WORLD TRADE  
ORGANIZATION  G/SCM/N/155/EEC/Add.9 
23 November 2007 
 
 (07-5160) 
Committee on Subsidies and 
Countervailing Measures Original:   French 
 
 
   
SUBSIDIES 
 
New and Full Notification and Updating Notifi cation 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 the 
subsidy programmes of France . 
 
_______________ 
 
   G/SCM/N/155/EEC/Add.9 
Page 2  
 
  FRANCE  
 
TABLE OF CONTENTS 
 
Page  
 
I. SME SCHEMES .................................................................................................................... ...4 
1.1 REGIONAL PREMIUM FOR THE CREATION OF ENTERPRISES (PRCE) ...........................................4  
1.2 REGIONAL EMPLOYMENT PREMIUM (PRE) ..................................................................................5  
1.3 REGIONAL ADVISORY ASSISTANCE FUND (FRAC ) .......................................................................6  
1.4 SME-SMI DEVELOPMENT FUND ....................................................................................................7  
II. REGIONAL SCHEMES ..........................................................................................................8  
2.1 METROPOLITAN FRANCE ............................................................................................................8  
2.1.1 Tax reduction for ne w enterprises...........................................................................................8  
2.1.2 Land-Use Management Premium (PAT)..............................................................................10  
2.1.3 Mining reconversion programme (SOFIREM - FINORPA) ..............................................11  
2.1.4 Industrial Development Company (SODIE) ........................................................................12  
2.2 CORSICA ............................................................................................................................... .....13  
2.2.1 Exemption, subject to approval, from co rporation tax on profits resulting from 
new activities crea ted in Corsica ...........................................................................................13  
2.2.2 Tax exemption for profits realized by en terprises set up in Corsica in the crafts, 
industrial, hotel, construction and public works sectors.....................................................14  
2.2.3 Profits tax exemption for industrial, commercial, crafts and agricultural enterprises operating in Corsica on 1 January 1997 or which establish operations there between this date and 31 December 2001 (Zone franche Corse) ...........15
 
2.2.4 Tax credit for certain investments ma de and exploited in Corsica ....................................16  
2.3 FRENCH OVERSEAS DEPARTMENTS (FODS ) ...............................................................................17  
2.3.1 Long-term tax treatment in F rench Overseas Departments...............................................17  
2.3.2 VAT deduction for certain exempted products....................................................................18  
2.3.3 Deduction of investments in French Overseas Departments and Territories ...................19  
2.3.4 Temporary exemption, subject to approval, from corporation tax for the 
creation of activities in Fren ch Overseas Departments.......................................................20  
2.3.5 Reduced taxation of profits from operat ions in French Overseas Departments...............21  
2.3.6 Premium for job creation in French Overseas Departments..............................................22  
2.4 URBAN AREAS IN DIFFICULTY ...................................................................................................23  
2.4.1 Measures on behalf of Ur ban Free Zones (ZFU) .................................................................23  
III. R&D SCHEMES.................................................................................................................... .25 
3.1 TAX CREDIT TO PROMOTE RESEARCH .......................................................................................25   G/SCM/N/155/EEC/Add.9 
 Page 3 
 
 
  3.2 RESEARCH AND TECHNOLOGY FUND (FRT)...............................................................................26  
3.3 INDUSTRIAL INNOVATION FUND (FII) (CURRENTLY THE FUND FOR ENTERPRISE 
COMPETITIVENESS ) ...................................................................................................................27  
3.4 NATIONAL AGENCY FOR THE PROMOTION OF RESEARCH (ANVAR ) ..........................................29  
3.5 ATOUT -PUMA ............................................................................................................................30  
3.6 AID TO RESEARCH INSTITUTIONS  IN THE CIVIL AVIATION SECTOR ...........................................30  
3.7 CIVIL AVIATION RESEARCH .......................................................................................................31  
3.8 YOUNG INNOVATIVE ENTERPRISES (JEI) ...................................................................................32  
IV. SECTORAL REGIMES.........................................................................................................33  
4.1 TONNAGE -BASED TAX SCHEME .................................................................................................33  
 
 
1 EURO = 6.55957 FRF (French francs). G/SCM/N/155/EEC/Add.9 
Page 4  
 
  I. SME SCHEMES 
1.1 R
EGIONAL PREMIUM FOR THE CREATION OF ENTERPRISES (PRCE) 
1. Period covered by the notification  
  2005 and 2006. 
 
2. Policy objective of aid scheme
 
 
Job creation and econom ic development. 
 
3. Legal basis  
  Article L.1511-2 of the General Code on Local Authorities.  4. Form of the aid
 
 
 Business grant with a ceiling of €25,000, but which may be increased to €35,000 in priority 
areas defined by decision of the Regional Council.  
 
5. Beneficiaries of the aid and allocation mechanism  
 
 Beneficiaries  
  Enterprises created less than 12 months prior to submission of the application.   Allocation mechanism
 
 
 The premium is paid directly to the enterpri ses by the local authorities and in particular the 
regions, which are responsible for th e implementation of this scheme. 
  Conditions
 
 
 Enterprises must undertake to create a minimum number of permanent jobs by recruiting 
persons linked to the enterprise by open-ended employment contracts. 
 6. Subsidy per unit or, where this is not possi ble, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year ) 
 
2005:  €33 million; 2006:  €33 million. 
7. Duration of the subsidy and/or any other time-limits attached to it
 
  Provision applicable until 2008. 
 
8. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
  No precise data can be provided.  However, since the total amount of aid granted annually 
and the maximum amount of aid that can be gran ted to each enterprise are low, the scheme has no 
significant impact on trade.  G/SCM/N/155/EEC/Add.9 
 Page 5 
 
 
  1.2 R EGIONAL EMPLOYMENT PREMIUM (PRE) 
1. Period covered by the notification  
  2005 and 2006. 
 
2. Policy objective of aid scheme
 
  Job creation and ec onomic development. 
 3. Legal basis
 
 
 Article L.1511-2 of the General Code on Local Authorities.  4. Form of the aid
 
 
 Business grant with a ceiling of €11,000 per j ob over three years, up to a total annual amount 
of €160,000 per enterprise.  5. Beneficiaries of the aid and allocation mechanism
 
  Beneficiaries
 
 
 Small and medium-sized enterprises, with th e exception of those operating in the following 
sectors:  the coal industry, transport, iron and steel  industry, shipbuilding, synthetic fibres, automotive 
industry and financial services.  
 Allocation mechanism
  
  The premium is paid directly to the enterpri ses by the local authorities and in particular the 
regions, which are responsible for th e implementation of this scheme. 
  Conditions
 
 
 As a general rule (job creation as the result of  the recruitment of a person linked to the 
enterprise by an open-ended employment contract), the aid amounts to a maximum of 20 per cent of gross earnings, subject to the payment of social se curity contributions for the new employee for three 
years.  
 
 The enterprise must create one or more jobs, unrelated to any new investment, and not have 
dismissed or made redundant any staff in the twel ve months prior to submitting the application. 
 6. Subsidy per unit or, where this is not possi ble, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year ) 
 
 2005:  €43 million;  2006:  €43 million.  7. Duration of the subsidy and/or any other time-limits attached to it
 
 
 10 years from 2000.  G/SCM/N/155/EEC/Add.9 
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  8. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
  No precise data can be provided.  However, since the total amount of aid granted annually 
and the maximum amount of aid that can be gran ted to each enterprise are low, the scheme has no 
significant impact on trade. 
 
1.3 R
EGIONAL ADVISORY ASSISTANCE FUND (FRAC ) 
1. Period covered by the notification  
  2005 and 2006. 
 
2. General policy objective and/or pur pose of the subsidy (or aid scheme
) 
  To foster the development of SMIs by encourag ing them to call on outside consultants, and to 
internationalize certain advisory functions yet to  be created (recruitment of professional staff). 
 
3. Legal basis (reference, date
) 
  Authorization by the Commission on 5 January 2000.  Ministerial Circular of 3 August 1989 on arrangements for the use of decentralized loans for the environment and enterprise 
competitiveness. 
 
4. Form of the subsidy (i.e., grant, loan, tax concession, etc
.) 
  Direct subsidization of the enterprise as regards:  
- Recourse to consultants by enterprises w ith inadequate internal operational services 
(FRAC); 
- recourse to technical advice provided by public or private laboratories, research 
centres, etc.:  Regional Technology Transfer Assistance Fund (FRATT); 
- internal advisory service involving the creation of new professional posts within the 
enterprise:  Professional Staff Recruitment Assistance (ARC). 
5. Beneficiaries of the aid and allocati on mechanism (calculation method and conditions
)  
Beneficiaries (who receives the subsidy, the producer, the exporter, other ) 
SMEs from all sectors, in accordan ce with specific support criteria. 
6. Subsidy per unit or, where this is not possi ble, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year ) 
 
• Total amount for 2005:  €20.1 million; 
• total amount for 2006:  €33 million.  G/SCM/N/155/EEC/Add.9 
 Page 7 
 
 
  Maximum level of aid: 
 
Type of counselling  Level  
"FRAC (short) " €3,800, up to a maximum of 80% of 
consultancy fees. With the exception of the ECSC, 
shipbuilding, synthetic fibre, automobile manufacturing, fisheries 
and agricultural sectors. 
"FRAC " €30,500, up to a maximum of 50% 
of the cost of the advisory service 
provided or the salary, including social security contributions, of the newly appointed employee.  
 
7. Duration of the subsidy and/or any other time-limits attached to it  
  Permanent arrangement funded on a yearly basis under the Finance Law.  
8. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
  Given that the purpose of the programme is to improve enterprise management, it has no impact on production costs and consequently does not affect trade.  
 1.4 S
ME-SMI DEVELOPMENT FUND  
1. Period covered by the notification  
  2005 and 2006. 
 
2. General policy objective and/or pur pose of the subsidy (or aid scheme
) 
 
 Assistance to SMEs engaging in technologi cal and innovatory material investments, 
intangible investments, installation and organizati onal work and studies relating to such material 
investments.  
3. Legal basis (reference, date
) 
  Circular of 31 August 2000;  Programme contracts between the State and the regions;  Notification by the French authorities on 1 March 2000;  Authorization by the Commission on 5 July 2000. 
 
4. Form of the subsidy (i.e., grant, loan, tax concession, etc
.) 
  Subsidy.  
 
5. Beneficiaries of the aid and allocati on mechanism (calculation method and conditions
) 
 
 Beneficiaries (who receives the subsidy, the producer, the exporter, other):  
•  Financially sound enterprises that come within the EU definition of SMEs, 
i.e., enterprises: G/SCM/N/155/EEC/Add.9 
Page 8  
 
  -  employing no more than 250 persons; 
-  no more than 25 per cent of the equity or  voting rights of which are held by one or 
more enterprises which fail to meet the above criteria.  Shares held by public holding companies, companies with venture capital and, provided they do not exercise any control, institutional invest ors are not taken into consideration. 
Conditions 
 
The maximum rate of contribution is as follows: 
 
Type of area Small enterprise Medium-sized enterprise 
Unassisted area 15% gross 7.5% gross 
Assisted area / PAT, 11.5% gross 21.5% gross 
Assisted area / PAT, 17% 27% gross 
Assisted area / PAT area, 23% gross 33% gross, up to a ceiling of 30% net 
Assisted area / FOD, 65% net 75% net 
 
6. Subsidy per unit or, where this is not possi ble, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year ) 
 
•  Total amount for 2005:  €45.2 million; 
•  total amount for 2006:  €34.4 million. 
 7. Duration of the subsidy and/or any other time-limits attached to it
 
 
 The scheme is valid until 2006.  Renewal in 2007. 
 8. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
  The aid is intended to compensate for struct ural disadvantages associated with the size of 
small enterprises.  It has no effect on trade. 
 
II. REGIONAL SCHEMES 
2.1 M
ETROPOLITAN FRANCE  
2.1.1 Tax reduction for new enterprises 
1. Title of the aid scheme  
 
 Profits tax exemption for new enterprises set  up in areas eligible for land-use management 
premiums for industrial projects, priority rural de velopment areas, rural re vitalization areas and urban 
redevelopment areas, regional ai d zones as of 1 January 2007. 
  Areas eligible for land-use management premiu ms for industrial projects and priority rural 
development areas are zones which expire on 31 D ecember 2006.  Enterprises set up in these areas as 
of 1 January 2007 no longer benefit from the exemption.   G/SCM/N/155/EEC/Add.9 
 Page 9 
 
 
  2. Period covered by the notification  
  2005 and 2006. 
 
3. General policy objective and/or pur pose of the subsidy (or aid scheme
) 
 
 To promote the creation of new enterprises in areas with geographical, economic or social disadvantages.  4. Legal basis (reference, date
) 
 
 Article 44 sexies  of the General Taxation Code, de riving from Article 14A of Law 
No. 88-1149 of 23 December 1988, extended by Article 92-I of Law No. 99-1172 of 30 December 1999 and then by Article 92 of La w No. 2003-1311 of 30 December 2003, and amended 
by Article 87 of the Budget Reconciliation Law for 2006. 
 
5. Form of the subsidy (i.e., grant, loan, tax concession, etc
.) 
  Tax concession.  Exemption from profits tax for two years, followed by a reduction for profits earned over the next three years (75 per cent, th en 50 per cent, then 25 per cent).  However, 
enterprises which set up in rural revitalization areas between 1 January 2004 and 31 December 2009 
are eligible for exemption from profits tax for five  years, followed by a reduction for profits earned 
over the next nine years (60 per cent, then 40 per cent, then 20 per cent).   This tax benefit may on no account exceed €225,000 over a 36-month period. 
 
6. Beneficiaries of the aid and allocati on mechanism (calculation method and conditions
) 
  - Beneficiaries (who receives the subsidy, the producer, the exporter, other) 
  New enterprises in the legal and economic sense  (excluding the resumption or extension of 
pre-existing activities), at least 50 per cent of the sh are capital of which is held  by natural persons, and 
which are set up in specified areas. 
 
 - Allocation mechanism 
 
 By operation of law. 
 
- Conditions  
 Genuinely new enterprises set up in eligible areas and the headquarters and all activities and 
operating resources of which are established in that area.  However, in the case of enterprises exercising a non-sedentary activity, conditions of esta blishment are considered to have been met if 
turnover generated outside eligible areas does not ex ceed 15 per cent (above this threshold, profits are 
taxed but on the basis of turnove r generated outside such areas). 
 7. Subsidy per unit or, where this is not possi ble, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year ) 
 
Total amount for 2005:    €50 million (estimate for 2006:  €50 million). G/SCM/N/155/EEC/Add.9 
Page 10  
 
  8. Duration of the subsidy and/or any other time-limits attached to it
 
  Five years (or fourteen years for enterprises created between 1 January 2004 and 31 December 2009 in rural revitalization areas), th e scheme being applicable to enterprises set up 
until 31 December 2009. 
 
9. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
  Not available.  2.1.2 Land-Use Management Premium (PAT) 
1. Period covered by the notification
 
  2005 and 2006. 
 
2. General policy objective and/or pur pose of the subsidy (or aid scheme
) 
  Development of employment-generating activities in the regional aid zones.  3. Legal basis (reference, date
) 
 
 Decree No. 2001-312 of 11 April 2001. 
 4. Form of the subsidy (i.e., grant, loan, tax concession, etc
.) 
  Subsidy.  
5. Beneficiaries of the aid and allocati on mechanism (calculation method and conditions
) 
 
 - Beneficiaries 
 
 All enterprises which manufacture products dir ectly related to the processing of a natural or 
semi-finished product, provide business services or undertake research and development programmes. 
 
 - Allocation mechanism 
 
 Decision by the Minister for the Civil Service,  State Reform and Town and Country Planning. 
 
 - Conditions 
 
 The programmes in question must lead, over a period of three years, to the creation of more 
than 15 permanent-contract jobs.  Industrial proj ects must be accompanied by investment of more 
than €2.3 million. 
 
6. Total annual amount  
  2005:  €32.88 million  2006:  €49.55 million 
 
7. Duration of the subsidy and/or any other time-limits attached to it
  
  General scheme valid until 31 December 2006.  G/SCM/N/155/EEC/Add.9 
 Page 11 
 
 
   
8. Statistical data permitting an assessmen t of the trade effects of the subsidy  
 
 2005 2006 
Number of jobs assisted 6,758 11,164 
Investments assisted €925 million €2,674 million 
 
2.1.3 Mining reconversion programme (SOFIREM - FINORPA) 
1. Period covered by the notification  
 
 2005-2006. 
 
2. General policy objective and/or pur pose of the subsidy (or aid scheme ) 
  To assist the reconversion of areas affected by the restructuring of the mining industry. 
 
3. Legal basis (reference, date
) 
  Commission Decision NN 2/89 of 15 June 1989 concerning the Charbonnages de France  
conversion companies.  
4. Form of the subsidy (i.e., grant, loan, tax concession, etc
.) 
  Long-term soft loans without a security requirement. These loans may always be repaid before the due date and redeemed without pe nalty (maximum financing: 30 per cent of the 
investment). 
 
 Acquisition of minority holdings.   Provision of free advice and services to the beneficiaries (SMEs) of the above measures. 
 
5. Beneficiaries of the aid and allocati on mechanism (calculation method and conditions
) 
 
 - Beneficiaries (who receives the subsidy, the producer, the exporter, other)  
  Enterprises in the coal-mining areas (as recognized by the Commission). 
  - Allocation mechanism  
 Two to three per cent below the normal rate  with a variable period of repayment. 
  In zones covered by SOFIREM and FINORPA th at are included in the zones qualifying for a 
land-use management premium (PAT), the aid compone nt 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 
schemes 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. 
 
 - Conditions 
  All enterprises in the coal-mining ar ea may apply under the same conditions. 
 G/SCM/N/155/EEC/Add.9 
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  6. Subsidy per unit or, where this is not possi ble, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year ) 
  No funding since 1996. 
7. Duration of the subsidy and/or any other time-limits attached to it
 
 
 -  8. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
 
 The aid is intended to compensate for the disa dvantages associated with establishment in the 
areas in question (lack of qualified subcontracti ng personnel, distance from markets and suppliers, 
etc.).  Consequently, it has no effect on trade.  
2.1.4 Industrial Development Company (SODIE) 
1. Period covered by the notification
 
  2005 – 2006. 
 
2. General policy objective and/or pur pose of the subsidy (or aid scheme
) 
 
 Reindustrialization and diversification in  areas affected by industrial decline. 
 3. Legal basis (reference, date
) 
  Initial approval on 17 February 1988 for conve rsion companies, on condition that the aid 
component of their activities is incorporated in th e overall regional aid package for a given project in 
order to ensure that the ceilings im posed under the PAT scheme are respected. 
 
 Letter from the Commission dated 13 February 1995 for funding during the 1993 financial 
year.  
 Aid Number :  762/94. 
  As of 1 January 1993, the five conversion companies of the USINOR-SACILOR group 
merged to form a single entity, Société pour le Développement de  l'Industrie et de l'Emploi (SODIE), 
comprising the following companies:  SODINOR, SODINOR VNE, SODIKERQUE, SODIKERQUE 
LITTOTAL, SODIEST, SODICEM, and SOCADEV. 
 4. Form of the subsidy (i.e., grant, loan, tax concession, etc
.) 
  The loans may not be cancelled.  Subsidies gr anted for the redeployment of iron and steel 
workers are not financed by State funds, but by the USINOR-SACILOR iron and steel group.  
5. Beneficiaries of the aid and allocati on mechanism (calculation method and conditions
) 
  - Beneficiaries  (who receives the subsidy, the producer, the exporter, other)  – 
 Enterprises established in the iron and steel conversion areas. 
 
 - Allocation mechanism.  
  G/SCM/N/155/EEC/Add.9 
 Page 13 
 
 
   - Conditions  – Zones of operation to be defined in agreement with the Commission. 
 6. Subsidy per unit or, where this is not possi ble, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year ) 
 
 SODIE has not received State funding since 1996. 
7. Duration of the subsidy and/or any other time-limits attached to it  
  Variable.  
8. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
  The aid is intended to compensate for the disa dvantages associated with establishment in the 
areas in question (lack of qualified subcontracti ng personnel, distance from markets and suppliers, 
etc.).  Consequently it has no effect on trade.  
 
2.2 C
ORSICA  
2.2.1 Exemption, subject to approval, from corporation tax on profits resulting from new 
activities created in Corsica 
1. Period covered by the notification  
 
2005 and 2006. 
 2. General policy objective and/or pur pose of the subsidy (or aid scheme
) 
  To encourage job creation and ec onomic development in Corsica. 
 
3. Legal basis (reference, date
) 
  Article 208 quater  A of the General Taxation Code, deriving from Article 88 of Law 
No. 90-1168 of 29 December 1990, last amended by Article 4-I of Law No. 94-1131 of 27 December 1994. 
 
4. Form of the subsidy (i.e., grant, loan, tax concession, etc
.) 
  Tax concession.  Exemption from profits tax for a period of 96 months.  
5. Beneficiaries of the aid and allocati on mechanism (calculation method and conditions
) 
 
 Beneficiaries (who receives the subsidy, the producer, the exporter, other) 
 
 Companies subject to corporation tax on new activities launched in Corsica before 
1 January 1999 in the industrial, craf ts, building and agricultural sectors. 
 
 - Allocation mechanism  – Approval. 
  - Conditions –  Subject to approval. 
 G/SCM/N/155/EEC/Add.9 
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  6. Subsidy per unit or, where this is not possi ble, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year ) 
 
Total amount for 2005:  Insignificant (estimate for 2006:  insignificant). 
7. Duration of the subsidy and/or any other time-limits attached to it  
 
 Eight years;  the scheme closed on 1 January 1999. 
 
8. Statistical data permitting an assessmen t of the trade effects of the subsidy   
 
 Not available. 
 
2.2.2 Tax exemption for profits realized by en terprises set up in Corsica in the crafts, 
industrial, hotel, construction  and public works sectors  
1. Period covered by the notification  
 
 2005 and 2006. 
 
2. General policy objective and/or pur pose of the subsidy (or aid scheme ) 
  To encourage the creation of new enterprises in Corsica. 
 
3. Legal basis (reference, date
) 
  Article 208 sexies  of the General Taxation Code, deriving from Article 22 of Law 
No. 87-1061 of 30 December 1987, last amended by Article 4-II and III of Law No. 94-1131 of 
27 December 1994. 
 4. Form of the subsidy (i.e., grant, loan, tax concession, etc
.) 
  Tax concession.  Exemption from profits tax for a period of 96 months.  
5. Beneficiaries of the aid and allocati on mechanism (calculation method and conditions
) 
  - Beneficiaries (who receives the subsid y, the producer, the exporter, other)  – 
Companies subject to corporation tax and established in Corsica before 
1 January 1999. 
 
 - Allocation mechanism  – By operation of law. 
  - Conditions – The enterprises must conduct a ll their business in Corsica. 
 6. Subsidy per unit or, where this is not possi ble, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year ) 
 
Total amount for 2005:   Insignificant (estimate for 2006:  insignificant). 
7. Duration of the subsidy and/or any other time-limits attached to it  
 
 Eight years;  the scheme closed on 1 January 1999. 
  G/SCM/N/155/EEC/Add.9 
 Page 15 
 
 
  8. Statistical data permitting an assessmen t of the trade effects of the subsidy  
  Not available.  
2.2.3 Profits tax exemption for industrial, commercial, crafts and agricultural enterprises 
operating in Corsica on 1 January 1997 or which establish operations there between this 
date and 31 December 2001 (Zone franche Corse) 
1. Period covered by the notification
 
  2005 and 2006. 
 
2. General policy objective and/or pur pose of the subsidy (or aid scheme
) 
  To encourage the creation and maintenance of operations in Corsica.  
3. Legal basis (reference, date
) 
  Article 44 decies  of the General Taxation Code, derivi ng from Article 1 of Law No. 96-1143 
of 26 December 1996 and amended by Article 1 of Law No. 98-1266 of 30 December 1998 and 
Article 33 I 1º a and b of Law No. 2003-721 of 1 August 2003.  
4. Form of the subsidy (i.e., grant, loan, tax concession, etc
.) 
  Tax concession.  Reduction on taxable profits up to a ceiling of €61,000 per 12-month period. 
Reduction of 100 per cent for the first five years of  operation, then 80 per cent, 60 per cent, 40 per 
cent and 20 per cent for each of the four subsequent 12-month periods. 
 
5. Beneficiaries of the aid and allocati on mechanism (calculation method and conditions
) 
 
- Beneficiaries (who receives the subsid y, the producer, the exporter, other)  – 
Commercial, crafts, liberal-professional and ag ricultural enterprises, for their new or 
existing activities established in Corsica. 
- Allocation mechanism  – By operation of law. 
 - Conditions – Enterprises must possess operating resources in Corsica enabling them to 
conduct their operations there autonomously. 
 
6. Subsidy per unit or, where this is not possi ble, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year ) 
 
Total amount for 2005:   €25 million (estimate for 2006:  €15 million). 
7. Duration of the subsidy and/or any other time-limits attached to it  
 
 Five years (+ four years of degressive reduction);  the scheme closed on 31 December 2001. 
 8. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
  Not available. 
 G/SCM/N/155/EEC/Add.9 
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  2.2.4 Tax credit for certain investment s made and exploited in Corsica 
1. Period covered by the notification
 
  2005 and 2006.  
2. General policy objective and/or pur pose of the subsidy (or aid scheme
) 
  To promote investment in Corsica.  3. Legal basis (reference, date
) 
 
 Article 244 quater  E of the General Taxation Code, deriving from Article 48 of Law 
No. 2002-92 of 22 January 2002 on Corsica, amended by Article 41 of the Budget Reconciliation Law 
for 2002 (Law No. 2002-1576 of 30 December 2002), Article 33 of Law No. 2003-721 of 1 August 2003 on Economic Initiative and Article  87-IX of Reconciliation Law No. 2006-1771 of 
30 December 2006 for 2006. 
 4. Form of the subsidy (i.e., grant, loan, tax concession, etc
.) 
  Tax concession.  Tax credit equivalent to 20 per cent of investment costs.  
5. Beneficiaries of the aid and allocati on mechanism (calculation method and conditions
) 
  - Beneficiaries (who receives the subsid y, the producer, the exporter, other)  - 
Small and medium-sized industrial, comme rcial, crafts, liberal-professional and 
agricultural enterprises est ablished in Corsica. 
 
 - Allocation mechanism  – By operation of law. 
  -  Conditions  – Investments eligible for tax credit ar e those used in Corsica, other than 
replacement investments, and at least 25 per cent of which is financed without State aid.  Investments used in sectors of activ ity subject to Community constraints are 
excluded.  Eligible investments must be u sed in Corsica for at least five years. 
 6. Subsidy per unit or, where this is not possi ble, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year ) 
 
Total amount of tax credit in 2005 = €40  million (estimate for 2006: €45 million). 
7. Duration of the subsidy and/or any other time-limits attached to it  
  This aid scheme applies to investments made between 1 January 2002 and 31 December 2011.  
8. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
  Not available.   G/SCM/N/155/EEC/Add.9 
 Page 17 
 
 
  2.3 F RENCH OVERSEAS DEPARTMENTS (FODS ) 
2.3.1 Long-term tax treatment in  French Overseas Departments  
1. Period covered by the notification  
  2005 and 2006.  
2. General policy objective and/or pur pose of the subsidy (or aid scheme
) 
  To contribute to the promotion of the Overse as Departments and, more generally, to foster 
their economic development. 
 
3. Legal basis (reference, date
) 
  Article 1655 bis of the General Taxation Code, deriving from Decree No. 58-558 of 
28 June 1958 and last amended by Article  44 of Law No. 96-1182 of 30 December 1996. 
 
4. Form of the subsidy (i.e., grant, loan, tax concession, etc
.) 
  Tax concession. This arrangement mainly involves exemption from corporation tax on reinvested profits and from import and export duti es and fees on certain products.  This scheme may 
not be applied concurrently, except with regard to  mining companies operating in the department of 
Guyana, with the exemption arrange ments provided for under Article 208 quater  of the General 
Taxation Code. 
 
5. Beneficiaries of the aid and allocati on mechanism (calculation method and conditions
) 
 
 - Beneficiaries (who receives the subsidy,  the producer, the exporter, other) – 
Public limited liability companies, limite d partnerships with a share capital, and 
private limited liability companies the purpose of which is research and mining in the 
Overseas Departments; public limited liability companies, limited liability partnerships and private limited liability co mpanies with agricultural, forestry or 
industrial activities in the department of Gu yana;  and companies the sole purpose of 
which is to conduct industrial activities in the departments of Guadeloupe, Martinique 
and Reunion comprising an investment programme for a minimum of F20 million (€3,048,980.30). 
  - Allocation mechanism – Prior approval by the Ministry of the Economy, Finance 
and Industry. 
  - Conditions – See above.  6. Subsidy per unit or, where this is not possi ble, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year ) 
 
Total amount for 2005:  €5 million (estimate for 2006:  €1 million). 
7. Duration of the subsidy and/or any other time-limits attached to it  
  The duration of the subsidy is specified in th e authorization for each particular case and is 
limited to a maximum of 25 years, plus, where appropriate, installation time not exceeding five years.  G/SCM/N/155/EEC/Add.9 
Page 18  
 
  It applied to companies that had submitted an application for authorization prior to 
31 December 2001.   The subsidy has not been extended.  
8. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
  No company requested an authorization in 1996 or 1997;  Six authorizations were granted to mining companies in 1998 and 1999;  No authorizations were granted in 2000; 
 Two authorizations were granted in 2001. 
 
2.3.2 VAT deduction for certain exempted products 
1. Period covered by the notification
 
 
 2005 and 2006. 
 
2. General policy objective and/or pur pose of the subsidy (or aid scheme ) 
  To promote economic development in Overseas Departments, preventing products exempted 
from VAT from being taxed following their incorporation into a production process. 
 
3. Legal basis (reference, date
) 
  Ministerial Decision of 2 November 1953.  
4. Form of the subsidy (i.e., grant, loan, tax concession, etc
.) 
  Tax concession.  Deduction of VAT  on certain exempted products. 
 
5. Beneficiaries of the aid and allocati on mechanism (calculation method and conditions
) 
 
 - Beneficiaries (who receives the subsid y, the producer, the exporter, other) - 
Enterprises subject to VAT established in the Overseas Departments of Guadeloupe, 
Martinique and Reunion. 
  - Allocation mechanism – Deduction of uncollected VAT. 
 
 - Conditions – The deduction of uncollected VAT may only take place following the 
import or purchase of certain exempted products. 
 6. Subsidy per unit or, where this is not possi ble, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year ) 
 
• Total amount for 2005:  €200 million; 
• Total amount for 2006:  €200 million. 
 7. Duration of the subsidy and/or any other time-limits attached to it
 
  Permanent scheme. 
  G/SCM/N/155/EEC/Add.9 
 Page 19 
 
 
  8. Statistical data permitting an assessmen t of the trade effects of the subsidy  
  Not available.  
2.3.3 Deduction of investments in F rench Overseas Departments and Territories 
1. Period covered by the notification
 
  2005 and 2006.  2. General policy objective and/or pur pose of the subsidy (or aid scheme
) 
 
 To contribute to the economic development of  French Overseas Departments and Territories.  
 3. Legal basis (reference, date
) 
 
 Initially codified under Articles 238 bis HA and 238 bis HC of the General Taxation Code, 
deriving from Article 22 of Finance Law No. 86-824 of 11 July 1986, this scheme, which has been amended several times, is now codified under Articles 199 undecies  B, 217 undecies  and 
217 duodecies  of the said Code. 
  This scheme was established under Law No. 2003-660 of 21 July 2003.  
 
4. Form of the subsidy (i.e., grant, loan, tax concession, etc
.) 
  Tax concession.  Deduction of the amount of eligible investments from the profits subject to corporation tax or a tax reducti on for taxpaying natural persons. 
 
5. Beneficiaries of the aid and allocati on mechanism (calculation method and conditions
) 
 
- Beneficiaries (who receives the subsidy,  the producer, the exporter, other):  
Enterprises and partners in a company subj ect to the tax regime provided for in 
Article 8 of the General Taxation Code (p artnerships) or members of a grouping 
referred to in Article 239 quater  or 239 quater  C of the same Code (economic interest 
groupings) which make productive investments overseas intended for use in certain sectors of activity, or, solely in respect of enterprises subject to corporation tax, which 
subscribe in cash for shares in companies s ubject to corporation tax that invest overseas 
in those sectors or for shares in regiona l development companies in the Overseas 
Departments. 
- Allocation mechanism:  Prior authorization must be obtained for eligible investments 
in excess of €300,000 or €1 million, depending on the type of financing arrangements. 
Authorization is automatic for investment s below these amounts, with the exception of 
investment in the following:  the transport,  recreational boating, agriculture, sea fishing 
and aquaculture sectors, the coal and iron and steel industries, the shipbuilding or 
synthetic fibre sectors and the automotive industry; investment in relation to the 
restoration and rehabilitation of graded hotels, tourist accommodation and holiday 
villages or in failing businesses, or investment required for the exploitation of a concession for local public services of an industrial or commercial nature;  such investments, without exception, requir e authorization as of the first euro. 
- Conditions:  Fixed assets, which must be tangibl e, new and redeemable, must be 
acquired, created, or leased by an ente rprise engaged in agricultural, industrial, G/SCM/N/155/EEC/Add.9 
Page 20  
 
  commercial or crafts activities outside the fo llowing sectors: trade; catering, with the 
exception of graded tourist restaurants, cafés, tobacconists and bars/public houses; 
business advisory services and consultancy;  research and development; education, 
health and social welfare;  banking, finance and insurance;  all real estate activities; cruise shipping, rental/leasing services without  operators, with the exception of the 
rental of motor vehicles and pleasure boats, car repair;  business services, with the 
exception of maintenance, cleaning, packagi ng on a toll basis and call centres;  leisure, 
sporting and cultural activities, except, on the one hand, activities which are a direct and key component of hotel and tourism ac tivities and which do not involve games of 
chance or gambling and, on the other hand, audiovisual and cinematographic 
production and broadcasting;  partners hip activities;  and postal services. 
6. Subsidy per unit or, where this is not possi ble, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year ) 
 
Total amount for 2005:  €510 million ( estimate for 2006:  €530 million). 
7. Duration of the subsidy and/or any other time-limits attached to it  
  The current scheme is in force until 31 December 2017.  8. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
 
 Number of applications approved in 2005: 
 
- Article 199 undecies  B: 277; 
- Article 217 undecies : 55. 
2006 data not available. 
 
2.3.4 Temporary exemption, subject to approval , from corporation tax for the creation of 
activities in French Overseas Departments 
1. Period covered by the notification  
  2005 and 2006. 
 
2. General policy objective and/or pur pose of the subsidy (or aid scheme
) 
  To encourage economic development and employment in the Overseas Departments.   
3. Legal basis (reference, date
) 
  Article 208 quater  of the General Taxation Code, deri ving from Article 9 of Law No. 60-1368 
of 21 December 1960, as last amended by Articles 86-I and 86-II of Law No. 2001-1275 of 28 December 2001.  
4. Form of the subsidy (i.e., grant, loan, tax concession, etc
.) 
  Tax concession.  Temporary exemption from corp oration tax for profits resulting from the 
authorized activity within the limits set forth in th e authorization.  The exemption does not apply to 
capital gains from the transfer of all or so me of the company's shares or fixed assets. 
  G/SCM/N/155/EEC/Add.9 
 Page 21 
 
 
  5. Beneficiaries of the aid and allocati on mechanism (calculation method and conditions ) 
 
- Beneficiaries (who receives the subsidy,  the producer, the exporter, other):  
Companies which, in a limited number of listed sectors, create a new activity likely to 
contribute to the economic development of the Overseas Departments and create new 
jobs.  
- Allocation mechanism:  Prior authorization from the Minister for the Budget.  
- Conditions:  Activities in agriculture, the hotel trad e, tourism with the exception of the 
cruise industry, fisheries, alternative sources  of energy, construction and public works, 
transport, crafts, computer services, audiovisual and cinematographic production and 
broadcasting, maintenance services for all qualifying sectors, concessions for local 
public services of an industrial or commercial nature, and medium-standard welfare housing.  
6. Subsidy per unit or, where this is not possi ble, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year ) 
 
Total amount for 2005:   €0 million (estimate for 2006:  €0 million). 
7. Duration of the subsidy and/or any other time-limits attached to it  
  Exemption is granted for a 10-year period starting from the actual commissioning of the 
installations to be used in carrying out the author ized activity.  The scheme applies to companies that 
submit an application for authorization prior to 31 December 2006. 
 8. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
 
No authorization issued since 2005. 
 
2.3.5 Reduced taxation of profits from op erations in French Overseas Departments 
1. Period covered by the notification  
  2005 and 2006.  
2. General policy objective and/or pur pose of the subsidy (or aid scheme
) 
  To foster economic development and em ployment in the Overseas Departments. 
 3. Legal basis (reference, date
) 
 
 Article 217 bis of the General Taxation Code, derivi ng from Article 40-I of Law No. 65-566 
of 12 July 1965, as last amended by Article 87 of Law No. 2001-1275 of 28 December 2001.   This scheme was established under Law No. 2003-660 of 21 July 2003.   
4. Form of the subsidy (i.e., grant, loan, tax concession, etc
.) 
  Tax concession.  One-third reduction of prof its or losses resulting from activities conducted in 
the Overseas Departments.  G/SCM/N/155/EEC/Add.9 
Page 22  
 
  5. Beneficiaries of the aid and allocati on mechanism (calculation method and conditions
) 
 
- Beneficiaries of the aid and allocation mechanism (calculation method and 
conditions) : 
- Beneficiaries (who receives the subsid y, the producer, the exporter, other) :  
Enterprises subject to corporation tax and c onducting an activity in  certain sectors in 
the Overseas Departments. 
- Allocation mechanism:  By operation of law. 
- Conditions:  Enterprises engaged in agricultural,  industrial, commercial or crafts 
activities outside the following sectors:  trade;   catering, with the exception of graded 
tourist restaurants, cafés, tobacconists and bars/public houses;  business advisory 
services and consultancy;  research and de velopment;  education, health and social 
welfare;  banking, finance and insurance;  all real estate activities;  cruise shipping, rental/leasing services without operators, with the exception of the rental of motor vehicles and pleasure boats, car repair;  business services, with the exception of 
maintenance, cleaning, packaging on a toll b asis and call centres;  leisure, sporting and 
cultural activities, except, on the one hand,  activities which are a direct and key 
component of hotel and tourism activities and which do not involve games of chance or 
gambling and, on the other hand, audiovisual and cinematographic production and broadcasting;  partnership activities;  and postal services. 
6. Subsidy per unit or, where this is not possi ble, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year ) 
 
Total amount for 2005:  €70 million (estimate for 2006:  €75 million). 
7. Duration of the subsidy and/or any other time-limits attached to it  
 
 The scheme is applicable to accounting periods closed by 31 December 2017. 
 8. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
  Not available.  2.3.6 Premium for job creation in French Overseas Departments 
1. Period covered by the notification
 
  2005 and 2006.  
2. General policy objective and/or pur pose of the subsidy (or aid scheme
) 
  Job creation.  3. Legal basis (reference, date
) 
 
 Law No. 94-638 of 25 July 1994 and Law No. 2000-1207 of 13 December 2000; 
 Decree No. 95-504 of 2 May 1995 and Decrees Nos. 2001-499 / 2001-502 of 11 June 2001. 
  G/SCM/N/155/EEC/Add.9 
 Page 23 
 
 
  4. Form of the subsidy (i.e., grant, loan, tax concession, etc .) 
  Grant.  5. Beneficiaries of the aid and allocati on mechanism (calculation method and conditions
) 
 
•  Beneficiaries (who receives the subsidy, the producer, the exporter, other):  
Enterprises established in the f our French Overseas Departments. 
•  Allocation mechanism:  Prior author ization by order of the Government 
representative in the Department. 
•  Conditions:  Job creation. 
 6. Subsidy per unit or, where this is not possi ble, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year )  
 
Subsidy per unit per job created:  €34, 650 
7. Duration of the subsidy and/or any other time-limits attached to it  
 
 The premium is proportional to the number of  newly-created jobs and is disbursed over 
ten years.  8. Statistical data permitting an assessmen t of the trade effects of the subsidy
  
 
 The trade effects of the subsidy pertain to the creation of 366 jobs in 2005 and 342 in 2006. 
   * production: ___no;   * consumption: ___no;   * extra-community imports/exports: ___no.  
 For products or sectors that have benefited fro m subsidies over the past three years and with 
reference to the year preceding that in whic h the subsidy was granted for the first time. 
  If the aid is widely available, or if sufficien tly precise data are not available or are negligible, 
this must be explained and ju stified in the notification. 
 
 If the aid is considered as having no trade eff ects (i.e., environment, R&D), this should also 
be explained and justified in the notification.  2.4 U
RBAN AREAS IN DIFFICULTY  
2.4.1 Measures on behalf of Urban Free Zones (ZFU) 
 Tax exemption for five years then a degressi ve reduction of 60 per cent, 40 per cent  and 
20 per cent over three or nine years (depending  on whether the enterprise employs less than 
five employees) for industrial, commercial, crafts or liberal-professional enterprises established in one 
of the urban free zones (ZFU) created by the Law on the Urban Regeneration Pact of 
14 November 1996 to 1 January 1997 or which set up ope rations in such a zone between this date and 
31 December 2007. 
 G/SCM/N/155/EEC/Add.9 
Page 24  
 
   This is also the case for enterprises established on 1 January 2004 in one of the 41 urban free 
zones created by Law No. 2003-710 of 1 Augus t 2003 on urban regeneration or which set up 
operations in such a zone between  this date and 31 December 2008. 
  Enterprises established on 1 January 2006 in one of the 15 new urban free zones created by 
Law No. 2006-396 of 31 March 2006 on e qual opportunities or which set up operations in such a zone 
between this date and 31 December 2011, like in ot her urban free zones, benefit from tax exemption 
for five years then a degressive reduction over nine  years (60 per cent for five years, 40 per cent for 
two years and 20 per cent for two years) irrespective of the number of employees on their payroll.  
1. Period covered by the notification
 
  2005 and 2006.  2. General policy objective and/or pur pose of the subsidy (or aid scheme
) 
 
 To encourage the creation and maintena nce of activities in urban free zones. 
 3. Legal basis (reference, date
) 
  Article 44 octies of the  General Taxation Code, deriving fro m Articles 2, 5A and 5C of 
Law No. 96-987 of 14 November 1996 and extended by Law No. 2002-1576 of 30 December 2002.  
  Measures applicable to 41 new urban free zones provided for by Law No. 2003-710 of 
1 August 2003 (enterprises estab lished in urban free zones on 1 January 2004 or which set up 
operations in such a zone between  this date and 31 December 2008). 
 
 Technical adjustments to the measures under Law No. 2003-1312 of 30 December 2003.   The measures created by Article 44 octies A deriving from Law No. 2006-396 of 
31 March 2006 replace the measures provided for by Article 44 octies which cease to be applicable 
for the creation of activities as of 1 January 2006 in all urban free zones. 
 
4. Form of the subsidy (grant, loan, tax concession, etc
.) 
  Reduction in profits tax up to  a base ceiling of €61,000 per 12-month period for enterprises 
placed under the Article 44 octies scheme and €100,000 per 12-month period, increased if necessary 
by €5,000 per new employee hired from 1 January  2006 who is domiciled in a sensitive urban zone 
(ZUS), for enterprises placed under the Article 44 octies  A scheme. 
 5. Beneficiaries of the aid and allocati on mechanism (calculation method and conditions
) 
 
- Beneficiaries (who receives the subsidy,  the producer, the exporter, other):  
Industrial, commercial, crafts and non comme rcial activities for their new or existing 
activities established in urban free zones.  
- Allocation mechanism:  By operation of law.  
- Conditions:  Enterprises must carry out an actual activity involving a meaningful 
presence within an urban free zone.  In the case of non sedentary activity established in 
an urban free zone but carried out entirely or partially outside of that zone, the activity 
is presumed to be carried out within an ur ban free zone when at least one sedentary 
full-time employee carries out his/her work with in the premises located in an urban free  G/SCM/N/155/EEC/Add.9 
 Page 25 
 
 
  zone set aside for the activity, or when the enterprise realizes at least 25 per cent of its 
turnover through clients located in the urban free zone. 
 As for the 41 new urban free zones, three new conditions have been established by Law 
No. 2003-1312 of 30 December 2003 regarding payroll numbers and turnover, holding 
of capital when the enterprise has been set up as a company and the enterprise's sector 
of activity.  
 These three conditions are also applicable  for the new urban free zones created under 
Law No. 2006-396 of 31 March 2006. 
6. Subsidy per unit or, where this is not possi ble, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year ) 
 
Total amount for 2005:  €170 million ( estimate for 2006:  €170 million). 
7. Duration of the subsidy and/or any other time-limits attached to it  
  Five years of total exemption, followed by a degressive reduction of 60 per cent, 40 per cent 
and 20 per cent over three or nine years (dependi ng on whether the enterprise employs less than 
five employees);  this scheme will close on 31 December 2007 (or 31 December 2008 for the 41 new 
urban free zones).   The abovementioned Law of 31 March 2006 creat es a new scheme codified under Article 44 
octies  A of the General Taxation Code which provides for total exemption for five years then the 
application of a degressive reduction over nine years. 
 8. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
 
Around 30,000 beneficiaries. 
 
III. R&D SCHEMES 
3.1 T AX CREDIT TO PROMOTE RESEARCH  
1. Period covered by the notification  
  2005 and 2006. 
 
2. General policy objective and/or pur pose of the subsidy (or aid scheme
) 
  To encourage better organization of research activities.  
3. Legal basis (reference, date
) 
  Articles 244 quater  B, 199 ter B, 220 B and 223 O of the General Taxation Code. 
 4. Form of the subsidy (grant, loan, tax concession, etc
.) 
 
 Tax concession – tax credit. 
 G/SCM/N/155/EEC/Add.9 
Page 26  
 
  5. Beneficiaries of the aid and allocati on mechanism (calculation method and conditions
) 
 
- Beneficiaries (who receives the subsid y, the producer, the exporter, other) :  
Industrial, commercial and agricultural enterprises. 
- Allocation mechanism :  The tax credit is equivalent to the amount of a volume share, 
equivalent to 10 per cent of research expend iture for the year, and to a growth share, 
equivalent to 40 per cent of the amount by which research expenditure in a given year exceeds the average research expenditu re of the two previous years. 
- Conditions:  The enterprise must have exercise d an option under the terms and 
conditions and within the deadlines set out in the law. 
6. Subsidy per unit or, where this is not possi ble, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year ) 
 
Total amount for 2005:  €700 million ( estimate for 2006:  €730 million). 
7. Duration of the subsidy and/or any other time-limits attached to it  
 
 Indefinite period.  8. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
  The aid has no effect on trade since it is linked to  the enterprise's research activity in terms of 
increased expenditure, not to its productive or co mmercial capacity.  This is a general and non-
specific fiscal measure which is not regarded as a s ubsidy by the French authorities.  The aid, which 
concerns around 6,500 beneficiaries, is notified in the interests of transparency.  3.2 R
ESEARCH AND TECHNOLOGY FUND (FRT) 
1. Period covered by the notification  
  2005 and 2006.  2. General policy objective and/or pur pose of the subsidy (or aid scheme
) 
 
 - To create new partnerships between public research and industrial research; 
 - to launch projects in new fiel ds of research and technology; 
 - to foster the development of research a nd the transfer of technology to the regions. 
 3. Legal basis (reference, date
) 
 
 - Decree No. 59-1397 of 9 December 1959 c oncerning the creation of a development 
fund for scientific and technological research; 
 - Decree No. 91-347 of 8 April 1991  on contributions by  the Research and Technology 
Fund to research projects of indus trial and commercial enterprises; 
 - Decree No. 99-1060 of 16 December 1999 concerning State subsidies for investment 
projects; 
 - Decree No. 2002-178 of 13 February 2002 concerning the rates of State subsidies for 
investment projects and the corresponding advances. 
 - Order of 8 April 1991 setting the amount  of expenditure on equipment under the 
projects subsidized by the research and technology fund.  G/SCM/N/155/EEC/Add.9 
 Page 27 
 
 
  4. Form of the subsidy (i.e., grant, loan, tax concession, etc .) 
 
- Subsidy (grant) appearing on the green  list (Article 8.2(a)) and representing a 
maximum of 50 per cent of the total cost of the programme for the enterprises.  In certain cases, as governed by the Decree of  13 February 2002, direct government 
assistance can amount to 100 per cent of su bsidizable expenditure (associations, 
foundations, public interest groupings – GIP). 
- All enterprises and public bodies engaged in basic research work or pre-competition 
development activities may apply under the same conditions. 
5. Beneficiaries of the aid and allocati on mechanism (calculation method and conditions
) 
 
- Beneficiaries (who receives the subsidy, the producer, the exporter, other) :  The 
FRT is not intended to provide aid to ente rprises, but to support research projects.  
Thus, 58.09 per cent in 2003 and over 50 per cen t in 2004 of the beneficiaries of FRT 
support are enterprises (in the secondary and te rtiary sectors), 9.86 per cent in 2003 and 
around 15 per cent in 2004 are higher education establishments and 32.05 per cent in 
2003 and around a third in 200 4 are research institutions. 
6. Subsidy per unit or, where this is not possi ble, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year ) 
 
In 2005, the government decision to create a na tional research agency (ANR) resulted in the 
termination of measures whereby the ministry di rectly provided the financing for research and 
particularly the FRT.  This became the role of the agency first created in the form of a public 
interest grouping in March 2005 which, since 1 January 2007, takes the form of an 
administrative public establishment (EPA) (D ecree 2006-963 of 1 August 2006).  2005 was 
therefore a year of transition, with the clos ure of FRT commitments made by the incentive 
funds, which were then replaced by the ANR. 
 Therefore, the FRT has not had programme authorization since 2005. 
 7. Duration of the subsidy and/or any other time-limits attached to it
 
 
 Permanent arrangement. 
 8. Statistical data permitting an assessmen t 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 impa ct on the trade performance of the enterprises 
involved.  Only scientific and technical content is considered in the selection and evaluation of 
projects. This is general, non-specific aid within the meaning of the Agreement. The aid is notified 
strictly in the interests of transparency.  3.3 I
NDUSTRIAL INNOVATION FUND (FII) (CURRENTLY THE FUND FOR ENTERPRISE 
COMPETITIVENESS )  
1. Period covered by the notification  
  2005 and 2006.  G/SCM/N/155/EEC/Add.9 
Page 28  
 
  2. General policy objective and/or pur pose of the subsidy (or aid scheme
) 
  To encourage the development of large-scale, st rategically or commercially important civilian 
industrial projects of a distinctly innovative nature  and the purpose of which is the marketing of a 
product or process determined by the management of the enterprises within a period of less than 
five years. 
 3. Legal basis (reference, date
) 
  Approval by the Commission on 10 November  1989 for the Industrial Innovation Fund (FII) 
"Grands Projets Innovants " and on 1 December 1986 for the Electronic Systems part 
(No. SG 86/D 14441).   Aid Number :  N 79/89 in 1989;  N 5/95 on 23 February 1995. 
 
 Approval by the Commission on 23 February 1995,  7 February 1994 and 19 May 1995 for the 
Electronic Systems part.  4. Form of the subsidy (i.e., grant, loan, tax concession, etc
.) 
  Repayable advances and subsidies. 
 
5. Beneficiaries of the aid and allocati on mechanism (calculation method and conditions
) 
 
- Beneficiaries (who receives the subsidy,  the producer, the exporter, other):  
General support scheme for projects pertaining to all industrial groups, irrespective of 
size. 
- Conditions :  The amounts taken into consideration are fairly substantial 
(approximately F15 to 50 million). 
  The gross level of aid is 30 per cent, although it may be increased by 10 per cent in 
cases where intersectoral or cooperative proj ects are financed from the basic research 
stage onwards. 
 
6. Subsidy per unit or, where this is not possi ble, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year ) 
 
 Budget: 
- for 2005:  €181.7 million; 
- for 2004:  €344.5 million. 
7. Duration of the subsidy and/or any other time-limits attached to it  
  Permanent arrangement funded on a yearly basis under the Finance Law.  
8. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
  The purpose of the programme is to finance innovation:  
- The expenditure financed concerns resear ch and development and consequently has no 
effect on production costs;  G/SCM/N/155/EEC/Add.9 
 Page 29 
 
 
  - being innovatory, the products and processes in question do not compete with existing 
ones. 
 The programme consequently has no trade effect and is notified merely in the interests of 
transparency.  
3.4 N
ATIONAL AGENCY FOR THE PROMOTION OF RESEARCH (ANVAR ) 
1. Period covered by the notification  
  2005 and 2006.  
2. General policy objective and/or pur pose of the subsidy (or aid scheme
) 
  - 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. 
 
3. Legal basis (reference, date
) 
  Decree No. 97-152 of 19 February 1997 on th e organization and operation of ANVAR and 
Decree No. 97-682 of 31 May 1997 concerning aid to innovation;  
 Notification by the French authorities of 3 February 1988, amended on 15 June 1989 and 
again on 28 January 1994;   Adoption by the European Commission on 17 July 1989 (SG(89) 9616), amended on 10 April 1990 and again on 14 March 1994. 
 
4. Form of the subsidy (i.e., grant, loan, tax concession, etc
.) 
  Interest-free loan:  repayable over a three- to fi ve-year period in the event of the technical and 
commercial success of the R&D project.  
 The loan becomes a non-reimbursable  subsidy should the project fail. 
  Direct subsidies for studies conducted prior to  the launching of research and development and 
innovation projects and for feasibility and advisory studies.  
5. Beneficiaries of the aid and allocati on mechanism (calculation method and conditions
) 
 
- Beneficiaries (who receives the subsid y, the producer, the exporter, other):  
Enterprises with fewer than 2,000 employees. 
- Allocation mechanism 
- Conditions:   Aid to innovation projects, aid to new technological enterprises either 
being set up or in existence for less than three years, following a technical and financial 
study of the programme, and aid for the recruitment of researchers. 
  Submission of an annual report to the Commission. 
   Notification of cases of application to projects valued at over €25 million. G/SCM/N/155/EEC/Add.9 
Page 30  
 
  6. Subsidy per unit or, where this is not possi ble, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year ) 
  Repayable advances with a ceiling of 40 per cen t of the intangible investment (maximum of 
24.6 per cent in gross subsidy equivale nt in the event of project success). 
 
 Direct subsidies up to a ceiling of F200,000, with a maximum rate of 50 per cent.  
For 2005 (in Euros):  €172 million For 2006 (in Euros):  €213 million 
7. Duration of the subsidy and/or any other time-limits attached to it
 
  Permanent arrangement funded on a yearly basis under the Finance Law.  8. Statistical data permitting an assessmen t of the trade effects of the subsidy
 
 
 The purpose of the programme is to finance innovation:  
- The expenditure financed concerns research  and development and consequently has no 
effect on production costs; 
- being innovatory, the products and processes in question do not compete with existing 
ones. 
 Consequently, the programme has no effect on trade. 
 3.5 A
TOUT -PUMA  
 Regime expired . 
 
3.6 A ID TO RESEARCH INSTITUTIONS  IN THE CIVIL AVIATION SECTOR  
1. Period covered by the notification  
  2005 and 2006.  
2. Policy objective
 
  The main purpose of the scheme is to he lp a number of non-profit-making research 
institutions to obtain the necess ary equipment for their work. 
 
3. Legal basis
 
  Annual Finance Law;  Arrangement approved by the European Commission (No. 53/96 and No. 51/2006).  4. Form of the subsidy
 
 
 Non-repayable subsidy.  5. Beneficiaries of the aid and allocation mechanism
 
 
 Mainly ONERA and ETW (European Transonic Wind Tunnel).  G/SCM/N/155/EEC/Add.9 
 Page 31 
 
 
  6. Total amount  
 
In 2005:  €3 million; In 2006:  €3.9 million. 
7. Duration of the subsidy
 
 
 Permanent scheme funded on an annual basis under the Finance Law.  8. Statistical data
 
 
 The entities concerned are non-profit-making. 
 3.7 C
IVIL AVIATION RESEARCH  
1. Period covered by the notification  
 
 2005 and 2006. 
 2. Policy objective
 
  The overall objective of the research is to develop knowledge in order to improve the 
technological base of the industry. 
 
 The research involves improving the understa nding of phenomena with a view to selective 
further investigation in areas likely to yield gains in performance and calculation accuracy with a view 
to shorter design cycles, as well as full-size testing.  
3. Legal basis
 
  Annual Finance Law;  Arrangement approved by the European Commission (No. 53/96 and No. 51/2006).  4. Form of the subsidy
 
 
 Non-repayable subsidy intended to finance part  of the cost of several previously selected 
research operations.  5. Beneficiaries of the aid and allocation mechanism
 
 
 22 enterprises were involve d in 2005, 23 in 2006. 
 6. Total amount
 
 In 2005:  €61.3 million. 
In 2006:  €53 million. 
7. Duration of the subsidy
 
  Permanent arrangement funded on a yearly basis under the Finance Law.  G/SCM/N/155/EEC/Add.9 
Page 32  
 
  8. Statistical data
 
  The aid goes entirely to research and therefore has no bearing on product manufacture.  3.8 Y
OUNG INNOVATIVE ENTERPRISES (JEI) 
1. Period covered by the notification  
  2005 and 2006.  2. General policy objective
 
 
 To support young innovative enterprises undertaking research and development projects. 
 3. Legal basis
 
 
 Articles 44 sexies -0 A and 44 sexies  A of the General Taxation Code, deriving from Law 
No. 2003-1311 of 30 December 2003.  4. Form of the subsidy
 
 
Total relief from income tax or corporation tax during the first three years of profitable 
business, then a reduction of 50 per cent for the follo wing two years of profitable business, within the 
seven-year period following the date of creation.  
The total sum of government support given to en terprises eligible for JEI status and the 
related advantages must not exceed the "de minimis" aid ceiling. 
 
5. Beneficiaries of the aid and allocation mechanism
 
 
- Beneficiaries:   Small and medium-sized enterprises established for less than eight 
years which incur research and development spending representing at least 15 per cent of their costs and at least 50 per cent of w hose share capital is held continuously by 
exhaustively listed natural persons or certai n enterprises  involved in the venture capital 
sector. 
- Allocation mechanism:   By operation of law. 
- Conditions:  Enterprise not created within the framework of the concentration, 
re-structuring, extension of pre-existing activities or resumption of such activities. 
6. Total amount
 
  Total amount for 2005:  €10 milli on (estimate for 2006: €20 million) 
 7. Duration of the subsidy
 
 
 Scheme applicable to financial years commencing on or after 1 January 2004. 
 8. Statistical data
 
  Around 1,600 beneficiaries. 
  G/SCM/N/155/EEC/Add.9 
 Page 33 
 
 
  IV. SECTORAL REGIMES 
4.1 T ONNAGE -BASED TAX SCHEME  
1. Period covered by the notification  
  2005 and 2006. 
 
2. Policy objective of aid scheme
 
  To enable enterprises operating in maritime transport to meet international competition, 
safeguard  Community jobs, preserve maritime know-how  and maintain high safety levels with regard 
to ships and navigation. 
 3. Legal basis
 
  Article 209-0 B of the General Taxati on Code deriving from Law No. 2002-1576 of 
30 December 2002 (Articles 19-I and 19-III). 
4. Form of assistance
 
 
Specific tax base:  the tonnage-based tax schem e replaces a rate based on accounting data by 
a flat rate calculated on the basis of the vessel's tonnage. 
5. Beneficiaries of the aid and allocation mechanism  
 
- Beneficiaries:  Enterprises subject to company tax,  at least 75 per cent of whose 
turnover is generated by the operation of me rchant vessels, and which operate vessels 
falling within the scope of the measure. 
- Allocation mechanism :  Upon option by the enterprise made for a period of ten years. 
- Conditions:  Operation of merchant vessels of a minimum tonnage (over 100 units of 
the universal gross tonnage system), engage d in the transportation of passengers or 
goods, towing on the high seas, salvage and other maritime assistance services or transport operations relating to the performance of all other services necessarily provided at sea and whose strategic and comme rcial management is based in France. 
6. Subsidy per unit or, where this is not possi ble, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year ) 
 
Total amount for 2005:  €115 million ( estimate for 2006:  €155 million) 
7. Duration of the subsidy and/or any other time-limits attached to it  
 
 This scheme has been in effect since 1 January 2003. 
8. Statistical data permitting an assessmen t of the trade effects of the subsidy  
 
Around 15 beneficiaries. 
__________