WORLD TRADE
ORGANIZATIONG/SCM/N/38/EEC/Add.5
21 December 1998
(98-5128)
Committee on Subsidies
and Countervailing MeasuresOriginal:  French
SUBSIDIES
New and Full Notifications Pursuant to Article XVI:1
of the GATT 1994 and Article 25 of the Agreement on
Subsidies and Countervailing Measures
EUROPEAN COMMUNITIES
Addendum
The following addendum to the notification of  the European Community relates to subsidy
programmes of France .G/SCM/N/38/EEC/Add.5
Page 2
FRANCE
TABLE OF CONTENTS
    Page
List of schemes:
1. SME SCHEMES
1.   Regional Premium for the Crea tion of Enterprises (PRCE) ............................................. 4
2.   Regional Employmen t Premium (PRE) ............................................................................ 4
3.   Regional Advisory Assistance Fund (FRAC) ................................................................... 54.   SME-SMI Development Fund (FDPME) ......................................................................... 7
2. REGIONAL SCHEMES
*METROPOLITAN FRANCE1.   Profits Tax Exemption for New Enterprises Set Up in
      Land-Use Management Areas ........................................................................................... 8
2.   Temporary Exemption from Professional Tax - PAT/TRDP ........................................... 9
3.   Temporary Exemption fro m Professional Tax - ZRR ..................................................... 10
4.   Temporary Exemption fro m Professional Tax - ZRU .................................................... 11
5.   Enterpri se Zones ......................................................................................................... .... 12
6.   Land-Use Management Premium (PAT) ........................................................................ 13
7.   Special Scheme for the Sa mbre-Avesnois Mining Area ................................................. 14
8.   Mining Reconversion Programme .................................................................................. 159.   Industrial Development Company (SODIE).................................................................... 16
*CORSICA1.   Exemption for New Activities ......................................................................................... 18
2.   Tax Exemption for Newl y-Created Enterprises............................................................... 18
3.   Reduction of Pr ofessional Tax ........................................................................................ 20
4.   Tax Exemption on Profits of up to F 400,000.................................................................. 20
*FRENCH OVERSEAS DEPARTMENTS (FODs)1.   Long-Term Tax Treatment ............................................................................................. 22
2.   VAT Deduction for Certain Exempted Products ............................................................ 23
3.   Reduction of Payroll Tax Rates ...................................................................................... 24
4.   Deduction of Invested Proceeds and Profits ................................................................... 25
5.   Temporary Tax Exemption fo r the Creation of  Activit ies .............................................. 26
6.   Reduced Taxation of Profits and Losses ......................................................................... 277.   Premium for Job Creation ............................................................................................... 27
*URBAN AREAS IN DIFFICULTYMeasures on behalf of Urban Free Zones .............................................................................. 29G/SCM/N/38/EEC/Add.5
Page 3
Page
3. R&D SCHEMES
1.   Tax Credit to Promote Research ..................................................................................... 30
2.   Research and Technology Fund (FRT) ........................................................................... 30
3.   Industrial Innova tion Fund (FII) ..................................................................................... 31
4.   National Agency for the Promotion of Research (ANVAR) .......................................... 33
5.   ATOUT- PUMA .............................................................................................................. 3 4
6.   Aid to R&D Institutions in  the Civil Avia tion Sector ..................................................... 35
7.   Civil Avia tion Research .................................................................................................. 36
4. OTHERS
Promotion of Subscription to Jo int Shareholdings in Ships .................................................. 38G/SCM/N/38/EEC/Add.5
Page 4
1. 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
3. Subsidy per unit
- Gross ceiling of F 200,000 per enterprise;
- total amount for 1997:  not available (administered by regional councils);
- last available data, 1993:  F 71,975 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. Statistical data permitting an assessment of the trade effects
- Not available;- small-scale subsidy.
2. Regional Employment Premium (PRE)
1. Title of the subsidy programme
Regional Employment Premium (PRE)
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
- total amount for 1997:  not available (administered by regional councils);G/SCM/N/38/EEC/Add.5
Page 5
- last available data, 1993:  F 39,319 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. Statistical data permitting an assessment of the trade effects
- Not available;- small-scale subsidy.
7. Legal basis
Article L 1511-2 of the General Code on Local Authorities.Decree 82-807 of 22 September 1992 on the PRE.
8. Beneficiaries of the aid
Enterprises that have fulfilled their tax and social 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.
3. Regional Advisory Assistance Fund (FRAC)
1. Title
Regional Advisory Assistance Fund (FRAC)
2. Legal basis
Programme contracts between the State and the regions 1989-93
3. 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 shares are held by one or more enterprises not
meeting the above criteria.  Shares held by public holding companies, companies with
equity capital and, provided they do not exercise any control, institutional investors,
are not taken into consideration.G/SCM/N/38/EEC/Add.5
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(i) 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 a new professional post within the
enterprise.
(ii) 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 of
F 200,000
1The subsidy is calculated on the basis of the amount corresponding to the first year of salary and social
costs for the newly-appointed official.
4. Total amount
Budget estimate of F 800 million per year for the period from 1994-1999.
1996:  F 307 million (State, local authorities, European Union).  The figure given in the
previous notification was an estimate.
1997:  F 260 million (State, local authorities, European Union).
(i) Policy objectives
To foster the development of SMIs by encouraging them to call on outside expertise,
consultancy firms, or laboratories.
(ii) Duration of the subsidy
Permanent arrangement funded on a yearly basis under the Finance Law.
)iii) Statistical data
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/38/EEC/Add.5
Page 7
4. SME-SMI Development Fund (FDPME)
1. Title
SME-SMI Development Fund (FDPME)
2. Legal basis
Programme contracts between the State and the regions.
3. 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 shares are held by one or more enterprises not
meeting the above criteria.  Shares held by public holding companies, companies with
equity capital and, provided they do not exercise any control, institutional investors,
are not taken into consideration.
4. 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 and
adjustment work connected with the equipment provided for by the programme, and external trainingcosts (feasibility study).
5. Form of subsidy
Direct subsidization of the enterprise implementing the investment programme.
6. Total amount and subsidy per unit
Budget estimate of F 7.5 million (State loans,  local authorities, Community loans) for the
period 1994-1999.
1996:  about F 1.4 billion (State, local authorities, European Union).  The figure given in the
previous notification was an estimate.
1997:  F 862 million (State, local authorities, European Union).  Average aid per project:
F 370,000.G/SCM/N/38/EEC/Add.5
Page 8
The maximum rate of contribution is as follows:
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 92, paragraph 3(c), with
an authorized regional aid ceiling of 17 per cent)27 per cent gross
C (Assisted area under Article 92, paragraph 3(c), with
an authorized regional aid ceiling of 25 per cent)30 per cent net
D (Assisted area under Article 92, 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 structuralfunds.
7. Policy objective
To promote SMEs-SMIs by helping to improve their technological level and the quality of
their products.
8. Duration
Permanent arrangement
9. 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 market, suppliers etc.).
Consequently, it has no effect on trade.
2. REGIONAL SCHEMES
*METROPOLITAN FRANCE
1. Profits Tax Exemption for new Enterprises set up in Land-Use Management Areas
1. Title
Profits Tax Exemption for New Enterprises Set Up in Land-Use Management Areas
2. Form of subsidy
Tax concession
3. Amount per unit or, where not possible, total amount or amount budgeted for the subsidy
Amount budgeted:  F 3,100 millionG/SCM/N/38/EEC/Add.5
Page 9
4. Policy objective and/or purpose of the subsidy
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
6. Statistical data permitting an assessment of the trade effects
No statistical data available.
7. Legal basis
Article 44 sexies  of the General Taxation Code.
8. 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 land-use management areas.
2. Temporary Exemption from Professional Tax in Connection with Land-Use
Management and Priority Rural Development Areas
1. Title
Temporary Exemption from Professional Tax in Connection with Land-Use Management and
Priority Rural Development Areas
2. Form of subsidy
Tax concession
3. Amount per unit or, where not possible, total amount or amount budgeted for the subsidy
Estimated amount:  F 1,180 million
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.
6. Statistical data permitting an assessment of the trade effects
No statistical data available.G/SCM/N/38/EEC/Add.5
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7. Legal basis
Articles 1465 and 1465 B of the General Taxation Code.
8. Beneficiaries
Enterprises which set up in land-use management and priority rural development areas with a
view to the:
- Creation, extension and decentralization of industrial activities, scientific and
technological research or design, management, engineering or computer services;
- revival of establishments or services in difficulty that perform these activities;
- reconversion of establishments or services to perform the same kind of activity.
9. Duration of the subsidy
Permanent arrangement
3. Temporary Exemption from Professional Tax in Rural Revitalization Areas
1. Title
Temporary Exemption from Profession al Tax in Rural Revitalization Areas
2. Form of subsidy
Tax concession
3. Subsidy per unit or, where not possible, total amount or amount budgeted for the subsidy
Estimated amount:  F 10 million
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.
6. Statistical data permitting an assessment of the trade effects
No statistical data available.
7. Legal basis
Article 1465 A of the General Taxation Code, as last amended by Article 95 of the Finance
Law for 1998, No. 97-1269 of 30 December 1997.G/SCM/N/38/EEC/Add.5
Page 11
8. 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;
- revival of establishments or services in difficulty that perform these activities;- reconversion of establishments or services to perform the same kind of activity.- creation of craft industries.
9. Duration of the subsidy
Permanent arrangement
4. Temporary Exemption from Professional Tax in Urban Revitalization Areas
1. Title
Temporary Exemption from Professional  Tax in Urban Revitalization Areas
2. Form of subsidy
Tax concession
3. Subsidy per unit or, where not possible, total amount or amount budgeted for the subsidy
Estimated amount:  F 510 million
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.
6. Statistical data permitting an assessment of the trade effects
No statistical data available.
7. Legal basis
Article 52 of LOADT of 4 February 1995 codified in Article 1466 Al bis of the General
Taxation Code.G/SCM/N/38/EEC/Add.5
Page 12
8. Beneficiaries
Enterprises employing fewer than 150 people that had, prior to 31 December 1996, proceeded
to set up new establishments or external existing ones.
9. Duration
Access to this scheme has been closed since 31 December 1996.
5. Enterprise Zones
1. Title
Enterprise Zones
2. Form of subsidy
Tax concession
3. Subsidy per unit or, where not possible, total amount or amount budgeted for the subsidy
Amount budgeted F 2,250 million
4. Policy objective and/or purpose of the subsidy
Revival of areas seriously affected by the loss of jobs in industry.
5. Duration of the subsidy and/or any other time-limits attached to it
Ten years, but the zones have been closed since 31 December 1991.
6. Statistical data permitting an assessment of the trade effects
No statistical data available.
7. Legal basis
Article 208 quinquies  of the General Taxation Code.
8. Beneficiaries
Legal entities subject to corporation tax that are created in order to carry on an enterprise in
one of the eligible zones.G/SCM/N/38/EEC/Add.5
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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
F 580 millionDossiers submitted:  203 Dossiers approved:  166
Jobs (to be created):  13,920 Investment:  F 15,589 million
Programmes (in number of dossiers approved):Creation: 67 (35.8 per cent)
Extension: 111 (59.4 per cent)
Decentralization: 9 (4.8 per cent)
Resumption/extension: 0
Conversion: 0
Average amount of PAT/job:  F 41,667
(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.G/SCM/N/38/EEC/Add.5
Page 14
6. Statistical data
Unavailable, because the premium concerns all sectors of activity according to geographical
criteria and is related to job creation under each project.
7. Legal basis
Decree No. 95-149 of 6 February 1995
8. Beneficiaries
All enterprises, whatever their size, that meet the conditions of eligibility set out in the
Decree.
7. Special Scheme for the Sambre-Avesnois Mining Area
1. Title
Special Scheme for the Sambre-Avesnois Mining Area
2. Form of subsidy
Tax concession
3. Subsidy per unit or, where not possible, total amount or amount budgeted for the subsidy
Negligible
4. Policy objective and/or purpose of the subsidy
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 to close on 13 May 1998.
6. Statistical data permitting an assessment of the trade effects
Because of the very low number of enterprises established, there are no trade effects.
7. Legal basis
Article 220 septies  of the General Taxation Code.
8. Beneficiaries
Legal entities subject to corporation tax that are created in order to carry on an enterprise in
the eligible zone.G/SCM/N/38/EEC/Add.5
Page 15
8. Mining Reconversion Programme (SOFIREM, FINORPA)
1. Title
Mining Reconversion Programme (SOFIREM, FINORPA)
2. Legal basis
Commission Decision of 15 June 1989 concerni ng the Charbonnages de France reconversion
companies:  NN 2/89.
3. Beneficiaries
Enterprises in the coal-mining areas (as recognized by the Commission).
4. Conditions
All enterprises in the coal-mining area may apply under the same conditions.
5. Form of subsidy
Long-term loans with interest-rate subsidies without a security requirement.  The loans may
always be repaid before the due date and redeemed without penalty (maximum financing:  30 per cent
of the investment).
Acquisition of minority holdings in enterprises.
Provision of free advice and services to the beneficiaries (SMEs) of the above measures.
6. Subsidy per unit and total amount
Two to 3 per cent below the normal rate with a variable period of repayment.In zones covered by SOFIREM and FINORPA in cluded in the zones qualifying for a land-use
management premium (PAT), the aid component is incorporated into the total regional aid anticipated
for a given project, in order to ensure that the regional aid ceilings imposed under the PAT scheme are
respected.  In zones covered by SOFIREM and FINORPA that are not included in the zones
qualifying for the PAT, only SMEs are eligible for the measures.
7. Government appropriation
The data previously notified under Article 25 referred to budgetary commitments and not
actual payments, which are made (or sometimes cancelled) later.
- For 1994:
F 81 million for SOFIREM
No payment to FINORPA
- For 1995 (corrected):
F 81 million for SOFIREM
F 54 million for FINORPA, but not paidG/SCM/N/38/EEC/Add.5
Page 16
- For 1996 and 1997:  no appropriations.
8. Policy objective
To assist the reconversion of areas affected by the restructuring of the mining industry.
9. 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.
10. Duration
Unlimited, subject to annual extension under the Finance Law.
9. Industrial Development Company (SODIE)
1. Title
Industrial Development Company (SODIE)
2. 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.
3. Beneficiaries
Enterprises established in the iron and steel conversion areas.
4. Conditions
Intervention zones to be defined in agreement with the Commission.
5. 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.
6. Total amount
- For 1994: F 200 million- For 1995: F 200 millionThese two figures correspond to State payments to SODIE.G/SCM/N/38/EEC/Add.5
Page 17
- For 1996: F 151 million in subsidized loans
- For 1997: F 128 million in subsidized loans.Since 1996 SODIE has not received State fundin g;  SODIE acts on behalf of the State by
using the repayments of loans previously granted.
7. Policy objective
Re-industrialization and diversification in areas affected by industrial decline.
8. Duration of the subsidy
Variable
9. 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/38/EEC/Add.5
Page 18
*CORSICA
1. Tax Exemption, subject to approval, for Profits Resulting from New Activities Created
in Corsica
1. Title
Tax Exemption, Subject to Approval, for Profits Resulting from New Activities Created in
Corsica
2. Form of subsidy
Tax concession
3. Subsidy per unit or, where not possible, total amount or amount budgeted for the subsidy
Insignificant
4. Policy objective and/or purpose of the subsidy
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.
6. Statistical data permitting an assessment of the trade effects
No statistical data available.
7. Legal basis
Article 208 quater  A of the General Taxation Code.
8. Beneficiaries
Companies subject to corporation tax for new activities created in Corsica prior to
31 December 1998 in the industrial, craft, construction and agricultural sectors.
9. Starting-point of aid to enterprise
Actual commencement of activity in Corsica.
2. Tax Exemption for Profits Realized by Enterprises Created in Corsica in the Craft,
Industrial, Hotel, Construction and Public Works Sectors
1. Title
Tax Exemption for Profits Realized by Enterprises Created in Corsica in the Craft, Industrial,
Hotel, Construction and Public Works SectorsG/SCM/N/38/EEC/Add.5
Page 19
2. Form of subsidy
Tax concession
3. Subsidy per unit or, where not possible, total amount or amount budgeted for the subsidy
Amount budgeted:  F 3 million
4. Policy objective and/or purpose of the subsidy
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
6. Statistical data permitting an assessment of the trade effects
No statistical data available.
7. Legal basis
Article 208 sexies  of the General Taxation Code.
8. Beneficiaries
Companies subject to corporation tax created in Corsica in certain sectors.
9. Starting-point of aid to enterprise
Commencement of activity in Corsica.G/SCM/N/38/EEC/Add.5
Page 20
3. Reduction of Professional Tax in Corsica
1. Title
Reduction of Professional Tax in Corsica
2. Form of subsidy
Tax concession
3. Subsidy per unit or, where not possible, total amount or amount budgeted for the subsidy
Estimated amount:  F 430 million
4. Policy objective and/or purpose of the subsidy
To stimulate investment, encourage the development of employment and maintain the fabric
of economic life in Corsica.
5. Duration of the subsidy and/or any other time-limits attached to it
The total duration of 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 and of
enterprises in difficulties.
6. Statistical data permitting an assessment of the trade effects
No statistical data available.
7. Legal basis
Article 1466 B of the General Taxation Code.
8. Beneficiaries
Enterprises located in Corsica which already existed on 1 January 1997 or which proceed
before 31 December 2001 to create or extend establishments, or SMEs in difficulty, provided such
enterprises carry on an activity other than one connec ted with finance, gambling, insurance, transport,
energy distribution or air and marine transport and co me within sectors other than agriculture, fishing,
coal-mining, the steel industry, large-scale naval repair work or automobile construction.
9. Duration of the scheme
Scheme to which access will be closed on 31 December 2001.
4. Tax Exemption on Profits of up to f 400,000
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 agricultural enterpri ses subject to income tax or corporation tax and
for companies that already operate in Corsica or establish operations there before 31 December 2001.G/SCM/N/38/EEC/Add.5
Page 21
2. Form of subsidy
Tax concession
3. Subsidy per unit or, where not possible, total amount or amount budgeted for the subsidy
Amount budgeted:  F 5 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 and/or any other time-limits attached to it
Five years
6. Statistical data permitting an assessment of the trade effects
No statistical data available.
7. Legal basis
Article 44 decies  of the General Taxation Code.
8. Beneficiaries
Industrial, commercial, craft and agricultural enterprises, for their new or existing activities
established in Corsica.
9. Starting-point of exemption for the enterprise
Beginning of the operation in the case of enterprises that establish themselves in Corsica or
1 January 1997 in the case of existing enterprises.G/SCM/N/38/EEC/Add.5
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*FRENCH OVERSEAS DEPARTMENTS (PODs)
1. Long-Term Tax Treatment
1. Title
Long-Term Tax Treatment
2. Legal basis (reference, date)
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.
3. Beneficiaries (who receive the subsidy, producers, exporters, etc.)
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.
4. Conditions to be fulfilled before the subsidy can be granted
Prior authorization from the Ministry of the Economy and Finance.
i) Form of subsidy (grant, loan, tax concession, etc.)
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 maynot be applied concurrently with the exemption arrangements provided for under Article 208 quater
of the General Taxation Code.
ii) Subsidy per unit, total amount or amount budgete d for the subsidy (indicating, if possible, the
average subsidy per unit in the previous year)
Amount not available either for1996 or 1997.
iii) Policy objective and/or purpose of the subsidy
To contribute to the promotion of the Overseas Departments, and more generally, to foster
their economic development.
iv) Duration of the subsidy and/or any other time-limits attached to it
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 applications for authorization before 31 December 2001.G/SCM/N/38/EEC/Add.5
Page 23
v) 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.
2. VAT Deduction for Certain Exempted Products
1. Title
VAT Deduction for Certain Exempted Products
2. Legal basis (reference, date)
Ministerial Decision of 2 November 1953.
3. Beneficiaries (who receive the subsidy, producers, exporters, etc.)
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.  These
enterprises may deduct under those operations the tax actually levied on their various purchases of
goods and services and the tax nominally applied to purchases of the exempted goods.
4. Conditions to be fulfilled before the subsidy can be granted
See below
i) Form of subsidy (grant, loan, tax concession, etc.)
Tax concession to prevent an exempted product being taxed following its use in a particular
process.
ii) Subsidy per unit, total amount or amount budgete d for the subsidy (indicating, if possible, the
average subsidy per unit in the previous year)
Amount for 1996:  F 570 million;
Amount for 1997:  F 580 million.
iii) Policy objective and/or purpose of the subsidy
To promote economic development and employ ment in the Overseas Departments.  In
addition, to ensure fiscal neutrality in various processes.
iv) Duration of the subsidy and/or any other time-limits attached to it
Permanent arrangement
v) Statistical dataG/SCM/N/38/EEC/Add.5
Page 24
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.
3. Aid to Overseas Departments.  Reduction of Payroll Tax Rates
1. Title
Aid to Overseas Departments.  Reduction of Payroll Tax Rates
2. Legal basis (reference, date)
Article 231 paragraph 2 bis and paragraph 5 of the General Taxation Code, deriving from
Article 2 of Law No. 56-1327 of 29 December 1956 and Article 11 of Law No. 60-1368 of
21 December 1960.
3. Beneficiaries (who receive the subsidy, producers, exporters, etc.)
Enterprises operating in the Overseas Departments.
i) Form of subsidy (grant, loan, tax concession, etc.)
Tax concession consisting of a reduction, as compared with Metropolitan France, in the rate
of the payroll tax paid by employers in the Overseas Departments.
ii) Subsidy per unit, total amount or amount budgete d for the subsidy (indicating, if possible, the
average subsidy per unit in the previous  year)
Amount for 1996: F 450 million
Amount for 1997: F 480 million
iii) Policy objective and/or purpose of the subsidy
To promote the creation of enterprises and of jobs by limiting the tax burden on salaries paid
by enterprises established in the Overseas Departments.
iv) Duration of the subsidy and/or any other time-limits attached to it
Indeterminate
v) Statistical data
The aid is intended to compensate for the disadvantages associated with the establishment of
employers in the areas in question (lack of qualified staff, subcontractors, distance from markets and
suppliers, etc.).  Consequently, it has no effect on trade.G/SCM/N/38/EEC/Add.5
Page 25
4. Deduction of proceeds and Profits Invest ed in the French Overseas Departments
1. Title
Deduction of Proceeds and Profits Invested  in the French Overseas Departments
2. Legal basis (reference, date)
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 provision has been amended practically every
year.  It has been codified, as of 1 January 1998, on the basis of Article 217 undecies  of the General
Taxation Code.
3. Beneficiaries (who receive the subsidy, producers, exporters, etc.)
Enterprises subject to corporation tax or income tax (on actual income) which make
productive investments overseas intended for use in a limited number of listed sectors of activity, orwhich subscribe in cash for shares in companies s ubject to corporation tax that invest overseas in
those sectors or for shares in regional development companies in the French Overseas Departments.
4. Conditions to be fulfilled before the subsidy can be granted
Prior authorization must be obtained for eligible investments in excess of 30 million francs.
Authorization is automatic for investments below th is amount except for certain investments in the
hotel and tourism sectors (which require authorization whatever the amount) or for all investments in
the transport and cinematic production and broadcasting sectors or in the franchising of local public
services of an industrial or commercial nature.
i) Form of subsidy (grant, loan, tax concession, etc.)
Tax concession through the deduction of the investment in question from the profits and
losses subject to corporation tax or income tax, as the case may be.
ii) Subsidy per unit, total amount or amount budgeted for the subsidy
Total amount for 1996: F 1,700 million
Total amount for 1997: F 2,400 million
iii) Policy objective and/or purpose of the subsidy
To promote the economic development of the Overseas Departments and Territories.
iv) Duration of the subsidy and/or any other time-limits attached to it
The scheme applies until 31 December 2001
v) 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/38/EEC/Add.5
Page 26
5. Creation of Activities in the Overseas Departments
1. Title
Creation of Activities in the Overseas Departments
2. Legal basis (reference, date)
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.
3. Beneficiaries (who receive the subsidy, producers, exporters, etc.)
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.
4. Conditions to be fulfilled before the subsidy can be granted
Prior authorization from the Minister of the Budget.
i) Form of subsidy (grant, loan, tax concession)
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.
ii) Subsidy per unit, total amount or amount budgeted for the subsidy
Total amount for 1997:  F 100 million
iii) Policy objective and/or purpose of the subsidy
To foster economic development and employment in the Overseas Departments.
iv) Duration of the subsidy and/or any other time-limits attached to it
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.
v) 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/38/EEC/Add.5
Page 27
6. Reduced Taxation of Profits and Losses
1. Title
Reduced Taxation of Profits and Losses
2. Legal basis (reference, date)
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.
3. Beneficiaries (who receive the subsidy, producers, exporters, etc.)
Enterprises subject to corporation tax and carrying on, in the Overseas Departments, an
activity in a limited number of listed sectors.
4. Conditions to be fulfilled before the subsidy can be granted
See below
i) Form of subsidy (grant, loan, tax concession, etc.)
Tax deduction of one third on profits or losses resulting from activities that take place in the
Overseas Departments.
ii) Subsidy per unit, total amount or amount budgeted for the subsidy
Amount for 1997:  F 210 million
iii) Policy objective and/or purpose of the subsidy
To foster economic development and employment in the Overseas Departments.
iv) Duration of the subsidy and/or any other time-limits attached to it
The scheme is applicable to accounting periods closed by 31 December 2001.
v) 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).
Consequently, it has no effect on trade.
7. Premium for Job Creation in the Overseas Departments
1. Title
Premium for Job Creation in the Overseas Departments
2. Legal basis (reference, date)
Decree No. 95-504 of 2 May 1995.G/SCM/N/38/EEC/Add.5
Page 28
3. Beneficiaries (who receives the subsidy, producers, exporters, etc.)
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.
4. Conditions to be fulfilled before the subsidy can be granted
Prior authorization by an order of the government representative in the Department.
i) Form of subsidy (grant, loan, tax concession, etc.)
Subsidy
ii) Subsidy per unit, total amount or amount budgete d 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 1996:  F 10,588,000, and in 1997:  F 9,307,680.
iii) Policy objective and/or purpose of the subsidy
To encourage job creation as a contribution to the promotion of the Overseas Departments
and, more generally, to foster their economic development.
iv) Duration of the subsidy and/or any other time-limits attached to it
The authorization determines the duration of the scheme up to a maximum of ten years.
v) 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/38/EEC/Add.5
Page 29
*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.
2. Form of subsidy
Tax concession
3. Subsidy per unit, or where not possible, total amount or amount budgeted for the subsidy
No amount calculated
4. Policy objective and/or purpose of the subsidy
To encourage the creation and maintenance of activities in urban free zones.
5. Duration of the subsidy and/or any other time-limits attached to it
Five years
6. Statistical data permitting an assessment of the trade effects
No statistical data available.
7. Legal basis
Article 44 octies  of the General Taxation Code.
8. Beneficiaries
Industrial, commercial, craft or liberal-professional enterprises for their new or existing
activities established in urban free zones.G/SCM/N/38/EEC/Add.5
Page 30
3. R&D SCHEMES
1. Tax Credit to Promote Research
1. Title
Tax Credit to Promote Research
2. Form of subsidy
Tax concession provided for in Article 244 quater  B of the General Taxation Code for the
benefit of industrial, commercial or agricultural enterprises.
3. Subsidy per unit or, where not possible, total amount or amount budgeted for the subsidy
Amount budgeted:  F 3,600 million.
4. Policy objective and/or purpose of the subsidy
To encourage better organization of research activities.
5. Duration of the subsidy and/or any other time-limits attached to it
Arrangement applicable up to 31 December 1998.
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.
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 precompetition
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)G/SCM/N/38/EEC/Add.5
Page 31
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. 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 inquestion.  Only scientific and technical content is considered in the selection and evaluation of
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).
8. 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.
3. Industrial Innovation Fund
1. Title
Industrial Innovation Fund
2. Legal basis
Annual Finance Law
3. Beneficiaries
General support scheme for projects pertaining to all industrial groups whatever their size.
4. Conditions
The amounts taken into consideration are fairly substantial (approximately 15 to 50 million
francs).G/SCM/N/38/EEC/Add.5
Page 32
i) Form of subsidy
Repayable advances which can be turned into subsidies in the event of the project's failure.
ii) 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.
A detailed report of the scheme is submitted to the Commission every year, and cases where it
is applied to projects whose total value exceeds ECU 20 million are notified.
5. Budget
- For 1994:  F 2,658 million- For 1995:  F 2,725 million
- For 1996:  F 2,325 million
- For 1997:  F 1,850 million
i) 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 process
determined by the management of the enterprises within a period of less than five years.
ii) Duration
Permanent arrangement funded on a yearly basis under the Finance Law.
iii) 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;
- 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/38/EEC/Add.5
Page 33
4. National Agency for the Promotion of Research (ANVAR)
1. Title
National Agency for the Promotion of Research (ANVAR)
2. Legal basis
Decree No. 79/616 of 13 July 1979 concerning innovation.Annual Finance Law
3. Beneficiaries
Enterprises with fewer than 2,000 employees.
4. 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.
i) 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.
ii) Subsidy per unit
Repayable advances with a ceiling of 50 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 of F 200,000 with a maximum rate of 50 per cent.
5. Budget
For 1994:  F 1,410 million;
For 1995:  F 1,217 million;
For 1996:  F 1,309 million;For 1997:  F 1,350 million
i) Policy objective
To make full use of the results of scientific and technical research;
to promote innovation and technological progress;
to facilitate the transfer to industry of the results of laboratory research.G/SCM/N/38/EEC/Add.5
Page 34
ii) Duration of the subsidy
Permanent arrangement funded on an annual basis under the Finance Law.
Conditions
Transmission of an annual report to the Commission.
Notification of applications of a value exceeding ECU 20 million.
iii) 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;
- being innovatory, the products and pr ocesses in question cannot compete with
existing ones.
Consequently, the programme has no effect on trade.
5. ATOUT-PUMA
1. Title
ATOUT-PUMA
2. Legal basis
Finance Law 1994
3. Beneficiaries
Industrial enterprises wishing to carry out research for the introduction of advanced materials
into industrial technologies.
4. Conditions
Financially sound enterprises with fewer than 2,000 employees, that are not subsidiaries of a
group comprising 2,000 persons or more.
i) 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.G/SCM/N/38/EEC/Add.5
Page 35
ii) 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 1994:  F 85 million;For 1995:  F 62 million;For 1996:  F 52 million;For 1997:  F 46 million.
iii) Policy objective
To support research and development projects aimed at introducing advanced materials into
industrial technologies.
iv) Duration of the subsidy
Permanent arrangement funded on a yearly basis under the Finance Law.
v) 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.
By its very nature the technology dissemination programme targets small enterprises that are
involved in sectors with little world-wide impact.  Consequently, the programme has no effect on
trade.
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 30 million in 1997
4. Policy objective
The main purpose of the programme is to help a number of non-profit-making research
institutions to have access to the equipment necessary to their activity.G/SCM/N/38/EEC/Add.5
Page 36
5. Legal basis
Annual Finance Law.
Scheme approved by the Commission under No. 53/96.
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
The institutions in question are non-profit-making.
7. Civil Aviation Research
1. Title
Civil Aviation Research
2. Form of subsidy
Participation in direct research costs.
3. Total amount
F 338 million in 1997
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 (scheme approved by the Commission under No. N53/96).
6. Beneficiaries
About 50 enterprises were involved in 1997.
7. Duration
Permanent arrangement funded on a yearly basis under the Finance Law.G/SCM/N/38/EEC/Add.5
Page 37
8. Statistical data
The aid goes entirely to research and therefore has no bearing on the production of products.G/SCM/N/38/EEC/Add.5
Page 38
4. OTHERS
1. Tax Concession to Promote Subscription to Joint Shareholdings in Merchant Ships
1. Title
Tax Concession to Promote Subscription to Joint Shareholdings in Merchant Ships
2. Form of subsidy
Tax concession
3. Subsidy per unit or, where not possible, total amount or amount budgeted for the subsidy
Amount budgeted:  F 690 million.
4. Policy objective and/or purpose of the subsidy
To encourage the development of merchant shipping flying under the French flag.
5. Duration of the subsidy and/or any other time limits attached to it
Arrangement open until 31 December 2000 for subscription to joint shareholdings concerning
ships for which an authorization application was made between 23 September 1996 and
15 September 1997.
6. Statistical data permitting an assessment of the trade effects
No statistical data available.
7. Legal basis
Article 238 bis HN of the General Taxation Code.
__________