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

Verified 01 January 2022 - Legal and Administrative Information Directorate (Prime Minister)

A company that comes in and hires a local workforce in a Urban Free Zone - Entrepreneur Territory (ZFU-TE), may benefit from tax exemptions under certain conditions. This device is valid until 31 December 2023.

Company implemented from 2016

To find out if your company is located in an urban free zone, you can consult the list of municipalities located in ZFU.

How do I know if your municipality is located in ZFU (free urban zone)?

Any company that meets the following 7 characteristics is entitled to the device:

  • Create between 1to January 2016 and December 31, 2023
  • Signing a city contract in a QPV
  • Business premises located in ZFU-TE: titleContent
  • Have a commercial, craft or industrial activity in the premises
  • Employing fewer than 50 employees
  • Revenue or profit less €10 million
  • External shares less than or equal to 25% capital or voting rights, from companies with more than 250 employees and more than €50 million CA (or more than €43 million of profits).

Please note

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

However, a company engaged in the manufacture of motor vehicles or ships, the manufacture of textile fibres, iron and steel or the transport of goods by road excluded from the device.

A company that meets one of the following two conditions may benefit from the exemption from income tax:

  • At least 50% of its employees are in permanent employment (or in CDD of at least 12 months) and reside in a ZFU-TE or City Priority Area (QPV)
  • Since its establishment or establishment, at least 50% employees hired in permanent employment (or in CDD of at least 12 months) reside in a ZFU-TE or a QPV

Please note

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

Compliance with one of the 2 conditions shall be assessed from 2e employee hired.

Thus, a company in a ZFU-TE that employs only an employee who is not resident in a ZFU-TE can benefit from the tax exemption. However, a company in a ZFU-TE that employs 2 employees is exempt only if one of the employees resides in a ZFU-TE or a QPV.

The exemption from income tax shall be:

  • 100% for the first 5 years
  • 60% during 6e year
  • 40% duringe year
  • 20% duringe year

Profits realised from activities carried on outside a SEZ-TE are excluded from the exemption.

Tax relief cannot exceed €50 000 per 12-month period, or €200 000 over 3 years.

This ceiling is increased by €5 000 per new employee residing in the neighbourhood and hired full time for at least 6 months.

If the exemption results from a transfer, take-over, concentration or restructuring of activities that have already benefited from the tax relief, the tax relief shall continue for the remainder of the period.

Reminder

the profit of a company is the amount that corresponds to the subtraction of revenue minus professional operating expenses (also known as deductible expenses).

The company must do this within the first 6 months of its ZFU-TE implementation.

To do so, the company must send a Statement of Profit with its Statement of Income.

Who shall I contact

Without a response beyond 3 months, the exemption is considered accepted.

Company must send before 30 April of each year annual labour movement report toUrssaf: titleContent and Dreets: titleContent on which she depends.

Annual declaration of labour movements in urban free zones (ZFU)

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

Online Pre-Hire Declaration (EPAD)

Finally, the company must make a declaration of employment specific to the Urssaf and the Dreets: titleContent, no later than 30 days after the effective date of the employment contract.

Companies implemented in 2015

Any company that meets the following 6 characteristics is entitled to the device:

  • Create between 1to January and 31 December 2015
  • Business premises located in ZFU-TE: titleContent
  • Have a commercial, craft or industrial activity in the premises
  • Employing fewer than 50 employees
  • Revenue or profit less €10 million
  • External shares less than or equal to 25% capital or voting rights, from companies with more than 250 employees and more than €50 million CA (or more than €43 million of profits).

Please note

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

A company whose activity falls under one of the following sectors is excluded from the scheme: Automotive, shipbuilding, textile fibre manufacturing (artificial or synthetic), iron and steel, road freight transport.

A company that meets one of the following two conditions may benefit from the exemption from income tax:

  • At least 50% of its employees are in permanent employment (or in CDD of at least 12 months) and reside in a ZFU-TE or City Priority Area (QPV)
  • Since its establishment or establishment, at least 50% employees hired in permanent employment (or in CDD of at least 12 months) reside in a ZFU-TE or a QPV

Please note

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

Compliance with one of the 2 conditions shall be assessed from 2e employee hired.

Thus, a company in a ZFU-TE that employs only an employee who is not resident in a ZFU-TE can benefit from the tax exemption. However, a company in a ZFU-TE that employs 2 employees is exempt only if one of the employees resides in a ZFU-TE or a QPV.

The exemption from income tax shall be:

  • 100% for the first 5 years
  • 60% during 6e year
  • 40% duringe year
  • 20% duringe year

Profits realised from activities carried on outside a SEZ-TE are excluded from the exemption.

Tax relief cannot exceed €50 000 per 12-month period, or €200 000 over 3 years.

This ceiling is increased by €5 000 per new employee residing in the neighbourhood and hired full time for at least 6 months.

If the exemption results from a transfer, take-over, concentration or restructuring of activities that have already benefited from the tax relief, the tax relief shall continue for the remainder of the period.

Reminder

the profit of a company is the amount that corresponds to the subtraction of revenue minus professional operating expenses (also known as deductible expenses).

The company must do this within the first 6 months of its ZFU-TE implementation.

To do so, the company must send a Statement of Profit with its Statement of Income.

Who shall I contact

Without a response beyond 3 months, the exemption is considered accepted.

Company must send before 30 April of each year annual labour movement report toUrssaf: titleContent and Dreets: titleContent on which she depends.

Annual declaration of labour movements in urban free zones (ZFU)

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

Online Pre-Hire Declaration (EPAD)

Finally, the company must make a declaration of employment specific to the Urssaf and the Dreets: titleContent, no later than 30 days after the effective date of the employment contract.

Companies before 2015

Any company that meets the following 6 characteristics is entitled to the device:

  • Creation before 1to January 2015
  • Business premises located in ZFU-TE: titleContent
  • Have a commercial, craft or industrial activity in the premises
  • Employing fewer than 50 employees
  • Revenue or profit less €10 million
  • External shares less than or equal to 25% capital or voting rights, from companies with more than 250 employees and more than €50 million CA (or more than €43 million of profits).

Please note

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

However, a company engaged in the manufacture of motor vehicles or ships, the manufacture of textile fibres, iron and steel or the transport of goods by road excluded from the device.

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

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

  • 60% over 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, or €200 000 over 3 years.

This ceiling is increased by €5 000 per new employee residing in the neighbourhood and hired full time for at least 6 months.

Reminder

the profit of a company is the amount that corresponds to the subtraction of revenue minus professional operating expenses (also known as deductible expenses).

The company must do this within the first 6 months of its ZFU-TE implementation.

To do so, the company must send a Statement of Profit with its Statement of Income.

Who shall I contact

Without a response beyond 3 months, the exemption is considered accepted.

Company must send before 30 April of each year annual labour movement report toUrssaf: titleContent and Dreets: titleContent on which she depends.

Annual declaration of labour movements in urban free zones (ZFU)

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

Online Pre-Hire Declaration (EPAD)

Finally, the company must make a declaration of employment specific to the Urssaf and the Dreets: titleContent, no later than 30 days after the effective date of the employment contract.

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