II. ESTABLISHING IN FRANCE
B. Investment Incentives Available
:
To stimulate industrial development,
the French government and local authorities
have implemented a wide range of financial
incentives specifically tailored to industrial
research and development. These programs are
often supervised by the Community. A foreign
investor can benefit from investment aids
created in order to promote and maintain employment
by the reorganization or reorientation of
industries experiencing economic difficulties.
The various incentive programs available in
France are frequently coordinated at the national
level by the Délégation à
l'Aménagement du Territoire et à
l'Action Régionale (DATAR) and at the
local level by the municipalities. Thus, for
example;
1. The "Prime d'Aménagement
du Territoire" (P.A.T) granted by the
DATAR.
DATAR provides grants to finance
up to 33% of a given investment in land, buildings
and/or equipment purchased during the first
three years of operation. The criteria to
be eligible include site selection, the number
of jobs created or to be created and the benefits
for local industry. The amount allocated to
the proposed operations is determined by a
government committee. One-third of the grant
is paid at the beginning of the investment
program, and the remainder is paid in two
installments as the project moves towards
completion.
To prevent distortion of completion within
the European Union, the Commission has set
limits on total public assistance which vary
according to the area concerned. In a few
areas, notably the area around Longwy in Eastern
France, parts of the North and Corsica, the
ceiling is as high as 28% or even 33% of investment
in property, plant and equipment. In some
other areas, only independent companies with
fewer than 250 employees can benefit from
public assistance and then, at a low rate.
2. The Regional Grant for New
Businesses (P.R.C.E.)
The Regional Grant for New Businesses
(P.R.C.E) is given by Regions with no geographical
limitations. It may be combined with the P.A.T.
and is reserved to young companies registered
for less than 12 months, which are likeley
to create a minimum number of jobs.
The advantage takes the form of a pre-tax
ceiling (150,000 FF to 200,000 FF), of refundable
loans, participation in equity capital, etc...
3. The Redevelopment Agencies
The Redevelopment Agencies have
also been created by large industrial corporations
to encourage the redevelopment of their production
sites or the job reinsertion : a free technical
assessment is offered as well as various financial
assistance.
4. Preferential Tax Regimes
Preferential Tax Regimes are provided,
such as the Research Tax Credit, in order
to encourage innovative programs and technology
transfers and the Tax Credit Break for companies
located in special investment areas (Z.I.P.).
5. Temporary exemption from the
Business tax
Temporary exemption from the Business
tax may be granted to the benefit of research
or industrial activities located in priority
development areas.
6. Tax exemptions are available
for acquisitions of ailing firms
A company set up for the purpose
of acquiring an ailing firm may qualify for
major exemptions from tax, social contributions
and property levies. Acquirers can thus enjoy
total exemption from corporate income tax
for the first 24 months of operation under
certain conditions. Entrepreneurs must undertake
to keep the company and its business in operation
for the three years following the acquisition,
failing which the tax savings become payable.
The buyer may also be exempted from business
tax for a period of 2 years in all parts of
France by decision of a local authority like
a "Commune".
7. National social measures
National social measures are open
to foreign enterprises inasmuch as they are
treated like French establishments. These
measures allow total or partial exemption
on labor costs, employer contributions, reimbursements
of training expenses, extensive incentives
for hiring young employees.... These various
aids cover a large field of activities.
8. Research & Development
To encourage companies in certain
key areas of technology to set up in France,
the Minister for Industry and Research offer
subsidies for part of the research expenditure
involved. When investment in research is not
directly subsidized, it may qualify for tax
credit of up to FF 40 million per company
and per year.
9. Local financial support
Most French municipalities and
Chambers of Commerce sponsor business parks
and industrial zones. They sell or lease the
land and provide financing. Also government
and local funds are available for job training.
10. Export guarantees and financial
assistance
Export guarantees and financial
assistance are also investment incentives.
The "Compagnie Française d'Assurance
pour le Commerce Exterieur" (COFACE)
and the Banque Française du Commerce
Exterieur (BFCE) play the same role in relation
to the sale of French goods abroad as the
Overseas Private Investment Corporation (OPIC)
in the U.S. in relation to the U.S. goods
or the Export Credit Guarantee Department
of the United Kingdom and may guarantee and
assist export activities. COFACE provides
credit insurance on behalf of the French State.
BFCE provides subsidized financing for companies
involved in international trade and plays
a coordinating role between French exporters
and the French Government.
