and/or environmental utility. These companies operate in different fields and have the objective of solving problems of general interest : fight against unemployment, exclusion, poor housing, development of organic farming, renewable energy, assistance to developing countries, etc.

In order to obtain the “social utility solidarity company” (ESUS) approval, the company must meet the following conditions :

  • The company must have as its main objective the search for social utility (support for vulnerable groups, territorial cohesion or sustainable development). This objective must be included in the company's statutes.
  • The burden induced by this objective of social utility must have a significant impact on the income statement or the profitability of the company.
  • The 5 employees or managers must not receive, on average, a remuneration greater than 7 times the SMIC and the highest salary of the company must not exceed 10 times the amount of the SMIC.
  • The company's equity securities must not be traded on a financial market.

The approval shall be issued for a period of 2 years for companies that have been in existence for less than 3 years at the time of application, and 5 years for the others.

Mutual Funds for Innovation (MFII)

The rate of the tax reduction is fixed at 25% .

The reduction applies to payments made on or after September 28, 2025.

Warning  

It only concerns subscriptions of units of FCPI authorized between 1er January 2024 and December 31, 2025.

Maximum amount of reduction

The amount of the tax reduction follows a system of double capping, 2 limits are applied one after the other.

On the one hand, the amount of the payments taken into account for the calculation of the tax reduction shall be limited as follows:

  • €50,000 / year for a single, widowed or divorced person
  • €100,000 / year for a married or former couple subject to common taxation

The portion of the payments that exceeds this first limit is eligible for the tax reduction for the next 4 years within the same limits.

On the other hand, this tax reduction is then taken into account in the overall cap on tax benefits which may be granted in respect of income tax. This overall limit is set at €10,000 per year. It is also possible to carry forward the excess of income tax due in subsequent years up to and including the fifth year.

Example :

In January 2024, a single person creates his business and subscribes to the capital of it up to €70,000. The applicable rate shall be 18%.

In the year of payment (year N), the amount of payments taken into account is limited to €50,000 for a single person (the €20,000 the remainder will be taken into account the following year). The taxpayer therefore benefits from a reduction of €9,000 (18% of €50,000).

The following year (N+1), the taxpayer benefits from a reduction of €3,600 for the remaining part of the payments (i.e. 18 % of €20 000).

Example :

In February 2024, a married couple set up their business and subscribed to the capital of the company to the tune of €110,000. The applicable rate shall be 18%.

In the year of payment (year N), the amount of payments taken into account is limited to €100,000 (the €10,000 the remainder will be taken into account the following year). The couple therefore benefits from a reduction of €18,000 (18% of €100,000), capped at €10,000 per year. The excess fraction equal to €8,000 shall be carried over to the following year.

The following year (N+1), the couple benefits from a reduction of €1,800 for the remaining part of the payments (i.e. 18 % of €10 000) and a reduction of €8,000 corresponding to the carry-over from year N. Thus, over year N+1, the couple benefits from a total reduction of €9,800.

However, where the amount of the tax reduction is greater than the amount of the tax payable by the taxpayer, the portion which could not be imputed shall not give rise to neither a refund nor a deferral on the tax due in respect of subsequent years.

To benefit from the tax reduction, the subscriber must attach to his annual tax return one individual state provided by the business to whose capital it subscribed.

This individual report must include the following information :

  • Object for which this state is established
  • Reason, purpose and registered office of the business
  • Identity and address of the subscriber
  • Number of securities subscribed and their amount and date of subscription
  • The amount and date of payments made under the subscription.

The individual statement must also state that the beneficiary business fulfills all the requirements (SME, unlisted, operating less than 10 years after registration or less than 7 years after its first commercial sale, etc.).

FYI  

The subscriber must be able to produce, at the request of the tax administration and for 5 years after the investment, any document such as to justify the duration of detention of his titles.

The tax cut is not not final. It can be called into question when various events occur. We are then talking about “ recovery ».

Thus, the tax reduction granted is questioning in the following cases:

  • The business reimburses the contribution to the subscriber before 31 December of the 7e year following the year of subscription. The refund may in particular take place during a reduction of share capital.
  • The subscriber disposes of all or part of its securities before 31 December of the 5the year following the year of subscription. In other words, it is not honoring its commitment to hold securities for five years. However, whatever the cause of the transfer, the tax reduction is not not questioned if the following conditions are met:
    • The policyholder has retained the securities for at least 3 years after they have been subscribed.
    • The subscriber reinvests the entire sale price securities sold (less taxes and charges generated by this sale) under subscription for new securities of eligible businesses, within a maximum period of 12 months from the sale.
    • The new securities subscribed in this way are retained until the end of the initial 5-year period.

Please note

The tax cut is not questioned in the event of dismissal, death or invalidity of 2e or 3e subscriber category. The same applies in the event of a judicial liquidation of the business, its merger or the donation of the securities if the donee assumes the obligation to keep the securities.

Subscription to the capital of a JEI

Subscription to the capital consists of cash contribution (deposit of money) for the benefit of a young innovative company (JEI). As from this contribution, the subscriber (or rapporteur) becomes a partner or shareholder and obtains the rights attached to this status (right to dividends, right to vote...).

Please note

One current account advance (loan from a partner to the business) don't open straight the tax cut.

In order for the tax reduction to be applicable, the subscriber, the beneficiary business of the subscription and the subscription itself must specific criteria.

Subscriber Conditions

To benefit from the tax reduction, the subscriber must meet the following conditions :

  • Be a natural person (or individual)
  • Be domiciled for tax purposes in France
  • Make a commitment to keep the securities received in exchange for the subscription (shares or shares) for 5 years.

Please note

The tax reduction benefits in particular the company creators who bring the funds of their own business. The capital increases are also affected by the scheme, but on condition that they are new members or shareholders.

Conditions linked to the business benefiting from the subscription

The beneficiary business of the subscription must be a Young Innovative company (JEI) satisfying the following conditions:

  • She's a SME.
  • It has been created since under 8 years.
  • She makes Research and Development (R&D) expenditure representing at least 15% of its charges. This rate does not take into account the costs of disposals of shares or bonds, foreign exchange losses and expenses incurred with other JEIs carrying out R&D projects.
  • It exercises a new activity, i.e. it was not created as part of a concentration, a restructuring, an extension of existing activities or a resumption of such activities.
  • Its capital must be held for at least 50% by the following persons or entities:
    • Natural persons: individual contractor (IC), private individual
    • Other JEI held at least 50% by natural persons
    • Associations or foundations recognized as being of public utility of a scientific nature
    • Public research and educational institutions or any of their subsidiaries
    • Investment businesses

Conditions related to the subscription

The subscription must meet all of the following conditions :

  • It is carried out in cash (deposit of money).
  • It is carried out between 1er January 2024 and December 31, 2028.
  • It is carried out either during the constitution of the business, or during a capital increase provided they are new partners or shareholders.
  • It confers only the rights attached to the status of partner or shareholder. The subscription must not offer any additional consideration (e.g. preferential rates for goods or services of the business).
  • She's bringing no capital guarantee agreement to members or shareholders in consideration of their subscription. This condition must be met on the date of subscription and continuously until the end of the 5e year following the year of this subscription.
  • It is not realized after repayment of contributions in favor of the subscriber made by the business within the preceding 12 months.
  • The total amount of payments received by the beneficiary business shall not exceed €15 million.

Please note

Subscriptions to the capital of a business holding host entitle to the tax advantage when the holding company has been incorporated and controls at least one subsidiary for at least 12 months.

The tax reduction for subscription to the capital of a young innovative company (JEI) must comply with a ceiling.

Applicable Rate

The amount of the tax reduction is equal to 30% payments made in respect of subscriptions to the capital of the JEI.

Maximum amount of reduction

The amount of payments taken into account for the calculation of the tax reduction is limited as follows:

  • €75,000 for a single, widowed or divorced person
  • €150,000 for a married or former couple subject to common taxation

The part of a year exceeding the ceilings shall not be not reportable in subsequent years, this fraction is lost.

Example :

In January 2024, a single person creates his business and subscribes to the capital of it up to €80,000. The applicable rate shall be 30%.

In the year of payment (year N), the amount of payments taken into account is limited to €75,000 (the €5,000 remaining are lost). The taxpayer therefore benefits from a tax reduction of €22,500 (30% of €75,000).

To benefit from the tax reduction, the subscriber must attach to his annual tax return one individual state provided by the business to whose capital it subscribed.

This individual report must include the following information :

  • Object for which this state is established
  • Reason, purpose and registered office of the business
  • Identity and address of the subscriber
  • Number of securities subscribed and their amount and date of subscription
  • The amount and date of payments made under the subscription.

The individual statement must also state that the beneficiary business fulfills all the requirements (SME, created less than 8 years ago, 15% of R&D expenses, etc.).

FYI  

The subscriber must be able to produce, at the request of the tax administration and for 5 years after the investment, any document such as to justify the duration of detention of his titles.

The tax cut is not not final. It can be called into question when various events occur. We are then talking about “recovery».

Thus, the tax reduction granted is questioning in the following cases:

  • The business reimburses the contribution to the subscriber before 31 December of the 7e year following the year of subscription. The refund may in particular take place during a reduction of share capital.
  • The subscriber disposes of all or part of its securities before 31 December of the 5the year following the year of subscription. In other words, it is not honoring its commitment to hold securities for five years. However, whatever the cause of the transfer, the tax reduction is not not questioned if the following conditions are met:
    • The policyholder has retained the securities for at least 3 years after they have been subscribed.
    • The subscriber reinvests the entire sale price securities sold (less taxes and charges generated by this sale) under subscription for new securities of eligible businesses, within a maximum period of 12 months from the sale.
    • The new securities subscribed in this way are retained until the end of the initial 5-year period.

Please note

The tax cut is not questioned in the event of dismissal, death or invalidity of 2e or 3e subscriber category. The same applies in the event of a judicial liquidation of the business, its merger or the donation of the securities if the donee assumes the obligation to keep the securities.

Subscription to a JEIR capital

Subscription to the capital consists of cash contribution (deposit of money) for the benefit of a young innovative company of rupture (JEIR). As from this contribution, the subscriber (or rapporteur) becomes a partner or shareholder and obtains the rights attached to this status (right to dividends, right to vote...).

Please note

One current account advance (loan from a partner to the business) don't open straight the tax cut.

In order for the tax reduction to be applicable, the subscriber, the beneficiary business of the subscription and the subscription itself must specific criteria.

Subscriber Conditions

To benefit from the tax reduction, the subscriber must meet the following conditions :

  • Be a natural person (or individual)
  • Be domiciled for tax purposes in France
  • Make a commitment to keep the securities received in exchange for the subscription (shares or shares) for 5 years.

Please note

The tax reduction benefits in particular the company creators who bring the funds of their own business. The capital increases are also affected by the scheme, but on condition that they are new members or shareholders.

Conditions linked to the business benefiting from the subscription

The beneficiary business of the subscription must be a Young innovative company of rupture (JEIR) satisfying the following conditions:

  • She's a SME.
  • It has been created since under 8 years.
  • She makes Research and Development (R&D) expenditure representing at least 30% of its charges. This rate does not take into account the costs of disposals of shares or bonds, foreign exchange losses and expenses incurred with other JEIs carrying out R&D projects.
  • It exercises a new activity, i.e. it was not created as part of a concentration, a restructuring, an extension of existing activities or a resumption of such activities.
  • Its capital must be held for at least 50% by the following persons or entities:
    • Natural persons: individual contractor (IC), private individual
    • Other JEI held at least 50% by natural persons
    • Associations or foundations recognized as being of public utility of a scientific nature
    • Public research and educational institutions or any of their subsidiaries
    • Investment businesses

Conditions related to the subscription

The subscription must meet all of the following conditions :

  • It is carried out in cash (deposit of money).
  • It is carried out between 1er January 2024 and December 31, 2028.
  • It is carried out either during the constitution of the business, or during a capital increase provided they are new partners or shareholders.
  • It confers only the rights attached to the status of partner or shareholder. The subscription must not offer any additional consideration (e.g. preferential rates for goods or services of the business).
  • She's bringing no capital guarantee agreement to members or shareholders in consideration of their subscription. This condition must be met on the date of subscription and continuously until the end of the 5e year following the year of this subscription.
  • It is not realized after repayment of contributions in favor of the subscriber made by the business within the preceding 12 months.
  • The de minimis aid granted to the business must not exceed an overall maximum of €300,000 over 3 fiscal years.

Please note

Subscriptions to the capital of a business holding host entitle to the tax advantage when the holding company has been incorporated and controls at least one subsidiary for at least 12 months.

The tax reduction for subscription to the capital of a young innovative research company (JEIR) must comply with a ceiling.

Applicable Rate

The amount of the tax reduction is equal to 50% payments made in respect of subscriptions to the capital of the JEIR.

Maximum amount of reduction

The amount of payments taken into account for the calculation of the tax reduction is limited as follows:

  • €50,000 for a single, widowed or divorced person
  • €100,000 for a married or former couple subject to common taxation

The part of a year exceeding the ceilings shall not be not reportable in subsequent years, this fraction is lost.

Example :

In January 2024, a single person creates his business and subscribes to the capital of it up to €60,000. The applicable rate shall be 50%.

In the year of payment (year N), the amount of payments taken into account is limited to €50,000 (the €10,000 remaining are lost). The taxpayer therefore benefits from a tax reduction of €25,000(50% of €50,000).

Please note

The benefit of the tax reduction is subject to compliance with Commission Regulation (EU) No 1407/2013 of 18 December 2013 on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to de minimis aid.

To benefit from the tax reduction, the subscriber must attach to his annual tax return one individual state provided by the business to whose capital it subscribed.

This individual report must include the following information :

  • Object for which this state is established
  • Reason, purpose and registered office of the business
  • Identity and address of the subscriber
  • Number of securities subscribed and their amount and date of subscription
  • The amount and date of payments made under the subscription.

The individual statement must also state that the beneficiary business fulfills all the requirements (SME, created less than 8 years ago, 30% of R&D expenses, etc.).

FYI  

The subscriber must be able to produce, at the request of the tax administration and for 5 years after the investment, any document such as to justify the duration of detention of his titles.

The tax cut is not not final. It can be called into question when various events occur. We are then talking about “ recovery ».

Thus, the tax reduction granted is questioning in the following cases:

  • The business reimburses the contribution to the subscriber before 31 December of the 7e year following the year of subscription. The refund may in particular take place during a reduction of share capital.
  • The subscriber disposes of all or part of its securities before 31 December of the 5the year following the year of subscription. In other words, it is not honoring its commitment to hold securities for five years. However, whatever the cause of the transfer, the tax reduction is not not questioned if the following conditions are met:
    • The policyholder has retained the securities for at least 3 years after they have been subscribed.
    • The subscriber reinvests the entire sale price securities sold (less taxes and charges generated by this sale) under subscription for new securities of eligible businesses, within a maximum period of 12 months from the sale.
    • The new securities subscribed in this way are retained until the end of the initial 5-year period.

Please note

The tax cut is not questioned in the event of dismissal, death or invalidity of 2e or 3e subscriber category. The same applies in the event of a judicial liquidation of the business, its merger or the donation of the securities if the donee assumes the obligation to keep the securities.

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