WORLD TRADE
ORGANIZATIONG/SCM/N/48/EEC/Add.5
7 January 2000
(00-0049)
Committee on Subsidies
and Countervailing MeasuresOriginal:  French
SUBSIDIES
Updating Notification Pursuant to Article XVI:1 of
the GATT 1994 and Article 25 of the SCM Agreement
EUROPEAN COMMUNITIES
Addendum
The following addendum to the notification of  the European Community relates to subsidy
programmes of France .G/SCM/N/48/EEC/Add.5
Page 2
FRANCE
TABLE OF CONTENTS
 Page
I. SME SCHEMES .................................................................................................................. .3
1. Regional Premium for the Creation of Enterprises (PRCE) ............................................3
2. Regional Employment Premium (PRE)..............................................................................4
3. Regional Advisory Assistance F und (FRAC) .....................................................................5
4. SME Development Fund (FDPME) ....................................................................................7
II. REGIONAL SCHEMES ......................................................................................................9
A. METROPOLITAN FRANCE .........................................................................................................9
1. Tax Reduction for New Enterprises....................................................................................9
2. Temporary Exemption from Pr ofessional Tax - PAT/TDRP .........................................11
3. Temporary Exemption from Professional Tax - ZRR.....................................................13
4. Temporary Exemption from Professional Tax - ZRU.....................................................15
5. Enterprise Zones ............................................................................................................. ....16
6. Land-Use Management Premium (PAT)..........................................................................177. Special Scheme for the Sambre-Avesnois Mining Area ..................................................19
8. Industrial Development Company (SODIE) ....................................................................20
B.
CORSICA ............................................................................................................................... .21
1. Tax Exemption for New Activities.....................................................................................21
2. Tax Exemption for New Enterprises.................................................................................223. Reduction of Professional Tax in Corsica.........................................................................23
4. Tax Exemption on Profits of up to F 400,000...................................................................25
C.
FRENCH OVERSEAS DEPARTMENTS (FOD S) ..........................................................................26
1. Long-Term Tax Treatment................................................................................................26
2. VAT Deduction for Certain Exempted Products.............................................................283. Deduction of Income and Profits Invested  in the French Overseas Departments ........29
4. Temporary Tax Exemption for Creation of Activities in the Overseas Departments ..31
5. Reduced Taxation of Operating Results ...........................................................................32
6. Premium for Job Creation in the Overseas Departments...............................................33
D.
URBAN AREAS IN DIFFICULTY ...............................................................................................35
1. Measures on behalf of Urban Free Zones.........................................................................35
III. R&D SCHEMES................................................................................................................ .36
1. Tax Credit to Promote Research.......................................................................................36
2. Research and Technology Fund (FRT).............................................................................37
3. Industrial Innovation Fund................................................................................................39
4. National Agency for the Pr omotion of Rese arch ( ANVAR) ............................................41
5. ATOUT-PUMA................................................................................................................... 43
6. Aid to Research Institutions in the Civil Aviation Sector ...............................................45
7. Aid to Civil Aviation Research and Development............................................................46G/SCM/N/48/EEC/Add.5
Page 3
I. SME SCHEMES
1. Regional Premium for the Creation of Enterprises (PRCE)
1. Title of the subsidy programme
Regional Premium for the Creation of Enterprises (PRCE)
2. Form of subsidy
Subsidy paid to enterprises which undertake to create jobs of indefinite duration.
3. Subsidy per unit
- Gross ceiling of F 200,000 per enterprise;- last available data, 1993:  F 71,975 million;
- total PRE and PRCE for 1998:  F 122.4 million.
4. Policy objective and/or purpose of the subsidy
Enterprise creation
5. Duration of the subsidy and/or any other time-limits attached to it
Permanent arrangement
6. Legal basis
Article L 1511-2 of the General Code on Local Authorities
Decree 82-806 of 22 September 1982 on the PRCE
7. Beneficiaries of the aid
Enterprises of any legal form that have fulfilled their corporate and tax obligations.
8. Statistical data permitting an assessment of the trade effects
- Not available;- small-scale subsidy.G/SCM/N/48/EEC/Add.5
Page 4
2. Regional Employment Premium (PRE)
1. Title of the subsidy programme
Regional Employment Premium
2. Form of subsidy
Subsidy
3. Subsidy per unit
- Maximum amount per job: F 10,000 in urban areas > 100,000 inhabitants
F 20,000 outside those limits
F 40,000 in mountain areas
- last available data, 1993:  F 39,319 million- total PRE and PRCE for 1995:  F 122.4 million
4. Policy objective and/or purpose of the subsidy
Creation, extension, conversion or resumption of  activities (with consequent job creation)
5. Duration of the subsidy and/or any other time-limits attached to it
Permanent arrangement
6. Legal basis
Article L 1511-2 of the General Code on Local Authorities.Decree 82-807 of 22 September 1992 on the PRE.
7. Beneficiaries of the aid
Enterprises that have fulfilled their tax and corporate obligations and whose turnover is less
than F 300 million, or more than 50 per cent of whose capital is held by an enterprise whose
consolidated turnover is less than F 300 million.
8. Statistical data permitting an assessment of the trade effects
- Not available;
- small-scale subsidy.G/SCM/N/48/EEC/Add.5
Page 5
3. Regional Advisory Assistance Fund (FRAC)
1. Title
Regional Advisory Assistance Fund (FRAC)
Additional information
Legal basis
Programme contracts between the State and the regions 1989-93
Beneficiaries and conditions
SMIs that meet the following conditions:
- That belong to one of the following sectors:  industry, transport, construction and
public works, agri-foodstuffs, tourism and distribution;
- that are financially sound;- that employ no more than 500 persons;- no more than 25 per cent of whose equity or voting rights are held by one or more
enterprises not meeting the above criteria.  Shares held by public holding companies,
companies with venture capital and, provided they do not exercise any control,
institutional investors, are not taken into consideration.
2. Forms of subsidy
Direct subsidization of the enterprise as regards:- Recourse to consultants in enterprises with inadequate internal operational services
(FRAC);
- recourse to technical advice provided by a laboratory (FRATT);- internal advisory service involving the creation of new professional posts within the
enterprise.G/SCM/N/48/EEC/Add.5
Page 6
3. Subsidy per unit
Maximum level of aid:
Type of counselling Lasting up to five days Exceeding five days
External counselling 80 per cent up to a maximum of
F 25,00050 per cent up to a maximum of
F 200,000
Introduction of internal counselling150 per cent up to a maximum ofF 200,000
1The subsidy is calculated on the basis of the amount corresponding to the first year of salary and social
contributions for the newly-appointed employee.
Total amount
Budget estimate of F 800 million per year for the period from 1994-1999.
1998:  F 257.123 million (State, local authorities, European Union).
4. Policy objective
To foster the development of SMIs by encouraging them to call on outside expertise,
consultancy firms, or laboratories.
5. Duration of the subsidy
Permanent arrangement funded on a yearly basis under the Finance Law.
6. Statistical data permitting an assessment of the trade effects
Since the purpose of the programme is to improve the management of enterprises, it has no
impact on production costs and consequently does not affect trade.G/SCM/N/48/EEC/Add.5
Page 7
4. SME Development Fund (FDPME)
1. Title
SME-SMI Development Fund (FDPME)
Additional information
Legal basis
Programme contracts between the State and the regions.
Beneficiaries
SMIs and SMEs that meet the Community support criteria, i.e.:
- That belong to one of the following sectors:  industry, transport, construction and
public works, agri-foodstuffs, tourism and distribution;
- that are financially sound;- that employ no more than 250 persons;- no more than 25 per cent of whose equity or voting rights are held by one or more
enterprises not meeting the above criteria.  Shares held by public holding companies,
companies with venture capital and, provided they do not exercise any control,
institutional investors, are not taken into consideration.
Conditions
SMEs and SMIs that are financially sound.
Investment projects:  material investment co mprising technology and innovations specific to
the programme of the enterprise, non-material investments (R&D, engineering), installation andadjustment work connected with the equipment provided for by the programme, and external training
costs (feasibility study).
2. Form of subsidy
Direct subsidization of the enterprise implementing the investment programme.
3. Total amount and subsidy per unit
Budget estimate of F 7.5 million (State loans,  local authorities, Community loans) for the
period 1994-1999.
1998:  F 1062 million (State, local authorities, European Union).Average aid per enterprise:  F 362,000.The maximum rate of contribution is as follows:G/SCM/N/48/EEC/Add.5
Page 8
Type of area Small enterprise Medium-sized enterprise
A (Unassisted area according to the EC
definition)15 per cent gross 7.5 per cent gross
B (Assisted area under Article 87, paragraph 3(c), with
an authorized regional aid ceiling of 17 per cent)27 per cent gross
C (Assisted area under Article 87, paragraph 3(c), with
an authorized regional aid ceiling of 25 per cent)30 per cent net
D (Assisted area under Article 87, paragraph 3(a) 75 per cent gross
The rates provided in lines B, C and D also correspond to the aid ceilings in respect of any
given project in cases where there is cumulation of regional aids, including Community structural
funds.
4. Policy objective
To promote SMEs-SMIs by helping to improve their technological level and the quality of
their products.
5. Duration
Permanent arrangement
6. Statistical data permitting an assessment of the trade effects
The aid is intended to compensate for the disa dvantages associated with establishment in the
areas in question (lack of qualified subcontracting personnel, distance from market, suppliers etc.).
Consequently, it has no effect on trade.G/SCM/N/48/EEC/Add.5
Page 9
II. REGIONAL SCHEMES
A. METROPOLITAN FRANCE
1. Tax Reduction for New Enterprises
1. Title
Profits Tax Exemption for New Enterprises Set Up in Land-Use Management Areas, Priority
Rural Development Areas and Urban Redevelopment Areas.
Additional information
Legal basis
Article 44 sexies  of the General Taxation Code.
Beneficiaries
Legally and economically new enterprises (excluding the resumption or extension of pre-
existing activities), at least 50 per cent of whose share capital is held by natural persons and which are
set up in specified areas.
Conditions
Genuinely new enterprises set up in eligible areas, who headquarters and all activities and
means of operation are established in the area.
2. Form of subsidy
Tax concession.  Exemption from profits tax for 2 years, followed by an abatement for profits
earned over the next 3 years (75 per cent, then 50 per cent, then 25 per cent).
3. Amount of subsidy
No absolute ceiling established for the exemption or rebate.
Amount budgeted
For 1988:  F 1,500 million
4. Policy objective
To promote the creation of new enterprises in areas with geographical, economic or social
disadvantages.
5. Duration of the subsidy and/or any other time-limits attached to it
Five years;  applicable to enterprises set up by 31 December 1999.G/SCM/N/48/EEC/Add.5
Page 10
6. Statistical data permitting an assessment of the trade effects
Given the general nature of the aid and the objective of compensating for the disadvantages
faced by the regions concerned, the trade effects can hardly be assessed.G/SCM/N/48/EEC/Add.5
Page 11
2. Temporary Exemption from Professional Tax - PAT/TDRP
1. Title
Temporary Exemption from Professional Tax in Connection with Land-Use Management and
Priority Rural Development Areas.
Additional information
Legal basis
Articles 1465 and 1465 B of the General Taxation Code.
Beneficiaries
Enterprises which carry out the:
- Creation, extension and decentralization of industrial activities, scientific and
technological research or design, management, engineering or computer services;
- reconversion to perform the same kind of activity or revival of establishments or
services in difficulty that perform these activities.
Conditions
- The exemption applies only if the local authority has so decided in advance;
- minimum levels of employment and investment;
- prior approval in certain cases.
2. Form of subsidy
Tax concession
3. Amount of subsidy
Amount budgeted
For 1998:  F 870 million (estimate)
4. Policy objective and/or purpose of the subsidy
To encourage the creation and development of enterprises in areas with geographical,
economic or social disadvantages.
5. Duration of the subsidy and/or any other time-limits attached to it
Total or partial exemption from professional tax for a maximum of five years.G/SCM/N/48/EEC/Add.5
Page 12
6. Statistical data permitting an assessment of the trade effects
Given the general nature of the aid and the objective of compensating for the disadvantages
faced by the regions concerned, the trade effects can hardly be assessed.G/SCM/N/48/EEC/Add.5
Page 13
3. Temporary Exemption from Professional Tax - ZRR
1. Title
Temporary Exemption from Profession al Tax in Rural Revitalization Areas
Additional information
Legal basis
Article 1465 A of the General Taxation Code.
Beneficiaries
Enterprises which set up in rural revitalization areas with a view to the:
- Creation, extension, decentralization of industrial activities, scientific and
technological research or design, management, engineering or computer services;
- reconversion to perform the same kind of activity or revival of establishments or
services in difficulty that perform these activities;
- creation of craft industries.
Conditions
- No contrary decision by the local authorities concerned;
- minimum levels of employment and investment;- prior approval in certain cases.
2. Form of subsidy
Tax concession
3. Amount of subsidy
Amount budgeted
For 1998:  F 28 million (estimate)
4. Policy objective
To encourage the creation and development of enterprises in areas with geographical,
economic or social disadvantages.
5. Duration
Total or partial exemption from professional tax for a maximum of five years.G/SCM/N/48/EEC/Add.5
Page 14
6. Statistical data permitting an assessment of the trade effects
Given the general nature of the aid and the objective of compensating for the disadvantages
faced by the regions concerned, the trade effects can hardly be assessed.G/SCM/N/48/EEC/Add.5
Page 15
4. Temporary Exemption from Professional Tax - ZRU
1. Title
Temporary Exemption from Professional  Tax in Urban Revitalization Areas
Additional information
Legal basis
Article 1466 Al bis and A1 ter of the General Taxation Code.
Beneficiaries
Enterprises existing at 1 January 1997 or which proceeded to set up new establishments or
extend existing ones, or changed hands.
Conditions
- No contrary decision by the local authorities concerned;
- each establishment concerned must employ less than 150 salaried employees.
2. Form of subsidy
Tax concession
3. Amount of subsidy
Ceiling on net exemption of F 1,129,000 for 1998, progressively reduced to F 745,000 in
2003, subject to adjustment for price movements.
For enterprises existing at 1 January 1997, the net exempted amount is half the above.
Amount budgeted
For 1998:  F 525 million (estimate)
4. Policy objective and/or purpose of the subsidy
To encourage the creation and development of enterprises in difficult urban areas with
geographical, economic or social disadvantages.
5. Duration of the subsidy and/or any other time-limits attached to it
Total or partial exemption from professional tax for a maximum of five years.
6. Statistical data permitting an assessment of the trade effects
Given the general nature of the aid and the objective of compensating for the disadvantages
faced by the regions concerned, the trade effects can hardly be assessed.G/SCM/N/48/EEC/Add.5
Page 16
5. Enterprise Zones
1. Title
Enterprise Zones
Additional information
Legal basis
Article 208 quinquies  of the General Taxation Code.
Beneficiaries
Legal entities subject to corporation tax that are created in order to carry on an industrial or
commercial enterprise in one of the eligible zones.
Conditions
The headquarters, activities and means of operation of the legal entity must be located in one
of the eligible zones.
2. Form of subsidy
Tax concession in the form of exemption from corporation tax for ten years.
3. Amount of subsidy
Amount of the corporation tax exemption.
Amount budgeted
For 1988:  F 3,200 million
4. Policy objective
Revival of areas seriously affected by the loss of jobs in industry.
5. Duration
Ten years, but the zones have been closed since 1992.
6. Statistical data permitting an assessment of the trade effects
Given the general nature of the aid and the objective of compensating for the disadvantages
faced by the regions concerned, the trade effects can hardly be assessed.G/SCM/N/48/EEC/Add.5
Page 17
6. Land-Use Management Premium (PAT)
1. Title
Land-Use Management Premium
2. Form and purpose of subsidy
Equipment subsidy for the promotion of activities in certain zones in France specified in the
Annex to the Decree of 6 February 1996.
3. Total amount of PAT granted:  467
Dossiers submitted:  220 Dossiers approved:  185Jobs (to be created):  15,900 Investment:  F 20,500 million
Programmes (by number of dossiers approved):
Creation: 67 (34 per cent)
Extension: 111 (60 per cent)
Decentralization: 12 (6 per cent)Resumption/extension: 0
Conversion: 0
Average amount of PAT/job:  F 31,000
(1995 average was:  F 42,305)
Sectors of Activity (Percentage of Dossiers Approved)
Dossiers PAT
(millions of francs)Jobs Investment (millions
of francs)
Agri-food 34 (20.5%) 72 (12.5%) 2,817 (20.3%) 2,045 (13.1%)
Industry 98 (59%) 456 (78.6%) 9,151 (65.7%) 13,012 (83.5%)
Tertiary 34 (20.5%) 51 (8.9%) 1,952 (14%) 531 (3.4%)
4. Policy objective
To promote activities in certain zones in France specified in the Annex to Decree No. 95-149
of 6 February 1995.
5. Duration of the subsidy
The PATs are granted under a three-year programme which, if necessary, can be extended for
a further maximum period of two years.
6. Legal basis
Decree No. 95-149 of 6 February 1995G/SCM/N/48/EEC/Add.5
Page 18
7. Beneficiaries
All enterprises, whatever their size, that meet the conditions of eligibility set out in the
Decree.
8. Statistical data
Unavailable, because the premium concerns all sectors of activity according to geographical
criteria and is related to job creation under each project.  Given the general nature of the aid and the
objective of compensating for the disadvantages faced by the regions concerned, the trade effects can
hardly be assessed.G/SCM/N/48/EEC/Add.5
Page 19
7. Special Scheme for the Sambre-Avesnois Mining Area
1. Title
Special Scheme for the Sambre-Avesnois Mining Area
Additional information
Legal basis
Article 220 septies  of the General Taxation Code.
Beneficiaries
Legal entities subject to corporation tax that are created in order to carry on an enterprise in
the eligible zone.
Conditions
The headquarters, activities and means of operation of the legal entity must be located in the
eligible zone.
2. Form of subsidy
Tax concession in the form of a tax credit.
3. Amount of subsidy
Tax credit of up to 22 per cent of investment costs.
Amount budgeted
For 1998:  no figure set.
4. Policy objective
To encourage the establishment of enterprises in certain employment areas particularly
affected by unemployment.
5. Duration of the subsidy and/or any other time-limits attached to it
Ten years, but the zone was closed on 13 May 1998.
6. Statistical data permitting an assessment of the trade effects
No statistical data available.G/SCM/N/48/EEC/Add.5
Page 20
8. Industrial Development Company (SODIE)
1. Title
Industrial Development Company (SODIE)
Additional information
Legal basis
Commission Decision of 17 February 1988 for conversion companies.
As of 1 January 1993, the five conversion co mpanies of the USINOR-SACILOR group were
merged to form a single entity, the Société pour le Développement de l'Industrie et de l'Emploi
(SODIE) , comprising the following companies:  SODINOR, SODINOR VNE, SODIKERQUE,
SODIKERQUE LITTOTAL, SODIEST, SODICEM, SOCADEV.
Beneficiaries
Enterprises established in the iron and steel conversion areas.
Conditions
Intervention zones to be defined in agreement with the Commission.
2. Form of subsidy
The loans may not be assigned to third parties and the subsidies granted for the redeployment
of iron and steel workers are not financed by State Funds but by the USINOR-SACILOR iron and
steel group.
3. Total amount
- For 1997: F 128 million of loans with interest-rate subsidy- For 1998: Not available
4. Policy objective
Re-industrialization and diversification in areas affected by industrial decline.
5. Duration of the subsidy
Variable
6. Statistical data
The aid is intended to compensate for the disa dvantages associated with establishment in the
areas in question (lack of qualified subcontracting personnel, distance from markets, suppliers, etc.).Consequently, it has no effect on trade.G/SCM/N/48/EEC/Add.5
Page 21
B. CORSICA
1. Tax Exemption for New Activities
1. Title
Tax Exemption, Subject to Approval, for Profits Resulting from New Activities Created in
Corsica.
Additional information
Legal basis
Article 208 quater  A of the General Taxation Code.
Beneficiaries
Companies subject to corporation tax for new activities created in Corsica prior to
1 January 1999 in the industrial, craft, construction and agricultural sectors.
Conditions
Subject to approval
2. Form of subsidy
Tax concession
3. Amount of subsidy
Profits tax exemption for a 96-month period
Amount budgeted
1998:  negligible cost
4. Policy objective
To encourage job creation and economic development in Corsica.
5. Duration of the subsidy and/or any other time-limits attached to it
Eight years;  the scheme closed on 1 January 1999.
6. Statistical data permitting an assessment of the trade effects
Small-scale subsidy.G/SCM/N/48/EEC/Add.5
Page 22
2. Tax Exemption for New Enterprises
1. Title
Tax Exemption for Profits Realized by Enterprises set up in Corsica in the Craft, Industrial,
Hotel, Construction and Public Works Sectors.
Additional information
Legal basis
Article 208 sexies  of the General Taxation Code.
Beneficiaries
Companies subject to corporation tax set up in Corsica in certain sectors before
1 January 1999.
Conditions
The enterprises must carry on all their business in Corsica.
2. Form of subsidy
Tax concession
3. Amount of subsidy
Profits tax exemption for a 96-month period.
Amount budgeted
1998:  negligible cost
4. Policy objective
To encourage the creation of new enterprises in Corsica.
5. Duration of the subsidy and/or any other time-limits attached to it
Eight years;  the scheme closed on 1 January 1999.
6. Statistical data permitting an assessment of the trade effects
Small-scale subsidy.G/SCM/N/48/EEC/Add.5
Page 23
3. Reduction of Professional Tax in Corsica
1. Title
Reduction of Professional Tax in Corsica
Additional information
Legal basis
Article 1466 B, 1472 A ter, 1586 bis and 1599 bis of the General Taxation Code.
Beneficiaries
Enterprises which carry on their business, expand or start up activities in Corsica.
Conditions
No contrary decision by the local authorities concerned, and exclusion of agriculture, fishing,
air and sea transport, coal-mining, the steel in dustry, large-scale naval repair work, automobile
construction, banking, finance, insurance, power transport or distribution, or gambling, as regards the
temporary exemption from the communal part of the professional tax.
2. Form of subsidy
Tax concession
3. Amount of subsidy
- Exemption from the departmental and regional components of the professional tax and
25 per cent reduction of the communal component.
- Temporary exemption from the communal component subject to a net base ceiling of
F 3,057,000 for 1998, adjusted according to payroll numbers and activity carried on, which
will fall progressively to F 2,010,000 in 2003, subject to adjustment for price movements.
Amount budgeted
For 1998:  F 488 million (estimate)
4. Policy objective
To stimulate investment, encourage the development of employment and maintain the fabric
of economic life in Corsica.
5. Duration of the subsidy
The total duration of temporary exemption from the communal component of the professional
tax cannot exceed five years in the case of the creation and extension of establishments, which must
take place before 31 December 2001, or in the case of establishments existing on 1 January 1997 andof enterprises in difficulties.G/SCM/N/48/EEC/Add.5
Page 24
6. Statistical data permitting an assessment of the trade effects
Given the general nature of the aid and the objective of compensating for the disadvantages
faced by the regions concerned, the trade effects can hardly be assessed.G/SCM/N/48/EEC/Add.5
Page 25
4. Tax Exemption on Profits of up to F 400,000
1. Title
Profits Tax Exemption for industrial, commercial, craft and agricultural enterprises that
already operate in Corsica or establish operations there before 31 December 2001.
Additional information
Legal basis
Article 44 decies  of the General Taxation Code.
Beneficiaries
Industrial, commercial, craft and agricultural enterprises, for their new or existing activities
established in Corsica.
Conditions
The enterprises must possess in Corsica operating resources enabling them to carry on their
operations there autonomously.
2. Form of subsidy
Tax concession
3. Amount of subsidy
Reduction of taxable profits subject to a ceiling on F 400,000 per 12-month period.  This tax
benefit is offset by supplementary tax levied on the exempted profits at the time of redistribution.
Amount budgeted
For 1998:  F 150 million
4. Policy objective and/or purpose of the subsidy
To encourage the creation and maintenance of operations in Corsica.
5. Duration of the subsidy
Five years;  the scheme closed on 31 December 2001.
6. Statistical data permitting an assessment of the trade effects
Given the general nature of the aid and the objective of compensating for the disadvantages
faced by the regions concerned, the trade effects can hardly be assessed.G/SCM/N/48/EEC/Add.5
Page 26
C. FRENCH OVERSEAS DEPARTMENTS (FODS )
1. Long-Term Tax Treatment
1. Title
Long-Term Tax Treatment for Overseas Departments
Additional information
Legal basis
Article 1655 bis of the General Taxation Code (deriving from Decree No. 58-558 of
28 June 1958, continued by Articles 10 and 13  of Law No. 60-1368 of 21 December 1960 and last
amended by Article 44 of Law No. 96-1182 of 30 December 1996).
Beneficiaries
Public limited liability companies, limited partnerships with a share capital and private
limited liability companies whose purpose is research and mining in the Overseas Departments;
public liability companies, limited liability partnerships and private limited liability companies with
agricultural, forestry or industrial activities in the Department of Guyana;  companies whose sole
purpose is to conduct industrial activities in the Departments of Guadeloupe, Martinique and Réunion
comprising an investment programme for a minimum of F 20 million.
Conditions
Prior authorization from the Ministry of the Economy, Finance and Industry.
2. Form of subsidy
Tax concession.  This arrangement mainly involves exemption from corporation tax on
reinvested profits and from import and export duties and fees on certain products.  This scheme may
not be applied concurrently with the exemption arrangements provided for under Article 208 quater
of the General Taxation Code.
3. Amount of subsidy
Figures not available for 1998.
4. Policy objective
To contribute to the promotion of the Overseas Departments, and more generally, to foster
their economic development.
5. Duration of the subsidy
The duration of the subsidy is specified in the authorization for each particular case and is
limited to a maximum of 25 years plus, where appropriate, installation time not exceeding five years.
It applies to companies that submit their appli cations for authorization before 31 December 2001.G/SCM/N/48/EEC/Add.5
Page 27
6. Statistical data
The subsidy, whose purpose is to promote the Overseas Departments, is intended to
compensate for the disadvantages associated with establishment in the areas in question.  It has no
effect on trade.G/SCM/N/48/EEC/Add.5
Page 28
2. VAT Deduction for Certain Exempted Products
1. Title
VAT Deduction in Certain Overseas Departments (Guadeloupe, Martinique, Réunion) for
Certain Exempted Products
Additional information
Legal basis
Ministerial Decision of 2 November 1953.
Beneficiaries
Enterprises established in the Overseas Departments of Guadeloupe, Martinique and Réunion.
Conditions
Enterprises established in the Overseas Departments of Guadeloupe, Martinique and Réunion
which for the purpose of taxable operations use certain equipment for the hotel and tourist industry,
construction materials and industrial or agricultural equipment which are exempt from VAT may
deduct under those operations the tax actually levied on their various purchases of goods and servicesand the tax nominally applied to purchases of the exempted goods.
2. Form of subsidy:  Tax concession to prevent an exempted product being taxed following its
use in a particular process.
3. Amount of subsidy
Amount budgeted
Amount for 1998:  F 590 million.
4. Policy objective
To promote economic development and employ ment in the Overseas Departments.  In
addition, to ensure fiscal neutrality in various processes.
5. Duration of the subsidy
Permanent arrangement
6. Statistical data
The aid is intended to compensate for the disa dvantages associated with establishment in the
areas in question, in particular, lack of qualified staff, distance from markets and suppliers, and
overrun on resulting investment costs.  It has no effect on trade.G/SCM/N/48/EEC/Add.5
Page 29
3. Deduction of Income and Profits Invest ed in the French Overseas Departments
1. Title
Deduction of Income and Profits Invested  in the French Overseas Departments
Additional information
Legal basis
Initially provided for in Articles 238 bis HA and 238 bis HC of the General Taxation Code
(deriving from Article 22 of the Finance Law No. 86-824 of 11 July 1986), this scheme has been
amended practically every year.  It is now codified under Articles 163 tervicies , on the basis of
217 undecies  and 217 duodecies of the General Taxation Code.
Beneficiaries
Enterprises subject to corporation tax which make productive investments overseas intended
for use in a limited number of listed sectors of activity, or which subscribe in cash for shares in
companies subject to corporation tax that invest overseas in those sectors or for shares in regional
development companies in the French Overseas Departments.
Conditions
Prior authorization must be obtained for eligible investments in excess of
2 or 5 million francs, depending on the type of financing arrangements.  Authorization is automatic
for investments below this amount except for investments in the hotel and tourism (tourist
accommodation) sectors, sea fishery, transport, audiovisual and cinematic production andbroadcasting or concessions for local public services of an industrial or commercial nature, which
require authorization as of the first Franc.
2. Form of subsidy
Tax concession through the deduction of the amount of the investment in question (excluding
public subsidies) from the profits subject to corporation tax.
3. Amount of subsidy
Amount budgeted
For 1998:  4,000 million
4. Policy objective
To promote the economic development of the Overseas Departments and Territories.
5. Duration of the subsidy
The scheme applies until 31 December 2002G/SCM/N/48/EEC/Add.5
Page 30
6. Statistical data
The aid is intended to compensate for the disa dvantages associated with establishment in the
areas in question.  Consequently, it has no effect on trade.G/SCM/N/48/EEC/Add.5
Page 31
4. Temporary Tax Exemption for Creation of Activities in the Overseas Departments
1. Title
Temporary Exemption from Corporation Tax for Creation of Activities in the Overseas
Departments
Additional information
Legal basis
Article 208 quater  of the General Taxation Code deriving from Article 9 of Law No. 60-1368
of 21 December 1960 and last amended by Arti cle 40 of Law No. 96-1182 of 30 December 1996.
Beneficiaries
Companies which, in a limited number of listed sectors create a new activity likely to
contribute to the development of the Ov erseas Departments and create new jobs.
Conditions
Prior authorization from the Minister of the Budget.
2. Form of subsidy
Tax concession consisting in temporary exemption from corporation tax on profits resulting
from the authorized activity within  the limits set forth in the authorization.  The exemption does not
apply to capital gains from the transfer of all or some of the company's shares or fixed assets.
3. Amount of subsidy
Amount budgeted
For 1998:  F 115 million
4. Policy objective
To foster economic development and employment in the Overseas Departments.
5. Duration of the subsidy
Exemption is granted for a period of ten years starting from the actual commissioning of the
installations to be used in carrying out the author ized activity.  The scheme applies to companies that
are formed or that create a new activity before 31 December 2001.
6. Statistical data
The aid is intended to compensate for the disa dvantage associated with establishment in the
areas in question.  Consequently, it has no effect on trade.G/SCM/N/48/EEC/Add.5
Page 32
5. Reduced Taxation of Operating Results
1. Title
Reduced Taxation of Profits from Operations in Overseas Departments
Additional information
Legal basis
Article 217 bis of the General Taxation Code (deriving from Article 40-I of Law No. 65-566
of 12 July 1965, as last amended by Article 53-II of Law No. 92-1476 of 31 December 1992).
Beneficiaries
Enterprises subject to corporation tax and carrying on, in the Overseas Departments, an
activity in a number of listed sectors.
2. Form of subsidy
Tax deduction of one third on profits or losses resulting from activities that take place in the
Overseas Departments.
3. Amount of subsidy
Amount budgeted
For 1998:  F 300 million
4. Policy objective
To foster economic development and employment in the Overseas Departments.
5. Duration of the subsidy
The scheme is applicable to accounting periods closed by 31 December 2001.
6. Statistical data
The aid is intended to compensate for the disa dvantage associated with establishment in the
areas in question (lack of qualified staff and sub-contractors, distance from markets and suppliers,
etc.).  Consequently, it has no effect on trade.G/SCM/N/48/EEC/Add.5
Page 33
6. Premium for Job Creation in the Overseas Departments
1. Title
Premium for Job Creation in the Overseas Departments
Additional information
Legal basis
Decree No. 95-504 of 2 May 1995.
Beneficiaries
Enterprises established in the four French Overseas Departments.
The premium is proportionate to the number of new jobs created and amounts to F 205,000
per job.  It is paid over ten years, as follows:
- Years one to five:  F 24,000/job;- years six to seven:  F 20,000/job;- years eight to ten:  F 15,000/job.
Conditions to be fulfilled
Prior authorization by an order of the Government representative in the Department.
2. Form of subsidy:  Subsidy
3. Subsidy per unit
Total amount or amount budgeted for the subsidy (indicating, if possible, the average subsidy
per unit in the previous year):  Permanent arrangement funded on a yearly basis under the Finance
Law (FEDOM Chapter – Ministry of Overseas Departments and Territories).
Amount in 1998:  F 8,459,760
4. Policy objective
To encourage job creation as a contribution to the promotion of the Overseas Departments
and, more generally, to foster their economic development.
5. Duration of the subsidy
The authorization determines the duration of the scheme up to a maximum of ten years.G/SCM/N/48/EEC/Add.5
Page 34
6. Statistical data
The aid, whose purpose is to create jobs in the Overseas Departments and territories, is
intended to compensate for the disadvantages associated with establishment in the areas in question.
It has no effect on trade.G/SCM/N/48/EEC/Add.5
Page 35
D. URBAN AREAS IN DIFFICULTY
1. Measures on behalf of Urban Free Zones
1. Title
Tax exemption for five years on profits of up to F 400,000 made in a 12-month period for
industrial, commercial, craft and liberal-professional enterprises that create or have an establishment
in an urban free zone before 31 December 2001.
Additional information
Legal basis
Article 44 octies  of the General Taxation Code.
Beneficiaries
Industrial, commercial, craft or liberal-professional enterprises for their new or existing
activities established in urban free zones.
Conditions
The enterprises must carry on an actual activity involving a meaningful presence on the
premises within an Urban Free Zone.
2. Form of subsidy
Tax concession
3. Amount of subsidy
Tax corresponding to reduction of profits subject to a ceiling of F 400,000 per 12-month
period.
Amount budgeted
For 1998:  F 320 million
4. Policy objective
To encourage the creation and maintenance of activities in urban free zones.
5. Duration of the subsidy
Five years;  the scheme will close on 31 December 2001
6. Statistical data permitting an assessment of the trade effects
Given the general nature of the aid and the aim of compensating for the disadvantages faced
by the areas concerned, the trade effects can hardly be assessed.G/SCM/N/48/EEC/Add.5
Page 36
III. R&D SCHEMES
1. Tax Credit to Promote Research
1. Title
Tax Credit to Promote Research
Additional information
Legal basis :  Article 244 quater  B and 199 ter B of the General Taxation Code.
Beneficiaries :  Industrial, commercial or agricultural enterprises.
Conditions :  The enterprise must have exercised an option under the terms and conditions and within
the deadlines set out in the law.
2. Form of subsidy
Tax concession
3. Amount of subsidy
Tax credit equivalent to 50 per cent of the amount by which research expenditure in a given
year exceeds the average research expenditure of the two previous years.
Amount budgeted
For 1998:  F 2,600 million.
4. Policy objective
To encourage better organization of research activities.
5. Duration
Arrangement applicable up to 31 December 2003.
6. Statistical data permitting an assessment of the trade effects
The aid has no effects on trade, since it is linked to the enterprise's research activity in terms
of increased expenditure, and not productive or commercial potential.  It is a general and not specific
fiscal measure, which is not regarded as a subsidy by  the French authorities.  It is notified in the
interests of transparency.G/SCM/N/48/EEC/Add.5
Page 37
2. Research and Technology Fund (FRT)
1. Title
Research and Technology Fund (FRT)
2. Form of subsidy
- Subsidy (grant) appearing on the green list (Article 8.2(a)) representing a maximum
of 50 per cent of the total cost of the programme for the enterprises;
- all enterprises and public bodies engaged in basic research work or pre-competition
development activities may apply under the same conditions.
3. Total amount of the Research and Technology Fund
- For 1996:  F 371.26 million (PA spent)- For 1997:  F 407.5 million (PA opened under preliminary Finance Law)- For 1998:  F 414 million (PA opened under preliminary Finance Law), 412.79 million
consumed
- For 1999:  F 630 million (PA opened under preliminary Finance Law)
4. Policy objective and/or purpose of the subsidy
- To create new partnerships between public research and industrial research;- to launch projects in new fields of research and technology;- to foster the development of research and the transfer of technology to the regions.
5. Duration
Permanent arrangement funded on a yearly basis under the Finance Law.
6. Beneficiaries
Eighty per cent of the beneficiaries of the activities of the FRT are enterprises in the
secondary and tertiary sectors.  The FRT is not intended to provide aid to enterprises, but to support
the realization of research projects.
7. Legal basis
Decree No. 59-1397 of 9 December 1959 concerning the creation of a development fund for
scientific and technological research.
Decree No. 91-347 of 8 April 1991 concerning the contributions of the FRT on behalf of the
research projects of industrial and commercial enterprises (as well as the Order of 8 April 1991).G/SCM/N/48/EEC/Add.5
Page 38
8. Statistical data permitting an assessment of the trade effects of the subsidy
The projects in question are part of the upstream phase of the research and development
process.  The subsidies have no measurable impact on the trade performance of the enterprises in
question.  Only scientific and technical content is considered in the selection and evaluation ofprojects.  This aid is notified in the interests of transparency.G/SCM/N/48/EEC/Add.5
Page 39
3. Industrial Innovation Fund
1. Title
Industrial Innovation Fund
Additional information
Legal basis
Annual Finance Law
Beneficiaries
General support scheme for projects pertaining to all industrial groups whatever their size.
Conditions
The amounts taken into consideration are fairly substantial (approximately 15 to 50 million
francs).
2. Form of subsidy
Repayable advances which can be turned into subsidies in the event of the project's failure.
3. Amount of the subsidy
The gross level of aid is 30 per cent, although it may be increased by 10 per cent in cases
where intersectoral or cooperative projects are financed from the basic research stage onwards.  The
rule on the cumulation of aid from different schemes applies to the Industrial Innovation Fund.
Amount budgeted
For 1998:  F 2,043 million
4. Policy objective
To encourage the development of large-scale, strategically or commercially important civilian
projects of a distinctly innovative nature and whose purpose is the marketing of a product or processdetermined by the management of the enterprises within a period of less than five years.
5. Duration
Permanent arrangement funded on a yearly basis under the Finance Law.
6. Statistical data
The purpose of the programme is to finance innovation:
- The expenditures financed concern research and development and consequently have
no effect on production costs;G/SCM/N/48/EEC/Add.5
Page 40
- being innovatory, the products or proces ses in question cannot compete with existing
ones.
Consequently, the programme has no effect on trade.G/SCM/N/48/EEC/Add.5
Page 41
4. National Agency for the Promotion of Research (ANVAR)
1. Title
National Agency for the Promotion of Research (ANVAR)
Additional information
Legal basis
Decree No. 79/616 of 13 July 1979 concer ning innovation.  Annual Finance Law
Beneficiaries
Enterprises with fewer than 2,000 employees.
Conditions
Aid to innovation projects and aid to new technol ogical enterprises being created or that have
existed for less than three years, following a technical and financial study of the programme;  aid for
the recruitment of researchers.
2. Form of subsidy
Aid to innovation:  advances repayable, in the event of technical and commercial success,
over a period of three to five years following the end of the programme.
Direct subsidies for studies prior to the launching of research and development and innovation
projects, and feasibility and advisory studies.
3. Subsidy per unit
Repayable advances with a ceiling of 40 per cent of the intangible investment (maximum of
24.6 per cent in gross subsidy equivalents in case of success).  Direct subsidies up to a ceiling ofF 200,000 with a maximum rate of 50 per cent.
Amount budgeted
For 1998:  F 1,081 million;
4. Policy objective
To make full use of the results of scientific and technical research;  to promote innovation and
technological progress;  and to facilitate the transfer  to industry of the results of laboratory research.
5. Duration of the subsidy
Permanent arrangement funded on an annual basis under the Finance Law.
6. Statistical data
The purpose of the programme is to finance innovation:G/SCM/N/48/EEC/Add.5
Page 42
- The expenditures financed concern research and development and consequently have
no effect on production costs;
- being innovatory, the products and pr ocesses in question cannot compete with
existing ones.
Consequently, the programme has no effect on trade.G/SCM/N/48/EEC/Add.5
Page 43
5. ATOUT-PUMA
1. Title
ATOUT-PUMA
Additional information
Legal basis
Finance Law 1994
Beneficiaries
Industrial enterprises wishing to carry out research for the introduction of advanced materials
into industrial technologies.
Conditions
Financially sound enterprises with fewer than 2,000 employees, that are not subsidiaries of a
group comprising 2,000 persons or more.
2. Form of aid
Subsidy (for projects involving the feasibility stage):  maximum of 50 per cent in gross
subsidy equivalent (subsidy ceiling at F 300,000).
Advances repayable in case of success:  between 16.5 per cent in gross subsidy equivalent
(advance fully repaid) and 40 per cent in gross subsidy equivalent (in case of total failure of the
research project and non-repayment of the advance).
A ceiling of F 1.5 million per project has been established for all advances.
3. Total amount of ATOUT-PUMA programme
The amounts are the sums allocated each year.  (The figures contained in the previous
notification were budget estimates).
For 1998:  F 57 million
4. Policy objective
To support research and development projects aimed at introducing advanced materials into
industrial technologies.
5. Duration of the subsidy
Permanent arrangement funded on a yearly basis under the Finance Law.G/SCM/N/48/EEC/Add.5
Page 44
6. Statistical data
The purpose of the programme is to disseminate technologies and to finance training expenses
and research and development costs without affecting the cost of production.
The programme has no effect on trade.G/SCM/N/48/EEC/Add.5
Page 45
6. Aid to Research Institutions in the Civil Aviation Sector
1. Title
Aid to Research Institutions in the Civil Aviation Sector
2. Form of subsidy
Subsidy
3. Total amount
F 31 million in 1998 (F 25 million excluding VAT)
4. Policy objective
The main purpose of the programme is to help a number of non-profit-making research
institutions to have the equipment necessary to their activity.
5. Legal basis
Annual Finance Law.
6. Beneficiaries
Mainly ONERA and ETW (European Transonic Wind Tunnel).
7. Duration
Permanent arrangement funded on a yearly basis under the Finance Law.
8. Statistical data
Small-scale subsidy.G/SCM/N/48/EEC/Add.5
Page 46
7. Aid to Civil Aviation Research and Development
1. Title
Civil Aviation Research
2. Form of subsidy
Participation in direct research costs.
3. Total amount
F 412 million in 1998
4. Policy objective
The main objective of the research is to develop knowledge to improve the technological base
of the industry.
The research involves improving the understanding of phenomena with a view to selective
investigation in greater depth of areas likely to yield gains in performance and in the precision of
calculations with a view to shorter design cycles, as well as full-size testing.
5. Legal basis
Annual Finance Law.
6. Beneficiaries
About 50 enterprises were involved in 1998.
7. Duration
Permanent arrangement funded on a yearly basis under the Finance Law.
8. Statistical data
The aid goes entirely to research and therefore has no bearing on product manufacture.
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