ZRR and ZFU-TE aid: how to benefit?

ZRR and ZFU-TE subsidies are granted by the government to revitalize certain underdeveloped areas with too few businesses.

In this case, these two grants are exclusively dedicated to self-employed workers, with the aim of facilitating their relocation to areas lacking in activity, in order to boost the local economy.

ZRR stands for "Zone de Revitalisation rurale" (rural revitalization zone). ZFU-TE aid stands for "Zone Franche Urbaine - Territoire Entreprise".

Companies based in these areas benefit from a number of assistance schemes, including tax exemptions.

The aim of this article is to present each of these two public business support schemes, as well as the conditions required to become a beneficiary.

What is ZRR assistance?

ZRR assistance is reserved for companies officially located in a rural area.

More often than not, these areas suffer from a lack of economic dynamism, due to their geographical isolation and poor transport and communications infrastructures.

The aim of this scheme is to attract new businesses to rural areas through tax exemptions if you are self-employed.

Aid recipients are exempt from income tax for the first 5 years from the date of the company's creation.

The mechanism also applies in the event of resumption of an activity

They are exempt from income tax at a rate of 75% for the sixth year, 50% for the seventh year and 25% for the eighth year. They are subject to income tax with no 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?

ZFU-TE aid (formerly ZFU) applies to urban areas seeking to attract new businesses and boost their activities.

It's not just a question of small towns far from major metropolises.

For example, the Marseille neighborhoods of Saint Barthelemy, Le Canet and Delorme-Peternelle are classified as ZFU-TE.

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

Beneficiaries are exempt from income tax for 5 years, then 60% in year 6, 40% in year 7 and 20% in year 8.

The tax advantage is limited to €50,000 per year.

What are the qualifying conditions?

ZRR aid is granted subject to conditions.

To obtain it, you must meet the following criteria:

• Your installation must be completed before December 31, 2020
• You must be subject to a real tax regime (workers benefiting from the simplified micro-social regime are not eligible).
• Your head office and all your business activities must be located in a ZRR. If this is not the case, you will only benefit from a partial tax exemption.
• Your company employs a maximum of 10 people.

Then simply tick the appropriate box on your tax return. The tax exemption applies automatically.

ZFU-TE aid is granted under the following conditions:

• Your installation must be completed before December 31, 2020
• Your head office and all your business activities must be located in a ZFU-TE. If this is not the case, you will only benefit from a partial tax exemption.
• If your business was set up on or after January 1, 2015, at least half of all employees on permanent or fixed-term contracts who have been with the company for more than a year must live in a ZFU-TE or a priority urban district (QPV).

To benefit from ZFU-TE assistance, the formalities to be completed are more stringent. You are required to submit a profit determination statement with your 2035 tax return.

Tax exemption is possible once an annual declaration of labor movements has been sent to URSSAF at the end of April.

To ensure that your municipality is eligible for each of these types of assistance, you can contact your tax office.

If the tax authorities do not respond to your request within 90 days, their silence is deemed to constitute acceptance.

The ZRR and ZFU-TE grants are therefore very useful for self-employed workers or heads of very small businesses looking 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 company growth, but they will also help to reduce territorial inequalities and the isolation of certain French regions.