Urban Development Zones (BUD) — Corporate Income Tax Exemption
Purpose listed: Exempt from tax on profits businesses set up in one of the urban areas to revitalise (BUD), for businesses created between 1 January 2018 and 31 December 2026; the scheme extends to neighbouring municipalities. Beneficiaries indicated in the catalogue: SMEs within the current EU definition, subject to income tax and located in municipalities belonging to a group of contiguous inter-municipal bodies (EPCI) with their own tax powers, totalling at least one million inhabitants, where population density is above the national average, median disposable income per consumption unit is below the national median, the unemployment rate is above the national rate, and 70% of each EPCI’s population lives in municipalities meeting these three criteria. Amount or form of aid indicated: full exemption from tax on profits for two years from the business’s creation, followed by a tapering allowance of 75% in the third year, 50% in the fourth year and 25% in the fifth year. Where the business carries out a non-sedentary activity and makes more than 15% of its turnover outside a BUD, the profits remain subject to income tax or corporation tax under ordinary rules; check the details in the official texts.
The “Urban areas to revitalise (BUD) – exemption from tax on profits” scheme aims to exempt from tax on profits businesses set up in one of the urban areas to revitalise (Bassins Urbains à Dynamiser, BUD). The exemption applies to businesses created between 1 January 2018 and 31 December 2026, and extends to neighbouring municipalities. The catalogue information gives initial indications, but it is not enough on its own to confirm that the scheme is currently available or that all the conditions are up to date. Before incurring costs or applying, check the applicable rules with the competent body.
Funded by Ministère de l’Economie, des Finances et de la Souveraineté Industrielle, Energétique et Numérique
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Who can apply
The catalogue mentions: SMEs within the current EU definition, subject to income tax and located in municipalities belonging to a group of contiguous inter-municipal bodies (EPCI) with their own tax powers, totalling at least one million inhabitants, where population density is above the national average, median disposable income per consumption unit is below the national median, the unemployment rate is above the national rate, and 70% of each EPCI’s population lives in municipalities meeting these three criteria.
Eligibility conditions
Conditions currently recorded in the catalogue: the company’s capital must not be held, directly or indirectly, for more than 50% by other companies; the exemption is subject to a local hiring condition — at the end of the financial year, the number of employees on permanent contracts or contracts of at least 12 months who live in a BUD must be at least half of the total number of employees employed under the same conditions (part-time employees counted pro rata to their contractual working time), or the number of employees hired since the business was created under the same conditions and living in a BUD must meet the threshold set by the official text — the number of employees meeting the same working and residence conditions as those above must be at least half of all employees hired under the same conditions during the same period.
What the scheme covers
Operations or costs mentioned: creation of businesses carrying out a genuinely new activity. The exemption covers only profits and capital gains (except gains on the revaluation of assets) that are properly declared within the deadlines. Businesses created as part of a takeover, concentration, restructuring or extension of a pre-existing activity are not eligible.
Amount and funding terms
The catalogue indicates: full exemption from tax on profits for two years from the business’s creation, followed by a tapering allowance of 75% in the third year, 50% in the fourth year and 25% in the fifth year. Where the business carries out a non-sedentary activity and makes more than 15% of its turnover outside a BUD, the profits remain subject to income tax or corporation tax under ordinary rules in proportion to the revenue earned outside these areas. The tax advantage granted cannot exceed a cap of €7.5 million. Maximum exempt profit in a regional aid zone (ZAFR): where the business is created in a ZAFR, the maximum exempt profit is obtained by applying to the eligible costs (corresponding to wage costs) a rate of 30% for small businesses or 20% for medium-sized businesses. Maximum exempt profit outside a ZAFR: where the business is not created in a ZAFR, the scheme is subject to European rules on aid to SMEs. The tax relief cannot therefore exceed an amount calculated by applying to eligible costs a rate of 20% for small businesses or 10% for medium-sized businesses. Combination with tax credits: all tax credits can be combined with this exemption, except the Corsica Investment Tax Credit. The scheme is granted in compliance with the European de minimis block exemption regime, which limits the total public aid granted per business to €200,000 over 3 consecutive financial years.
How to apply
1. Identify the reviewing body and obtain the current version of the rules. 2. Confirm the eligibility of the company and the project. 3. Have the costs and eligibility date validated before signing quotes or starting. 4. Prepare the supporting documents requested by the operator. 5. Keep written proof of the conditions applicable at the date of application.
Timeline
The exemption applies to businesses created between 1 January 2018 and 31 December 2026. Check the conditions in the official texts and with the tax office before relying on it.
Key facts
- Funder
- Ministère de l’Economie, des Finances et de la Souveraineté Industrielle, Energétique et Numérique
- Type of funding
- Tax exemption
- Status
- Open
- Maximum amount
- €7,500,000
- Automatically extracted — check the official source
- Closes
- 31 December 2026
- Geographic scope
- All of France
Frequently asked questions
What is the “Urban areas to revitalise (BUD) – exemption from tax on profits” scheme for?
The catalogue presents it as aiming to exempt from tax on profits businesses set up in one of the urban areas to revitalise (BUD), for businesses created between 1 January 2018 and 31 December 2026; the scheme extends to neighbouring municipalities. The exact scope must be confirmed in the official documentation in force.
Who can use “Urban areas to revitalise (BUD) – exemption from tax on profits”?
The catalogue mentions: SMEs within the current EU definition, subject to income tax and located in municipalities belonging to a group of contiguous inter-municipal bodies (EPCI) with their own tax powers, totalling at least one million inhabitants, where population density is above the national average, median disposable income per consumption unit is below the national median, the unemployment rate is above the national rate, and 70% of each EPCI’s population lives in municipalities meeting these three criteria. Eligibility also depends on the company’s area, size, sector and situation under the current rules.
How much can be obtained with “Urban areas to revitalise (BUD) – exemption from tax on profits”?
Full exemption from tax on profits for two years from creation, then a tapering allowance of 75%, 50% and 25% in the third, fourth and fifth years. Non-sedentary businesses making more than 15% of their turnover outside a BUD remain taxed under ordinary rules. The amount granted, basis and caps must be validated with the reviewing body.
Is the “Urban areas to revitalise (BUD) – exemption from tax on profits” scheme still available?
The current status and availability of funds are not confirmed by this page. Contact the operator and check the official dates before treating the scheme as available.
Official source
No official URL is available in our data for this grant.
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