FIP simulator: tax reduction for financing regional SMEs

Simulate your FIP reduction

The simulator applies the rate and ceiling according to your situation. Your data is neither stored nor transmitted.

Why the FIP is more than just a tax reduction

The FIP (French Investment Fund) has a dual nature that must be understood in both senses. Firstly, it's a tax-efficient product: 18% of the investment is tax-deductible from your income tax in the year of subscription, up to a limit of €12,000 (single person) or €24,000 (couple). This benefit is immediate and guaranteed. But it's also, and above all, an investment in unlisted regional SMEs—a real, illiquid, and risky asset.

The most common mistake is to focus solely on the first aspect. An investor who subscribes to a FIP (French investment fund) to "reduce €2,160 in taxes" without considering the fund's strategy, the quality of the management team, and the level of fees treats a capital investment like a simple accounting entry. However, the final performance depends primarily on the performance of the SME portfolio, not solely on the tax advantage.

The real asset value lies elsewhere: exposing a measured portion of one's assets to financing the unlisted regional economy, mitigating the entry risk through the reduction of 18 %. This is a component of diversification, to be carefully considered within an overall allocation — never the core of a portfolio.

The 3 realities of the FIP: advantages and disadvantages

An immediate reduction that cushions the blow, without protecting

The 18% tax reduction is applied in the year of subscription: this is a definite advantage that automatically lowers your cost price. However, it does not protect the capital. If the SME portfolio underperforms, the exit value may be lower than the initial investment, even after the reduction. The tax advantage softens the blow of the initial investment; it does not guarantee a positive outcome.

Risk to SMEs and long-term illiquidity, to be fully assumed

You are financing unlisted regional SMEs, some of which will fail—that's inherent to unlisted investments. Shares must be held for at least five years to maintain the tax advantage, and real liquidity often comes later, between six and ten years, depending on fund sales. This money should be money you don't need and that you accept will fluctuate, or even partially lose.

Fees and strategy are what really drive performance.

FIPs (French investment funds) have entry and management fees that significantly impact net performance. Two funds offering the same tax reduction of 18% can produce very different results depending on their fees and the quality of their management team. Before subscribing, it's essential to review the investment strategy, the manager's track record, and the fee structure. An FIP is primarily an investment choice, then a tax reduction—and it falls within the overall tax break limit of €10,000 per year.

Case study: Claire and Julien, 44 and 47 years old, self-employed professionals in Nantes

This couple, taxed at 41% (%), wants to reduce their tax burden while diversifying a small portion of their assets into unlisted companies. They invest €20,000 in a FIP (French investment fund), below the couple's limit of €24,000. Here's what the simulator calculates, without hiding the risk:

The €3,600 discount brings the cost price down to approximately €16,400: if the fund eventually returns the initial capital, Claire and Julien only benefit from the discount. However, the entire €20,000 remains exposed to the risk of the portfolio's SMEs and is tied up for at least 5 years, often longer in practice.

That's why we consider this type of investment as a diversification tool—a limited portion of your financial assets—and not as a core portfolio investment. The discount is an entry bonus, not a guarantee of success.

The FIP is judged on its substance, not on the tax line.

This simulator calculates the tax reduction. The real decision lies in the quality of the fund: strategy, management team, track record, fee level, and its appropriate allocation within your portfolio. Choosing a FIP (French investment fund) solely for its tax advantages, without considering its underlying assets, is a mistake that the 18% tax reduction won't rectify.

Balmont Conseil is an objective wealth management firm, a member of ANACOFI, with no capital ties to any asset management company. We compare FIPs (French investment funds) across the entire market and only select one if the risk/return profile justifies it, beyond the tax advantages. Let's make an appointment to integrate this lever, if necessary, into a controlled allocation.

Frequently Asked Questions

What exactly is the FIP rate and ceiling?

The income tax reduction is 18% of the amount invested, up to a limit of €12,000 for a single person and €24,000 for a couple filing jointly. This benefit falls within the overall tax break cap of €10,000 per year, so it must be considered in conjunction with your other tax advantages.

What are the risks of a FIP?

The FIP invests in unlisted regional SMEs: some may fail, and the exit value is not guaranteed—it may be lower than the initial capital, even after the 18% reduction. Furthermore, there is significant illiquidity: shares are locked in for at least 5 years, with real liquidity often only becoming available between 6 and 10 years. It is a diversification investment, not a guaranteed investment.

Is the capital gain from the FIP taxed?

If you adhere to the holding period, any capital gain from the sale of the shares is exempt from income tax. However, social security contributions of 17.2% (%) remain due on this capital gain. Therefore, the income tax exemption does not cover the entire exit tax liability.

How to choose a good FIP?

Looking at what's inside, not just the discount. The investment strategy, the experience and track record of the management team, and especially the level of entry and management fees determine the net performance. Two FIPs (French local investment funds) offering the same 18% discount can produce very different results: an FIP is first and foremost an investment choice.

Why go through Balmont Conseil for a FIP?

Because a distributor has an interest in investing the funds that generate their income. Balmont Conseil, a member firm of ANACOFI, compares FIPs (French investment funds) across the entire market and only selects one if its risk/return profile and fee level justify it, beyond the tax advantages. We also allocate this investment to its appropriate position within your portfolio, without overselling it.