What is a rural revitalization zone?

Definition of rural revitalization zone ZRR

With a view to strengthening the development of certain rural territories, the State has determined rural revitalization zones (ZRR). An order dated July 1, 2017 sets out the list of towns classified as ZRRs. To find out the exact list of towns concerned, simply visit the Observatoire des Territoires website. The 2024 Finance Act created a new zoning named "France Ruralités Revitalisation" (FRR). It came into effect on July 1, 2024.

Who is affected by rural revitalization zones?

General considerations

Companies located in ZRRs can benefit from a 12-month exemption from employer social security and family allowance contributions for the first fifty employees hired. Public-interest organizations with head offices in ZRRs benefit from these exemptions for employees hired in ZRRs since November 1, 2007. For employees hired before November 1, 2007, a specific exemption is possible.

Employers concerned

The employers concerned by the ZRR exemptions are :

• Companies(SASU, SAS, EURL, SARL, SNC);
• employer groups, each with an establishment located in a ZRR ;
• organizations of general interest (OIG) whose head office is located in a ZRR and for employees hired since November 1, 2007.

To benefit from the scheme, companies must be involved in craft, industrial, commercial, agricultural or liberal professions activities. They must have at least 50 employees.

Employers excluded from the SRR exemption system are :

• the State, public administrative establishments and local authorities;
• individual employers ;
• public network companies: La Poste, SNCF-RATP, EDF, etc.

A company can opt for business domiciliation in a ZRR by using the services of a domiciliation company. This is an excellent solution for taking advantage of these exemptions and gaining access to comprehensive services: mail management, telephone reception, shared workspace, meeting room and office space.

Employees concerned

Companies benefit from an exemption for their first fifty employees. These employees must meet certain cumulative conditions:

• earn less than 2.4 times the minimum wage;
• have a full-time or part-time, open-ended or fixed-term contract lasting at least 12 months and concluded for a temporary increase in activity;
• work in an establishment located in a ZRR.

The company must have affiliated its employees to the unemployment insurance scheme to benefit from the exemption.

Exemption conditions

Increase in workforce up to 50 employees

For the exemption to apply to a new hire, he or she must be hired under a permanent contract or a fixed-term contract concluded to cover a temporary increase in activity for a minimum period of 12 months. The increase in the company's workforce must not exceed fifty employees.

Hirings must bring the company's workforce over the twelve calendar months following the effective date of the hiring to a level at least equal to the sum of the reference workforce and the workforce corresponding to the hiring.

Thereference headcount corresponds to the highest average headcount determined on the basis of the two consecutive 12-calendar-month periods preceding the effective date of hiring and giving entitlement to the exemption.

When the period between the effective date of hiring and the date of creation of the company is less than two years, the reference headcount corresponds to the average headcount since the creation of the company.

Thenumber of employees hired is the monthly full-time equivalent of the employee hired. It must be deducted from the working hours specified in the employment contract. Thus, a full-time employee counts as one while a part-time employee, prorated to working hours, does not.

The retention obligation

During the twelve months following the employee's hiring, the company must check that the workforce is at least equal to the workforce to be maintained. When a company is in this situation, it can apply the ZRR exemption for the month. However, if the company's actual headcount is below the level to be maintained, it need not apply the ZRR exemption for the month in question.

Other situations in which the ZRR exemption can be maintained

In order to benefit from the ZRR exemption, the company must not make any redundancies for economic reasons during the twelve months preceding the hiring for which the exemption is requested.

The company is under an obligation not to relocate its activities outside the rural revitalization zone within five years of benefiting from the exemption. If it does, it must repay the full amount of the tax exemption.

In order to benefit from the exemption, the company must file a declaration with the Dreets(Direction régionale de l'économie, de l'emploi, du travail et des solidarités). This must be done within 30 days of the effective date of the new employee's employment contract.

Towards the new ZFRR system

Since July 1, 2024, France's rural revitalization zones (ZFRR) have included :

• Redynamizing employment areas (BER)
• Rural business revitalization zones (Zorcomir)
• Rural revitalization zones

In fact, the exemption applies to taxes levied in respect of 2024. Companies operating in the industrial, craft, commercial or liberal professions and set up within a ZFRR between July 1, 2024 and December 31, 2029 are eligible for tax exemptions on the portion of their income tax(IR) or corporation tax (IS) profits generated in the identified zone. Tax exemption is total for 60 months, then degressive over the following 36 months. In certain cases, a temporary exemption from business property tax (CFE) is also available.

To revitalize economic activity in certain rural areas, ZRR exemption schemes enable companies to benefit from reductions in employers' social security contributions. To qualify, however, companies must meet strict criteria.