Why locate your business in a rural revitalization zone (ZRR)?

What is a rural revitalization zone (ZRR)?

A zone de revitalisation rurale (ZRR - rural revitalization zone) is a geographical perimeter grouping together a number of communes recognized as fragile from a socio-economic point of view (in demographic and economic decline). ZRRs were created in 1995 to encourage business start-ups and economic development in rural areas, by allowing companies wishing to set up there to benefit fromtax breaks (Loi n° 95-115 du 4 février 1996 d'orientation pour l'aménagement et le développement du territoire).

The classification of communes as rural revitalization zones (ZRR) is established by decree, in the form of a list. Would you like to know if your community is eligible? Simply consult the interactive map of the Observatoire des Territoires listing the ZRRs and use the available search tool.

This temporary scheme, which has already been extended several times, has been extended until June 30, 2024 by the Finance Act for 2024. From July 1, 2024, a new scheme will replace the ZRRs: the "France ruralités revitalisation" scheme.

What exemptions are available in rural revitalization zones (ZRR)?

If your company is located in a rural revitalization zone (ZRR), you can benefit from tax and social security exemptions, provided you meet certain criteria. These criteria relate in particular toyour company's workforce and the nature of your business.

Here are the main tax and social security exemptions available to you:

• exemption from corporation tax (IS) or income tax (IS);
• exemption from the territorial economic contribution (CET): cotisation foncière des entreprises (CFE) and cotisation sur la valeur ajoutée des entreprises (CVAE).
• an exemption from property tax on built-up properties (TFPB) and housing tax on second homes;
• an exemption from employer contributions.

Exemption from corporation tax (IS) or income tax (IR) in ZRR areas

To benefit from a tax exemption on profits, you have until June 30, 2024 to set up or take over a business in a rural revitalization zone (ZRR).

Eligible companies

To qualify for a corporate income tax (CIT) or income tax (IR) exemption, your company's head office and all operating resources must be located in a ZRR.

Businesses covered by the exemption are those that have been set up or taken over, whether they aresole proprietorships (EI) or companies, subject to corporation tax (IS) or income tax (IR), and which meet the following conditions:

• be created or taken over before June 30, 2024;
• carry on an industrial, commercial, craft or liberal activity;
• locate its head office and activities in a ZRR;
• be subject to a real tax system ;
• employ fewer than 11 people on permanent or fixed-term contracts of at least 6 months;
• for companies, to have less than 50% of its capital held by other companies.

Please note that if your company generates more than 25% of its sales outside a ZRR, the portion in excess of 25% is taxed.

Excluded companies

However, your company is excluded from the exemption if it meets one of the following criteria:

• be a micro-business;
• engage in financial, banking, insurance, property management or leasing, or sea fishing activities;
• make agricultural profits ;
• be created as part of an extension to a pre-existing activity;
• be created or taken over following the transfer of an activity previously carried out by a company that had already benefited from an exemption.

Amount and duration of exemption

The exemption from corporation tax (IS) or income tax (IR) is total for 5 years from the date of the company's creation or takeover. Thereafter, the exemption is partial and degressive for the following 3 years:

• 6th year: 75% exemption;
• 7th year: 50% exemption;
• the 8th year: 25% exemption.

The amount of the tax advantage is capped at €300,000 over a 3-year period, in line with de minimis aid regulations. The de minimis rule stipulates that a single company may not receive more than €300,000 in aid over a period of 3 sliding tax years.

Procedure

If your company qualifies for tax exemption, you don't need to take any specific steps. The exemption is automatic once you have filled in the appropriate line on the table used to determine your taxable income.

To check whether your company is eligible for this scheme, you can contact your local business tax office (Service des Impôts des Entreprises - SIE).

CFE and CVAE exemptions in ZRRs

Unless your municipality decides otherwise, your company may be exempt from CFE and CVAE if it is located in a ZRR. The CFE is a local tax payable by companies engaged in self-employed activities, calculated on the basis of the rental value of real estate subject to property tax.

Eligible companies

Your company is exempt from CFE and CVAE if it meets one of the following criteria:

• creation, expansion, conversion or takeover of a iling industrial or scientific and technical research establishments , or management, research, engineering and IT services;
• business start-ups by artisans, registered in the national register of companies (RNE), mainly engaged in manufacturing, processing, repairs or service provision, and for whom labor remuneration represents more than 50% of sales;
• a business start-up or takeover of a commercial or craft business carried out by a company engaged in the same type of activity, with fewer than 5 employees and based in a town with fewer than 2,000 inhabitants.

Amount and duration of exemption

The exemption applies to the entire territorial economic contribution (Contribution Economique Territoriale - CET), i.e. the Cotisation Foncière des Entreprises (CFE) and the Cotisation sur la Valeur Ajoutée des Entreprises (CVAE).

CFE and CVAE exemptions are automatic, unless waived by the local authority, and apply for a maximum of 5 years.

Steps

To take advantage of the CET exemption, you must submit the following forms to your local business tax office (Service des Impôts des Entreprises - SIE):

• form n° 1465-SD with the annual CFE declaration sent on May 3 following the year in which the exempt operation is carried out ;
• form no. 1447-C-SD for new businesses, by December 31 of the year in which the business was set up.

Please note, however, that in the case of an exemption for the extension or creation of industrial or scientific and technical research establishments, you do not need to complete any formalities.

Exemption from property tax on built-up properties (TFPB) in ZRR areas

By decision of your commune, department or region, you may be exempt from property tax on built-up properties (TFPB) if your company is located in a ZRR.

Eligible companies

The exemption from property tax (taxe foncière sur les propriétés bâties - TFPB) applies only to :

• hotels ;
• meublés de tourisme ;
• bed and breakfast.

To qualify for this exemption, the company must meet the following criteria:

• employed fewer than 11 people in the penultimate year (N-2) prior to taxation;
• annual sales of less than €2 million in the year before last (N-2), or in the last 12 months of the financial year.

The TFPB exemption applies only to premises used foraccommodation purposes.

Steps

To apply for exemption from TFPB, you need to send Cerfa form no. 15532 to your local Service des Impôts des Entreprises (SIE), together with all the documents required to prove the use of the premises. The form must be sent before December 31 of the year preceding that for which the exemption applies.

Exemption from council tax on second homes in ZRR areas

As with the exemption from property tax on built-up properties (TFPB), meublés de tourisme and chambres d'hôtes located in ZRR areas may be exempt from property tax on secondary residences, after deliberation by the municipality in which they are located. Exemption from council tax on second homes applies to premises used solely foraccommodation purposes.

To benefit from this exemption, you need to fill in Cerfa form no. 13567 and send it to your local Service des Impôts des Entreprises (SIE).

Exemption from employer contributions in ZRR areas

Finally, if your company is located in a rural revitalization zone (ZRR), you can benefit from an exemption from employer contributions for social insurance and family allowances, for hiring employees in rural revitalization zones (ZRR).

Eligible companies

To be eligible for an exemption from employer contributions in a ZRR, you must meet the following conditions:

• carry on an industrial, commercial, craft, agricultural or liberal activity;
• have at least one establishment located in a ZRR ;
• employ a maximum of 50 people;
• be up to date with all URSSAF obligations;
• not have been made redundant in the 12 months prior to hiring.

Amount and duration of exemption

The exemption from employer contributions applies for 12 months from the employee's hiring date. The amount of the exemption varies according to the employee's salary:

• it is total for remuneration less than or equal to 1.5 times the SMIC, i.e. up to €2,650.38 gross per month in 2024;
• the benefit is degressive and then cancelled for earnings between 1.5 and 2.4 times the SMIC, i.e. between €2,650.38 and €4,240.60 gross per month in 2024.

Steps

To benefit from an exemption from employer contributions, you must send Cerfa form no. 10791 to DREETS, within 30 days of hiring the employee.

For reporting purposes, you must indicate the number of employees concerned and the amount of the exemption on the specific line of your URSSAF declaration, using the personnel type code (CTP) 513: "embauche du 1er au 50e salarié ZRR" (hiring of the 1st to the 50th ZRR employee).

You now have all the essential information on the exemptions applicable to companies located in rural areas! So don't wait any longer to check whether your company is eligible...