Tax Eligibilities As Per Your Choices

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In this article, we explain the eligibility conditions for the subscriptions made and for the companies that receive the payments.

Payments eligible for the IR-PME tax reduction

The payments which give rise to the right to the IR-PME tax reduction are the payments made for all the subscriptions to the initial capital or to the capital increases of companies eligible for the scheme. Only cash subscriptions are eligible for this tax assistance, contributions in kind are excluded. A cash subscription may take the form of a cash payment or a set-off against liquid and payable claims on the company. For payments made on the occasion of an increase in share capital, the amount to be used to calculate the tax reduction corresponds to the issue price paid (nominal value + issue premium).

Companies eligible for the IR-PME tax reduction

The beneficiary company of the payments made in respect of the capital subscription must meet several conditions to be eligible for the IR-PME tax reduction scheme. These conditions must be met on the day of subscription. Use the Tax return estimator for the proper results.

Subscriptions to the capital of operating companies and lead holding companies

Here are the 11 conditions to be met for an operating company or a holding company to be eligible for the IR-PME tax reduction:

  • The subscription must be made for the benefit of an operating company or a holding company
  • the company must be an SME within the meaning of European regulations (workforce less than 250 people and turnover not exceeding 50 million euros or total balance sheet not exceeding 43 million euros)
  • The company has at least 2 employees (or 1 if it is registered with the Chamber of Trades and Crafts) at the closing date of the financial year following that of the subscription
  • The company must have its registered office in France or in another EU Member State, Iceland, Norway or Liechtenstein
  • The company’s securities must not be admitted to trading on a regulated market
  • The company is subject, automatically or optionally, to corporation tax (IS) or income tax (BIC, BA or BNC)
  • the company must directly exercise a commercial, industrial, craft, liberal or agricultural activity, excluding activities providing guaranteed income due to the existence of a regulated tariff for the repurchase of production, financial activities, activities management of movable assets and real estate activities
  • the assets of the company do not consist predominantly of precious metals, works of art, collectibles, antiques, race or competition horses or, unless the object itself of its activity consists in their consumption or retail sale of wines or spirits
  • The company is not a company in difficulty within the meaning of article 2-18 of EU regulation 651/2014 of June 17, 2014
  • The company not having received, in respect of subscriptions, payments and aid for risk financing, the total amount of which exceeds 15 million euros

And the company must be at least in one of the following situations:

  • Not yet carry out any activity on a market,
  • Have been operating in a market for less than 7 years since the first commercial sale.

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