IR-PME: Tax reduction for subscribing to the capital of an SME, rates and limits

A French resident who invests cash in the capital of a non-listed SME can benefit from an income tax reduction, known as IR-PME. The standard rate is 18% of the investment, capped at €50,000 per year for a single person and €100,000 for a married or civilly partnered couple. This reduction is subject to the overall €10,000 cap on tax benefits, and the shares must be held until the end of the fifth year following the investment.

This page covers the principle, the standard tax rate, the ceilings, the deferral, and the holding of securities. For higher rates, it indicates the figures published by official sources and highlights those that depend on a decree or are published by only one of the sources consulted (ESUS, SFS, JEII). It does not cover FIPs and FCPIs, which have their own page, nor the situation of a person not domiciled in France, nor the company's financing ceiling, for which official pages do not provide the same figure.

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 shares must be held until the end of the fifth year following the subscription date to avoid jeopardizing the tax reduction, and they are not traded on a regulated market. The tax reduction does not protect your invested capital.

The principle

Article 199 terdecies-0 A of the French General Tax Code (CGI) stipulates that an individual who subscribes in cash to the capital of a company may benefit from a tax reduction (entreprendre.service-public.gouv.fr, verified on 23/02/2026). The taxpayer benefits from this reduction for the year in which the payment is made (BOFiP, BOI-IR-RICI-90-20-10, § 80). For a payment made in 2026, this is the reduction for the year 2026.

The rates

For ESUS and SFS companies, whether a payment made after September 30, 2026, qualifies for the increased rate is not indicated on this page: this must be verified with the official source before making a decision. The specific conditions for JEI and JEIR companies, including the level of research expenditure, are not detailed.

Payment limits

The ceiling is assessed annually, including all payments (BOI-IR-RICI-90-20-10, § 110 and 120).

The portion of payments which exceeds these limits entitles the holder to the reduction for the following four years, within the same limits, using first the oldest surpluses (BOI-IR-RICI-90-20-10, § 130 and 150).

For Young Innovative Companies (JEIs), the annual limits are €75,000 (single person) and €150,000 (couple); any amount exceeding these limits does not qualify for a tax reduction in subsequent years. For JEIs, the tax reduction cannot exceed €50,000 of income tax over the period from January 1, 2024, to December 31, 2028 (BOI-IR-RICI-110-10-10, paragraphs 80 to 100). This €50,000 limit is common to the tax reductions provided for in Articles 199 terdecies-0 A bis and A ter of the French General Tax Code (CGI) (BOI-IR-RICI-110-10-10, paragraph 100); the BOFiP (Official Tax Bulletin) relating to Young Innovative Companies (BOI-IR-RICI-110-20) uses the same amount. For JEIR, service-public.gouv.fr indicates that the surplus is not carried over.

Allocation, overall cap and carryover

The reduction is applied to progressive income tax. It cannot be applied to taxes at a proportional rate. The unused portion cannot be refunded (BOI-IR-RICI-90-20-10, § 170 and 180).

The SME income tax reduction is listed in the table of benefits subject to the overall cap of €10,000 (BOI-IR-LIQ-20-20-10-10, § 75, version of 27/08/2026). The total tax benefits cannot result in a reduction of tax due exceeding €10,000. Any amount exceeding this cap can be carried forward to offset income tax due in subsequent years, up to and including the fifth year (BOI-IR-RICI-90-20-10, § 190).

Two separate deferrals coexist: that of payments beyond the payment ceiling (four years) and that of the reduction beyond the overall ceiling (up to the fifth year).

Conditions to be aware of

The company (service-public.gouv.fr and impots.gouv.fr):

• it has been operating for less than 10 years after its registration; both sources also provide for a 7-year alternative, formulated differently (service-public.gouv.fr: from the financial year in which turnover exceeds €250,000 for the first time; impots.gouv.fr: after the first commercial sale); ;
• it employs at least 2 employees (1 for a craft business) at the close of the financial year following the subscription; ;
• its headquarters are in a Member State of the European Union or the European Economic Area; ;
• It is subject to corporation tax, is not a company in difficulty, and its securities are not admitted to trading on a regulated market (impots.gouv.fr also cites the multilateral trading facility); ;
• Its activities are not those excluded by the text, including financial activities, management of movable assets and real estate activities.

This list is not exhaustive: detailed conditions can be found in the BOFiP.

The subscriber : a natural person, tax resident in France, who subscribes in cash and undertakes to keep their securities for 5 years.

Preservation of securities and resumption of the reduction

The subscriber must hold the securities until the end of the fifth year following the year of subscription (impots.gouv.fr, amended on 08/07/2026). The tax reduction may be revoked in two cases:

• the subscriber transfers all or part of his securities before December 31 of the 5th year following that of the subscription; ;
• The company must repay the initial investment before December 31st of the 7th year following the year of subscription (service-public.gouv.fr). For SFS (Sociétés de Financement de France), the BOFiP (ACTU-2026-00156) mentions the reduction of this period from seven to five years.

The tax reduction is not affected in the event of the subscriber's dismissal, death, or disability (category 2 or 3). Nor is it affected if the subscriber has held the shares for at least three years, reinvests the entire sale price, net of taxes, in new shares of eligible companies within 12 months, and holds these new shares until the end of the initial five-year period. Other cases are provided for by law; these will be verified in your file.

To the declaration

The subscriber attaches to his annual income tax return an individual statement provided by the company (service-public.gouv.fr).

What changed in 2025 and 2026

• The FIP reduction (excluding Corsica and overseas territories) is repealed for subscriptions from 16/02/2025 (finance law for 2025, article 12; fact D2-01).
• The FCPI tax reduction is repealed as of February 21, 2026 (2026 Finance Law, Article 22; fact D2-02), except for FCPI units invested in young innovative companies (BOI-IR-RICI-100). These topics have their own dedicated page.
• The Finance Act for 2026 (Law No. 2026-103 of 19/02/2026) creates the category of JEII; only subscriptions from 21/02/2026 are eligible.

The rules for this reduction have been modified by the finance law for 2025 and by that for 2026. The applicable rate and ceiling are those in effect on the date of your payment.

Numerical example (fictitious profile)

Situation. Isabelle and Thomas, married and taxed jointly, subscribe in 2026 to the capital of a standard SME, at a rate of 18%. Assumptions of the hypothetical profile: their income tax before reduction is €12,000 and they have no other benefits subject to the overall cap.

Issue. They are considering paying €100,000, or even €130,000. What does the reduction take, and what remains to be deducted?

Strategy. Compare the payment to the ceiling of €100,000, then the reduction to the overall ceiling of €10,000.

Result.

The BOFiP (French Official Tax Bulletin) provides the same example of a cap (€18,000 reduction, €8,000 excess). The securities must be held until December 31, 2031. A sale before this date risks losing the tax reduction. In this example, the invested capital remains exposed to a risk of loss, which the tax reduction does not cover.

This profile is fictitious. The €12,000 tax, the absence of other benefits, and the 18% tax rate are assumptions. The calculation does not indicate whether the company meets the conditions and does not provide any results specific to your situation.

What changes depending on your situation

• The company category : common law, JEI, JEIR, ESUS, SFS or JEII.
• The date of your payment, for the increased rates.
• Your family situation : ceiling of €50,000 or €100,000.
• The amount of your tax : an unused discount is not refunded.
• Your other tax advantages, which fall under the same overall cap.

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