IR-PME: Which companies qualify for the tax reduction, size, age and activity requirements

Your subscription only qualifies for the SME income tax reduction if the company also meets a series of conditions: it must be an SME as defined by European law, be young, have a minimum number of employees, carry out an activity not excluded by the legislation, have its registered office in the European Union or the European Economic Area, and not be listed on a regulated market. These conditions are generally assessed on the date of payment, and several must remain valid until December 31st of the fifth year following receipt of the securities.

This page addresses the conditions that apply to the company. It does not cover the contribution rates and limits, which have their own dedicated page, nor does it cover FIP and FCPI investments, enhanced categories (JEI, JEIR, JEII, ESUS, SFS), or holding companies. On certain points, the page refers to the official source at the time of your contribution rather than providing definitive answers.

Risk. Investing in the capital of a non-listed SME exposes you to the risk of losing all or part of your invested capital. The tax reduction does not protect your capital.

Size: an SME in the European sense

The BOFiP (BOI-IR-RICI-90-10-20-10, version of 27/08/2026) requires a company to employ fewer than 250 people. It sets a threshold of €50 million for annual turnover and €43 million for total assets; the way these two thresholds interact is explained in the text. The same text specifies:

• For a company linked to others, the data of the linked companies must be added; ;
• The size is assessed on the date of payment, based on the last completed twelve-month financial year; ;
• Losing SME status after the release of the subscription does not affect the reduction.

Age: ten years old, seven years old, or a need for growth

The French tax authority (BOFiP, BOI-IR-RICI-90-10-20-20, § 160) considers a company to be eligible if it has been operating for less than ten years after its registration, or for less than seven years after its first commercial sale. This first sale is measured by a turnover excluding VAT of €250,000 (threshold set by decree), assessed on a year-by-year basis. A company that is not yet active in any market may also be eligible. The condition is assessed on the date of the payment corresponding to the initial investment.

Starting point of the seven-year period: to be verified at the source. Three formulations exist. The BOFiP (§ 160) states that "the seven-year period runs from the opening date of the fiscal year following the one in which" turnover first exceeds the threshold. Entreprendre.service-public.gouv.fr links the period to the opening of the fiscal year in which turnover first exceeds €250,000. Impots.gouv.fr states "after its first commercial sale." The website does not endorse any of these formulations over the others: for a company nearing this deadline, the date is verified at source before payment.

Beyond these deadlines, the BOFiP (§ 170 to 180) provides for a special case: the investment must aim to integrate a new geographical or product market, with a financing need greater than 50 % of the average annual turnover of the previous five years, established by a business plan.

The company in difficulty

The company must not be a company in difficulty as defined by European Regulation 651/2014 (BOI-IR-RICI-90-10-20-10, § 70). The BOFiP specifically addresses:

• The company whose partners have limited liability (the BOFiP cites SARL, SA, SCA and SAS) that has lost more than half of its share capital. This criterion does not apply to an SME that has been operating for less than ten years after its registration or for less than seven years after its first commercial sale; ;
• the company which is subject to insolvency proceedings; ;
• the company that has received rescue aid, as long as the loan is not repaid or the aid has not ended, or restructuring aid, as long as it remains subject to the restructuring plan.

The activity: what is excluded

The BOFiP (BOI-IR-RICI-90-10-20-20, § 10 to 70) requires a company that carries out "exclusively an industrial, commercial, craft, agricultural or professional activity". It excludes:

• managing one's own movable assets; ;
• energy production activities sold at a regulated buyback tariff; ;
• financial activities: banking, finance, insurance; ;
• the construction of buildings for sale or rental; ;
• all real estate activities.

An ineligible activity may be admitted if it is ancillary and constitutes an inseparable complement to an eligible activity, subject to three cumulative conditions: identical clientele, predominance of the eligible activity in turnover, and technical or commercial necessity (§ 90). The BOFiP does not impose any legal form requirements (BOI-IR-RICI-90-10-20, § 20).

Also excluded is a company whose assets consist primarily of precious metals, works of art, collectibles, antiques, racehorses or show horses (§ 20), wines, or spirits. The BOFiP (French Official Tax Bulletin) does not include wines and spirits when the very purpose of the business is their consumption or retail sale. The threshold is half of the fixed assets, inventory, or their sum, depending on the nature of the assets (BOI-IR-RICI-90-10-20-30, § 10).

Staff numbers, headquarters and stock market listing

Effective. At least two employees at the close of the financial year following the subscription (BOI-IR-RICI-90-10-20-30, § 150). Only one employee is sufficient for a craft business (entreprendre.service-public.gouv.fr, impots.gouv.fr); the BOFiP refers to the company that must register with the Chamber of Trades and Crafts.

Seat. The place of effective management is in France or in another State of the European Union; the BOFiP also admits a State of the European Economic Area linked to France by an administrative assistance agreement (§ 40).

Quoting. The securities must not be admitted to trading on a regulated market. According to the BOFiP (French Official Tax Bulletin), a company listed on Euronext is excluded, while Euronext Growth or a free market may be eligible (paragraphs 60 to 70). Multilateral trading facilities are also included, with an exception for those composed primarily of SMEs. A listing subsequent to the release of the subscription does not invalidate the tax reduction; however, a subscription to a capital increase made as a follow-on investment after the admission of the securities does not entitle the holder to the tax reduction (paragraph 90).

Two points to check at the source before subscribing

The company's tax regime. The BOFiP (BOI-IR-RICI-90-10-20-30, § 100 and 120) refers to companies subject to corporate income tax under standard tax rules, and specifies that this applies to companies whose profits are automatically or optionally subject to personal income tax (BIC, BA, or BNC) or corporate income tax, without a permanent full or partial exemption. The information sheets on entreprendre.service-public.gouv.fr and impots.gouv.fr use different terminology ("corporate income tax" for the former, "corporate income tax" for the latter). For a company subject to personal income tax, the rule is verified at source before filing.

The funding limit received by the company. A limit applies to the total amount received by the company. This amount should be verified with the official source at the time of your payment; no figures are provided here.

After subscribing

The conditions regarding business activity, registered office, and assets must remain met until December 31 of the fifth year following receipt of the securities. The securities themselves must be held until the end of the fifth year following the year of subscription (impots.gouv.fr, amended on 08/07/2026).

Numerical example (fictitious profile)

Situation. Marc, who is single, plans to pay €30,000 on October 15, 2026, to one of two fictitious companies. Company A, an industrial joinery business, was registered on March 15, 2019, employs 18 people, and has a turnover of €6 million and a balance sheet total of €4 million. Company B was registered on May 2, 2011; its turnover (excluding VAT) exceeded €250,000 for the first time in the 2012 fiscal year (calendar year), and its average annual turnover over the last five years is €2 million. Assumptions: Marc's tax before reduction is €14,000, he has no other benefit subject to the overall cap, and the basic rate of 18 % indicated by entreprendre.service-public.gouv.fr and by the BOFiP (BOI-IR-RICI-90-20-10, § 160) applies on the date of his payment (impots.gouv.fr mentions it for payments made in 2025: to be verified on the date of reading).

Issue. Which of these companies meets the age and size requirements?

Strategy. Apply the BOFiP thresholds to each company, then calculate the reduction at the rate of 18 %.

Result.

For company A, the €30,000 subscription is below the €50,000 contribution limit for a single individual. The tax reduction at 18 % is €5,400, which is less than the overall limit of €10,000: Marc's tax liability decreases from €14,000 to €8,600. The shares must be held until December 31, 2031.

For company B, the ten-year period expired on May 2, 2021. According to the BOFiP (French Official Tax Bulletin) wording, the seven-year period ended on January 1, 2020; according to service-public.gouv.fr (starting at the beginning of the 2012 fiscal year), it ended on January 1, 2019. In both cases, it will expire in October 2026. Based on these age criteria, it would only fall under the category of growth financing, which requires a business plan and a need exceeding €1,000,000.

These profiles are fictitious; dates, staffing levels, figures, and tax are assumptions. The calculation does not test the funding limit, the activity, the stock market listing, the tax regime, or the financial situation: it does not determine whether Marc is eligible. The invested capital remains exposed to a risk of loss, which the tax reduction does not cover.

What changes depending on your situation

• The real age of society and the date of its first commercial sale.
• His membership in a group, which changes the calculation of the size.
• His exact activity, including an ancillary activity.
• Its tax regime, to be verified at the source.

No results are guaranteed. The rule depends on your situation.