ZRR and ZFU-TE aid: how to benefit?

ZRR and ZFU-TE aids are provided by the State to revitalize certain underdeveloped areas with too few businesses.

In this case, these two aids are exclusively dedicated to self-employed workers in order to facilitate their establishment in areas lacking activity to revive the local economy.

ZRR assistance stands for « Rural Revitalization Zone ». ZFU-TE assistance stands for « Urban Free Zone - Business Territory ».

Businesses located in these areas get several types of aid, including tax exemptions.

This article aims to present each of these two public business support schemes, as well as the conditions you need to meet to benefit from them.

What is ZRR assistance?

The ZRR aid is only for businesses officially located in a rural area.

Most often, these areas suffer from a lack of economic dynamism, due to their geographical isolation and weak transport and communication infrastructure.

This aid aims to attract new businesses to rural areas through tax exemptions if you are self-employed.

Those receiving assistance are exempt from profit tax for the first 5 years from the date the company is created.

The mechanism also applies when taking over a business

They are exempt up to 75% in the sixth year, 50% in the seventh year, and 25% in the eighth year. They are subject to income tax without any exemption from the ninth year of existence.

It's important to note that you can't exceed €200,000 in tax benefits every three years.

What is ZFU-TE assistance?

The ZFU-TE aid (formerly ZFU) is for urban areas looking to attract new businesses and boost their economies.

It's not just about small towns far from big cities.

For example, the Saint Barthelemy, Le Canet, and Delorme-Peternelle districts in Marseille are classified as ZFU-TE (Free Urban Zone-Tax Exemption).

In Lyon, the Duchère district also qualifies. Other cities such as Nice, Toulouse, Lille, Nantes, Grenoble, and Montpellier complete the long list of cities with ZFU-TE classified zones.

Beneficiaries are exempt from profit tax for 5 years, then at a rate of 60% in the 6th year, 40% in the 7th year, and 20% in the 8th year.

The tax benefit is capped at €50,000 per year.

What are the requirements to benefit from it?

The ZRR aid is given out under certain conditions.

To get it, you need to meet the following criteria:

• Your installation must be effective before December 31, 2020
• You must be subject to a real tax regime (those benefiting from the simplified micro-social regime are not eligible).
• Your registered office and all of your activities must be located in a ZRR (rural revitalization zone). If this isn't the case, you'll only be eligible for a partial tax exemption.
• Your company employs 10 employees maximum.

Next, simply tick the box provided on your tax return. The tax exemption applies automatically.

The ZFU-TE aid is given out based on these conditions:

• Your installation must be effective before December 31, 2020
• Your registered office and all of your activities must be located in a ZFU-TE (urban free zone - tax exemption). If this isn't the case, you'll only be eligible for a partial tax exemption.
• If your business was created after January 1, 2015, at least half of the employees on permanent or fixed-term contracts who have been with the company for more than a year must reside in a ZFU-TE (Free Urban Zone-Tax Exemption) or in a priority neighborhood of the city (QPV).

To benefit from ZFU-TE assistance, the procedures to be completed are more restrictive. You are then obliged to send a statement of profit determination attached to declaration 2035.

Tax exemption is possible after sending an annual declaration of workforce movements to URSSAF at the end of April.

To make sure your municipality is indeed in the cities eligible for each of these aids, you can contact your tax center.

If the tax authorities don't respond to your request within 90 days, their silence means acceptance.

ZRR and ZFU-TE benefits are super helpful for freelancers or those running a VSE (very small enterprise) who want to optimize their tax situation during their first few years in business.

Not only will they free up more resources to finance their investments and the company's growth, but they will also help reduce regional inequalities and the isolation of certain French territories.