The essentials of the AFR system

Regional aid areas: definition

Zones d'aide à finalité régionale, or AFR zones, are territories in the European Union identified as being in difficulty. This zoning was approved by decree of the European Commission in 2022. It delimits the areas within which the State and local authorities can receive business aid over the period 2022-2027. The aim is to encourage investment and sustainable job creation. The aid scheme may take the form of tax breaks.

AFR zones are designed to reduce development disparities between different regions of Europe. The aim is to encourage companies to locate in areas identified as being in difficulty.

Communes covered by the AFR zone scheme

To find out whether your commune is eligible for the AFR scheme, you can consult the new map of eligible communes. Simply type the name of your town in the search bar to find out if your company is eligible for an exemption.

Companies covered by the AFR zones scheme

Companies wishing to benefit from the AFR aid scheme must meet certain eligibility criteria:

  • Recently created ;
  • Carrying on a craft, commercial or industrial activity;
  • Set up in a regional aid area before December 31, 2027 ;
  • Submission to the real tax system and the intention to make a profit.

Certain business sectors are excluded from the scheme: insurance, banking, property management and rental, and sea fishing. Finally, if a company is incorporated, no more than 50% of its capital may be held by other companies.

Tax exemptions in regional aid areas

Corporate income tax (IS or IR)

The tax exemption scheme in AFR zones provides a two-year 100% exemption from income tax orcorporate income tax. For the following three years, the exemption is reduced to 75%, 50% and then 25%. The amount of the tax break is subject to compliance with de minimis aid regulations (small amounts of state aid for businesses), i.e. 300,000 euros of aid over three fiscal years.

To benefit from this total and then partial exemption from income or corporation tax, no special steps are required. The manager simply needs to fill in the dedicated line on the table for determining taxable income.

Business property tax (CFE)

Under the AFR scheme, you can benefit from a total or partial exemption from business property tax (cotisation foncière des entreprises - CF E) for a maximum period of five years. The precise terms and conditions depend on the deliberations of the communes and their public establishments for inter-communal cooperation (EPCI).

The exemption limit for business property tax is set by Community rules, depending on the location and business model. Applications must be submitted by December 31 of the year the business is set up. The application must be sent to the company tax department (SIE).

Business value-added tax (CVAE)

Companies eligible for an exemption from CFE tax can apply for an exemption from the Cotisation sur la Valeur Ajoutée des Entreprises(CVAE). This exemption is calculated on the basis of the municipal share of the CVAE, in the same proportions as the CFE. Departments and regions can opt to exempt their share of CVAE.

To determine whether a company is eligible for theCVAE exemption, the manager must contact his or her local business tax office (SIE). If the zone qualifies for the exemption, the manager must file a specific declaration with the SIE before December 31 of the year in which the company was created.

AFR assistance

Investment grants

Companies based in a regional aid area can benefit from investment aid. It is granted for an initial investment or for the launch of a new economic activity. SMEs are particularly targeted by this type of aid.

Operating aid

Operating aid is defined as aid to reduce a company's current expenses, provided they are not linked to an initial investment. It excludes the following operating costs: personnel costs, materials, contracted services, communications, energy, maintenance, etc. These operating subsidies are deployed to offset the additional costs of transporting goods, for example.

Aid for urban development

To be eligible for urban development aid, the project must be deployed via urban development funds in assisted areas. It is co-financed by European structural and investment funds. Finally, the project supports the implementation of an integrated strategy for sustainable urban development.

How do I register my company in a regional aid area?

Company domiciliation is both a tax and administrative obligation. It corresponds to the registered office of the company or micro-enterprise. To domicile your company in a regional aid area, you can opt for one of the following solutions:

  • Leasing commercial premises;
  • A coworking space;
  • A domiciliation company.

A domiciliation company offers a wide range of services to make your day-to-day administrative tasks easier: mail management (reception, scanning, forwarding), telephone reception, shared workspace, meeting room and office rental. SeDomicilier also offers legal advisory services.

In Europe, certain areas have been identified as being under economic pressure. For the period from 2022 to 2027, specific communes have been defined to deploy the regional aid scheme. In France, it takes the form of tax exemptions and investment grants.