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Business Tax Calculation and Your Opportunities

 

Setting up a business in a rural revitalization zone (ZRR) can benefit from tax advantages in the form of profit tax exemptions and exemptions from territorial economic contribution (CFE and CVAE). The entrepreneurs’ corner explains how to benefit from these tax advantages if you set up in ZRR.

Tax exemptions in the ZRR rural revitalization zone

Rural revitalization zones or ZRRs

Before checking your eligibility for tax exemption schemes for companies located in ZRRs, you should make sure you are well established in this type of zone.

Profit tax exemption in ZRR

Obtaining the exemption from income tax is linked to compliance with several conditions, particularly in terms of activity and employment. Using the tax calculator is important there.

Which companies are affected by this exemption?

Can benefit from the exemption from tax on profits in the event of establishment in ZRR the companies created or taken over before December 31, 2020 having:

  • An industrial, commercial, craft or liberal activity,
  • A head office and all the activities located in the ZRR (1),
  • A real tax regime (automatic or optional),
  • Less than 11 employees on CDI or CDD of at least 6 months and less than 50% of the capital held by other companies.

If a part of the activity is outside the ZRR, the turnover generated outside the zone must not represent more than 25% of the total turnover of the company for this condition to be satisfied.

No condition concerns the legal status of the company or its tax regime.

The following companies cannot benefit from this exemption system:

  • Agricultural, financial, banking, insurance, management or rental of buildings or sea fishing activities.
  • Companies resulting from a business takeover transaction carried out for the benefit of the spouse, ascendants or descendants, brothers and sisters of the transferor, or in which the transferor holds more than 50% of the rights.
  • Companies resulting from an operation to extend an existing activity or from a transfer of activity from a company already benefiting from the exemption.

What is the amount and duration of the income tax exemption?

The company established in ZRR which meets all the conditions to benefit from the exemption from tax on profits is:

  • Totally exempt from income tax for 5 years,
  • Then partially exempt over the following 3 years: up to 75% in the 6 th year, 50% in the 7 th year then 25% in the 8th

The exemption falls within the scope of the cap on so-called de minimis aid. It is therefore capped (with other aid from which the company may benefit) at 200,000 euros over a period of 3 financial years.

What is the procedure to benefit from the exemption from income tax?

The company established in ZRR which wants to benefit from the exemption from tax on the profits does not have any particular procedure to carry out. It should be indicated in the tax return on a line provided for this purpose.

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