Since January 1, 2017, taxpayers in Metropolitan France wishing to invest in French Small and Medium Enterprises (SMEs) while reducing their income tax, can take advantage of a new, very attractive tax system: the Overseas FIP. Find out how to pay less tax while contributing to the economic development of France.
An Overseas FIP now open to investors in Metropolitan France
Until the beginning of this year, the Local Investment Funds (FIP) dedicated to overseas SMEs which allowed their subscribers to benefit from a reduction in income tax at a particularly high rate (42% of the amount subscribed, at instead of 18% for traditional FIP), were unfortunately reserved only for residents of Overseas Departments and Regions (DROM), namely the inhabitants of Guadeloupe, Guyana, Martinique, Mayotte and Reunion.
Since this year, the government has decided to extend the subscription to this type of fund, henceforth called FIP Overseas residents of the Metropolis. In fact, the limitation of DOM FIP to only "domian" investors de facto limited the collection of funds for the benefit of companies which are in great need. The development of businesses in the French overseas departments and territories is hampered by the weakness of local private investment.
This inconsistency between the stated desire of the executive power to reduce the economic gap between the overseas territories and the mainland and the reality of the means put in place was all the more inconceivable for overseas entrepreneurs as the FIP Corse, open to metropolitan investors, authorized a tax reduction of 38%.
How to benefit from your income tax reduction?
To invest in an Overseas FIP and benefit from a reduction in your income tax corresponding to 38% of the amount invested in SMEs in the French overseas departments and territories, all you need to do is subscribe to specialized management companies. Generally the subscription starts from 1000 euros, which will give you the right to a minimum tax reduction amount of 380 euros.
The investment is capped at 24,000 euros for taxpayers in couples taxed commonly (married or civil partnership couples) and 12,000 euros for single, widowed or divorced taxpayers. Thus, the tax reduction can reach 9,120 euros for taxpayers investing in couples while it can reach 4,560 euros for single taxpayers investors.
For the tax reduction to apply to your tax due on your 2017 income, you will need to invest before December 31, 2017.
Note that the tax advantage is conditional on keeping your shares in the fund for a minimum of 5 years and that this holding period for securities varies depending on the fund and may be extended by decision of the management company. Finally, note that investing in an Overseas FIP presents the risk of partial or total loss of your investment.
To learn more about this tax-exempt private equity solution, take a tour of the market by comparing the offers of the different operators offering this type of fund.