Capital subscription for small and medium-sized companies (SMEs): tax cut extended

Who can benefit?

To benefit from the SME capital subscription tax reduction, you must:

• be a natural person domiciled for tax purposes in France;
• or be a legal person having as its exclusive social object, the investment in businesses which are themselves eligible for the scheme Madelin;
• make a subscription in cash (cash, checks, transfers, etc.) directly to the initial capital or capital increases of small and medium-sized companies (SMEs) in the start-up, start-up or expansion phase;
• undertake to keep the securities received in exchange for the subscription for 5 years.

What are the conditions for business?

To be eligible for the tax reduction, the business must meet the following conditions:

• have its registered office in France or in a State of the European Economic Area;
• meet definition European SME ;
• have been in existence for less than 7 years and are in the start-up, start-up or expansion phase. You can invest in an SME that is over 7 years old, but it must be an investment in a new geographic or product market, in an amount greater than 50% of the average annual turnover of the previous 5 years
• not be a company in difficulty and not fall within the shipbuilding, coal or steel sectors;
• be subject to business tax (IS) ;
• engage in any commercial, industrial, craft or agricultural activity, except for those activities:
  
  • financial activities;
  • movable property management activities;
  • activities providing guaranteed income due to the existence of a regulated feed-in tariff;
  • real estate activities, including the construction of buildings with a view to their sale or rental.
• not be listed on a stock exchange;
• employ at least 2 employees on the closing date of the financial year following the subscription giving entitlement to the reduction or at least 1 employee in the case of a craft company;
• not possess assets consisting predominantly of precious metals, works of art, collectors' items, antiques, racehorses and competitions, wines or spirits (unless the very object of the activity consists in the consumption or retail sale of wines and spirits);
• not be listed on a regulated market;
• have not received sums for subscriptions and risk finance aid totaling more than EUR 15 million;
• have not made repayments of previous contributions within the 12 months preceding the subscription.

What is the amount of the discount?

The amount of the income tax reduction is equal to 18% the amount of payments made until 9 august 2020. and 25% the amount of payments made from 10 August 2020 until 31 December 2020. This rate plus 25% for payments made under an SME capital subscription, is extended until 31 December 2021

Payments shall be withheld up to €50,000 for a single, widowed or divorced person, or €100,000 for people who are married or past.