WORLD TRADE  
ORGANIZATION  G/SCM/N/123/EEC/Add.8 
26 August 2005 
 (05-3593) 
Committee on Subsidies 
and Countervailing Measures Original:  French 
 
 
 
SUBSIDIES 
 
New and Full and Updating Notifications 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/123/EEC/Add.8 
Page 2  
 
FRANCE  
 
TABLE OF CONTENTS 
 
Page  
 
1. SME SCHEMES .................................................................................................................... ...4 
1.1 Regional Premium for the Creati on 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  
2. REGIONAL SCHEMES ..........................................................................................................8  
2.1 Metropolitan France............................................................................................................ .....8 
2.1.1 Tax reduction for ne w enterprises...........................................................................................8  
2.1.2 Enterprise zones............................................................................................................... .......10  
2.1.3 Land-Use Management Premium (PAT)..............................................................................11  
2.1.4 Mining reconversion programme (SOFIREM - FINORPA) ..............................................11  
2.1.5 Industrial Development Company (SODIE) ........................................................................13  
2.2 Corsica ........................................................................................................................ .............14  
2.2.1 Exemption, subject to approval, from corp oration tax on profits resulting from new 
activities created in Corsica .................................................................................................. .14 
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, comme rcial, 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 Depa rtments (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 French Ov erseas Departments ..........................................................................21  
2.3.5 Reduced taxation of profits from operat ions in French Overseas Departments...............22  
2.3.6 Premium for job creation in French Overseas Departments..............................................23  
2.4 Urban Areas in Difficulty...................................................................................................... .24 
2.4.1 Measures on behalf of Ur ban Free Zones (ZFU) .................................................................24   G/SCM/N/123/EEC/Add.8 
 Page 3 
 
 
Page  
 
3. R&D SCHEMES.................................................................................................................... .26 
3.1 Tax Credit to Promote Research ...........................................................................................26  
3.2 Research and Technology Fund (FRT).................................................................................27  
3.3 Industrial Innovation Fund (FII) (Currently the fund for enterprise competitiveness) ..28  
3.4 National Agency for the Prom otion of Research (ANVAR)................................................29  
3.5 Atout-puma..................................................................................................................... .........31  
3.6 Aid to Research Institutions in  the Civil Aviation Sector ...................................................32  
3.7 Civil Aviation Research........................................................................................................ ..33 
3.8 Young Innovative Ent erprises (JEI ) ....................................................................................33  
4. SECTORAL REGIMES.........................................................................................................34  
4.1 Tonnage-based tax scheme.....................................................................................................34  
 
1 EURO = 6.55957 FRF (FRENCH FRANCS) G/SCM/N/123/EEC/Add.8 
Page 4  
 
 
1. SME SCHEMES 
1.1 Regional Premium for the Creation of Enterprises (PRCE) 
1. Period covered by the notification
: 
 2003 and 2004. 
 
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 m onths prior to submission of the 
application. 
- Allocation mechanism:  The premium is paid directly to the enterprises by the local 
authorities and in particular the regions, wh ich are responsible for the implementation 
of this scheme. 
- Conditions:   Enterprises must undertake to create a minimum number of permanent 
jobs by recruiting persons linked to th e enterprise by open-ended employment 
contracts. 
6. Subsidy per unit or, where this is not possibl e, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year) : 
- Total amount for 2002:   €33 million; 
- 2003 and 2004:   not available. 
7. Duration of the subsidy and/or any other time-limits attached to it : 
 Provision applicable until 2008. 
 
8. Statistical data permitting an assessment 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/123/EEC/Add.8 
 Page 5 
 
 
1.2 Regional Employment Premium (PRE) 
1. Period covered by the notification : 
 2003 and 2004. 
 
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 enterp rises, with the exception of those 
operating in the following sectors: the coal i ndustry, transport, iron and steel industry, 
shipbuilding, synthetic fibres, automotive industry and financial services. 
- Allocation mechanism :  The premium is paid directly to the enterprises by the local 
authorities and in particular the regions, wh ich are responsible for the 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 em ployment contract), the aid amounts to a 
maximum of 20 per cent of gross earnings, subject to the payment of social security 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 twelve months prior to submitting 
the application. 
 6. Subsidy per unit or, where this is not possibl e, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year) : 
- Total amount for 2002:   €43 million; 
- 2003 and 2004:   not available. 
7. Duration of the subsidy and/or any other time-limits attached to it : 
 10 years from 2000. 
 8. Statistical data permitting an assessment 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/123/EEC/Add.8 
Page 6  
 
1.3 Regional Advisory Assistance Fund (FRAC) 
1. Period covered by the notification
: 
 2003 and 2004. 
 2. General policy objective and/or purpos e 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 with  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 allocation mechanism (calculation method and conditions) :  
Beneficiaries (who receives the subsidy,  the producer, the exporter, other):   SMEs from 
all sectors, in accordance with  specific support criteria. 
6. Subsidy per unit or, where this is not possibl e, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year) : 
- Total amount for 2003:  €33 million; 
- Total amount for 2004:   €26.9 million.  G/SCM/N/123/EEC/Add.8 
 Page 7 
 
 
Maximum level of aid :  
TYPE OF 
COUNSELLING LEVEL  
FRAC (short) €3,800, up to a maximum of 80 per 
cent 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 per cent 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 assessment 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 SME-SMI Development Fund 
1. Period covered by the notification
: 
 2003 and 2004. 
 
2. General policy objective and/or purpos e 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.  
 G/SCM/N/123/EEC/Add.8 
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5. Beneficiaries of the aid and allocation 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: 
- 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 investors ar e not taken into consideration. 
Conditions: The maximum rate of contribution is as follows: 
 
Type of area Small enterprise Medium-sized enterprise 
Unassisted area 15 per cent gross 7.5 per cent gross 
 
Assisted area / PAT, 11.5 per cent gross 21.5 per cent gross 
Assisted area / PAT, 17 per cent 27 per cent gross 
Assisted area / PAT area, 23 per cent gross 33 per cent gross, up to a ceiling of 30 per 
cent net 
Assisted area / FOD, 65 per cent net 75 per cent net 
 6. Subsidy per unit or, where this is not possibl e, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year) : 
- Total amount for 2003:   €107 million; 
- Total amount for 2004:   €73 million. 
7. Duration of the subsidy and/or any other time-limits attached to it : 
 The scheme is valid until 2006. 
 8. Statistical data permitting an assessment 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. 
 
2. REGIONAL SCHEMES 
2.1 Metropolitan France  2.1.1 Tax reduction for new enterprises  G/SCM/N/123/EEC/Add.8 
 Page 9 
 
 
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.  
2. Period covered by the notification
: 
 2003 and 2004 
 
3. General policy objective and/or purpos e 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 and last amended by Article 92-I of Law No. 99-1172 of 
30 December 1999 and then by Article 92  of Law No. 2003-1311 of 30 December 2003. 
 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, then 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, follo wed 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 allocation 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 share 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 exerci sing a non-sedentary activity, conditions of 
establishment are considered to have been met if turnover generated outside eligible 
areas does not exceed 15 per cent (above this threshold, profits are taxed but on the 
basis of turnover generated outside such areas). 
7. Subsidy per unit or, where this is not possibl e, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year) : 
- Total amount for 2003:   €175 million (estimate for 2004: €170 million). G/SCM/N/123/EEC/Add.8 
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 assessment of the trade effects of the subsidy
: 
 Not available. 
 
2.1.2 Enterprise zones 
1. Period covered by the notification : 
 2003 and 2004 
 2. General policy objective and/or purpos e of the subsidy (or aid scheme)
: 
 Revival of areas seriously affected by the loss of jobs in industry. 
 
3. Legal basis (reference, date) : 
 Article 208 quinquies  of the General Taxation Code, de riving from Article 22 of Ordinance 
No. 86-1113 of 15 October 1986.  4. Form of the subsidy (i.e., grant, loan, tax concession, etc.)
: 
 Tax concession in the form of a ten-year exemption from corporation tax. 
 
5. Beneficiaries of the aid and allocation mechanism (calculation method and conditions) : 
- Beneficiaries (who receives the subsidy, the producer, the exporter, other):  Legal 
entities subject to corporation tax that are cr eated in order to operate an industrial or 
commercial enterprise in one of the eligible zones. 
- Allocation mechanism:  By operation of law.  
- Conditions:  The headquarters, activities and opera ting resources of the legal entity 
must be located in one of the eligible zones.  
6. Subsidy per unit or, where this is not possibl e, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year) : 
- Total amount for 2003:  €40 million (estimate for 2004: negligible cost). 
7. Duration of the subsidy and/or any other time-limits attached to it : 
 10 years, but the zones have been closed since 1992. 
 8. Statistical data permitting an assessment of the trade effects of the subsidy
:  
 In respect of the financial year ending in 2002 , 9 industrial and commercial enterprises, with a 
total of 1,039 employees, were benefiting from the scheme provided for under Article 208 quinquies  
of the General Taxation Code.  G/SCM/N/123/EEC/Add.8 
 Page 11 
 
 
 
2.1.3 Land-Use Management Premium (PAT) 
1. Period covered by the notification : 
 2003 and 2004 
 
2. General policy objective and/or purpos e 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 allocation mechanism (calculation method and conditions) : 
- Beneficiaries:  All enterprises which manufacture products directly 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-c ontract jobs. Industrial projects must be 
accompanied by investment of more than €2.3 million. 
6. Total annual amount
: 
-  2003:  €69.40 million 
-  2004:  €53.12 million 
7. Duration of the subsidy and/or any other time-limits attached to it :  
 General scheme valid until 31 December 2006. 
 8. Statistical data permitting an assessment of the trade effects of the subsidy
: 
 2003 2004 
Number of jobs assisted 11,177 9, 251 
Investments assisted  €2,320 million €1,062 million 
 
2.1.4 Mining reconversion programme (SOFIREM - FINORPA) 
1. Period covered by the notification : 
 2003-2004. G/SCM/N/123/EEC/Add.8 
Page 12  
 
 
2. General policy objective and/or purpos e 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 allocation 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), th e 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 schemes are respected. In zones covered by SOFIREM 
and FINORPA that are not included in the z ones qualifying for the PAT, only SMEs 
are eligible for the measures. 
- Conditions:   All enterprises in the coal-mining area may apply under the same 
conditions. 
6. Subsidy per unit or, where this is not possibl e, 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 assessment 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. 
  G/SCM/N/123/EEC/Add.8 
 Page 13 
 
 
2.1.5 Industrial Development Company (SODIE) 
1. Period covered by the notification : 
 2003 – 2004. 
 
2. General policy objective and/or purpos e 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 allocation 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 
- Conditions:   Zones of operation to be defined in agreement with the Commission. 
6. Subsidy per unit or, where this is not possibl e, 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 assessment 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.  G/SCM/N/123/EEC/Add.8 
Page 14  
 
 
2.2 Corsica 
2.2.1 Exemption, subject to approval, from co rporation tax on profits resulting from new 
activities created in Corsica 
1. Period covered by the notification
: 
 2003 and 2004. 
 2. General policy objective and/or purpos e 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 allocation 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.  
6. Subsidy per unit or, where this is not possibl e, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year) : 
- Total amount for 2003:   Insignificant (estimate for 2004: 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 assessment of the trade effects of the subsidy :  
 Not available. 
 
2.2.2 Tax exemption for profits realized by enterprises set up in Corsica in the crafts, 
industrial, hotel, construction  and public works sectors  
1. Period covered by the notification : 
 2003 and 2004. 
  G/SCM/N/123/EEC/Add.8 
 Page 15 
 
 
2. General policy objective and/or purpos e 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 allocation mechanism (calculation method and conditions) : 
- Beneficiaries (who receives the subsidy,  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 possibl e, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year) : 
- Total amount for 2003:  Insignificant (estimate for 2004: 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 assessment 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 : 
 2003 and 2004. 
 2. General policy objective and/or purpos e 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 last 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. 
 G/SCM/N/123/EEC/Add.8 
Page 16  
 
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 allocation mechanism (calculation method and conditions)
: 
- Beneficiaries (who receives the subsidy,  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 resour ces in Corsica enabling them to 
conduct their operations there autonomously. 
6. Subsidy per unit or, where this is not possibl e, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year) : 
- Total amount for 2003:  €20 million (estimate for 2004: €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 assessment of the trade effects of the subsidy
: 
 Not available. 
 2.2.4 Tax credit for certain investment s made and exploited in Corsica 
1. Period covered by the notification
: 
 2003 and 2004. 
 2. General policy objective and/or purpos e 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 2 002) and Article 33 of Law No. 2003-721 of 
1 August 2003 on Economic Initiative. 
 4. Form of the subsidy (i.e., grant, loan, tax concession, etc.)
: 
 Tax concession.  Tax credit equivalent to 20 per cent of investment costs. 
  G/SCM/N/123/EEC/Add.8 
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5. Beneficiaries of the aid and allocation mechanism (calculation method and conditions) : 
- Beneficiaries (who receives the subsidy, the producer, the exporter, other):  Small- 
and medium-sized industrial, commercial, crafts, liberal-professional and agricultural enterprises established in Corsica. 
- Allocation mechanism:  By operation of law. 
- Conditions:  Investments eligible for tax credit are 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 possibl e, 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 2003 = €25 million. 
- Total amount of tax credit in 2004 = €35 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 assessment of the trade effects of the subsidy
: 
 Not available. 
 
2.3 French Overseas Departments (FODs) 
2.3.1 Long-term tax treatment in  French Overseas Departments  
1. Period covered by the notification : 
 2003 and 2004. 
 
2. General policy objective and/or purpos e 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. G/SCM/N/123/EEC/Add.8 
Page 18  
 
 
5. Beneficiaries of the aid and allocation mechanism (calculation method and conditions)
: 
- Beneficiaries (who receives the subsidy, the producer, the exporter, other):  Public 
limited liability companies, limited partners hips with a share capital, and private 
limited liability companies the purpose of whic h is research and mining in the Overseas 
Departments; public limited liability companies, limited liability partnerships and 
private limited liability companies with agricu ltural, forestry or industrial activities in 
the department of Guyana; 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 possibl e, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year) : 
- Total amount for 2003 :  Amount unavailable. 
- Total amount for 2004:   Amount unavailable. 
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.  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 assessment 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
: 
 2003 and 2004. 
 
2. General policy objective and/or purpos e 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.   G/SCM/N/123/EEC/Add.8 
 Page 19 
 
 
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 allocation mechanism (calculation method and conditions) : 
- Beneficiaries (who receives the subsidy,  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 possibl e, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year) : 
- Total amount for 2003:   €90 million; 
- Total amount for 2004:   €90 million.  
7. Duration of the subsidy and/or any other time-limits attached to it : 
 Permanent scheme. 
 8. Statistical data permitting an assessment 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 : 
 2003 and 2004. 
 
2. General policy objective and/or purpos e 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.  
 G/SCM/N/123/EEC/Add.8 
Page 20  
 
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 allocation 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 quate r 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, 
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 possibl e, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year) : 
- Total amount for 2003 (estimated):   €225 million (estimate for 2004: €305 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. 
  G/SCM/N/123/EEC/Add.8 
 Page 21 
 
 
8. Statistical data permitting an assessment of the trade effects of the subsidy : 
 Number of applications approved in 2003: 
- Article 163 tervicies  (previous scheme): 12; 
- Article 199 undecies  B: 374; 
- Article 217 undecies : 68. 
Number of applications approved in 2004 
- Article 199 undecies  B: 343; 
- Article 217 undecies : 77. 
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 : 
 2003 and 2004. 
 2. General policy objective and/or purpos e 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 the 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. 
 
5. Beneficiaries of the aid and allocation 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 possibl e, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year) : 
- Total amount for 2003:  €3 million (estimate for 2004: €2 million). G/SCM/N/123/EEC/Add.8 
Page 22  
 
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 assessment of the trade effects of the subsidy
: 
 Number of authorizations granted: 
- 1996: 28 - 1997: 25 - 1998: 23 
- 1999: 12 
- 2000: 0 - 2001: 11 - 2002: 17 - 2003: 12 
- 2004: 0 
 
2.3.5 Reduced taxation of profits from op erations in French Overseas Departments 
1. Period covered by the notification
: 
 2003 and 2004. 
 
2. General policy objective and/or purpos e 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. 
 
- 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  G/SCM/N/123/EEC/Add.8 
 Page 23 
 
 
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 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 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. 
5. Subsidy per unit or, where this is not possibl e, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year) : 
- Total amount for 2003:   €65 million (estimate for 2004:  €75 million). 
6. 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. 
 7. Statistical data permitting an assessment 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 : 
 2003 and 2004. 
 
2. General policy objective and/or purpos e 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. 
 4. Form of the subsidy (i.e., grant, loan, tax concession, etc.)
: 
 Grant. 
 
5. Beneficiaries of the aid and allocation mechanism (calculation method and conditions) : 
- Beneficiaries (who receives the subsid y, the producer, the exporter, other) :  
Enterprises established in the f our French Overseas Departments. 
- Allocation mechanism:   Prior authorization by order of the Government representative 
in the Department. 
- Conditions:   Job creation. G/SCM/N/123/EEC/Add.8 
Page 24  
 
6. Subsidy per unit or, where this is not possibl e, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year) :  
- Total amount for 2003:   €927, 325; 
- Total amount for 2004:   €796, 943. 
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 amounts to F205,000 
(Law of 1995) and €34,650 per job (Law of 2000). It is disbursed over ten years. 
 8. Statistical data permitting an assessment of the trade effects of the subsidy
:  
 The trade effects of the subsidy pertain to the creation of 314 jobs in 2003 and 203 in 2004: 
  * 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 Urban 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 lib eral-professional enterprises established in one of 
the  urban free zones (ZFU) created by th e 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. 
 
 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. 
 
1. Period covered by the notification
: 
 2003 and 2004. 
 2. General policy objective and/or purpos e of the subsidy (or aid scheme)
: 
 To encourage the creation and maintena nce of activities in urban free zones. 
  G/SCM/N/123/EEC/Add.8 
 Page 25 
 
 
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.  
4. Form of the subsidy (grant, loan, tax concession, etc.)
: 
 Reduction in profits tax up to a b ase ceiling of €61,000 per 12-month period. 
 5. Beneficiaries of the aid and allocation 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 
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 ne w conditions have been established by Law No. 
2003-1312 of 30 December 2003 regarding payroll numb ers and turnover, holding of capital when the 
enterprise has been set up as a company and the enterprise's sector of activity.  
6. Subsidy per unit or, where this is not possibl e, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year) : 
- Total amount for 2003 :  €100 million (estimate for 2004: €90 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 (depending  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).  
8. Statistical data permitting an assessment of the trade effects of the subsidy
: 
 Not available. 
 G/SCM/N/123/EEC/Add.8 
Page 26  
 
3. R&D SCHEMES 
3.1 Tax Credit to Promote Research 
1. Period covered by the notification
: 
 2003 and 2004. 
 
2. General policy objective and/or purpos e 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. 
 5. Beneficiaries of the aid and allocation mechanism (calculation method and conditions)
: 
- Beneficiaries (who receives the subsid y, the producer, the exporter, other) :  
Industrial, commercial and agricultural enterprises. 
- Allocation mechanism :  Until 31 December 2003, tax credit equivalent to 50 per cent 
of the amount by which research expenditu re in a given year exceeds the average 
research expenditure of the two previous years. 
- From 1 January 2004, tax credit equivalent to  the amount of a volume share, equivalent 
to 5 per cent of research expenditure for the year, and to a growth share, equivalent to 
45 per cent of the amount by which research expenditure in a given year exceeds the 
average research expenditure 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 possibl e, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year) : 
- Total amount for 2003:   €470 million; 
- Total amount for 2004:   €500 million. 
7. Duration of the subsidy and/or any other time-limits attached to it : 
 Scheme applicable until 31 December 2003 (increasing tax credit).  Mechanism amended 
from 1 January 2004, renewed for an indefinite period. 
 8. Statistical data permitting an assessment 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- G/SCM/N/123/EEC/Add.8 
 Page 27 
 
 
specific fiscal measure which is not regarded as a subsidy by the French authorities and is notified 
merely in the interests of transparency.  
3.2 Research and Technology Fund (FRT) 
1. Period covered by the notification
: 
 2003 and 2004. 
 2. General policy objective and/or purpos e of the subsidy (or aid scheme)
: 
- 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. 
3. Legal basis (reference, date) : 
 Decree No. 59-1397 of 9 December 1959 concerni ng 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 industria l 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 con cerning 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.  
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 allocation 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. G/SCM/N/123/EEC/Add.8 
Page 28  
 
6. Subsidy per unit or, where this is not possibl e, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year) : 
 The amounts listed below are the envelope of di sbursement authorizations given over the year 
(including carryovers a nd allocations cancelled): 
 
- 2003:  €197 million budgeted under the pr eliminary Finance Law, €143.28 million 
disbursed; 
- 2004:  €181.45 million budgeted under the pr eliminary Finance Law, €149.86 million 
disbursed. 
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 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 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 th e meaning of the Agreement. This aid is notified 
strictly in the interests of transparency.  
3.3 Industrial Innovation Fund (FII) (Currentl y the fund for enterprise competitiveness) 
1. Period covered by the notification
: 
 2003 and 2004. 
 2. General policy objective and/or purpos e 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. 
  G/SCM/N/123/EEC/Add.8 
 Page 29 
 
 
5. Beneficiaries of the aid and allocation 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, alt hough it may be increased by 10 per cent in cases 
where intersectoral or cooperative projects ar e financed from the b asic research stage 
onwards. 
 
6. Subsidy per unit or, where this is not possibl e, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year) : 
 Budget: 
- for 2003, in Euros:   €278 million; 
- for 2004, in Euros:   €141.5 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 assessment of the trade effects of the subsidy
: 
 The purpose of the programme is to finance innovation: 
 
- the expenditure financed concerns researc h and development and consequently has no 
effect on production costs; 
- 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 National Agency for the Promotion of Research (ANVAR) 
1. Period covered by the notification : 
 2003 and 2004. 
 
2. General policy objective and/or purpos e 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. 
 G/SCM/N/123/EEC/Add.8 
Page 30  
 
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 five -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 allocation mechanism (calculation method and conditions)
: 
- Beneficiaries:  (who receives the subsidy, 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. 
 6. Subsidy per unit or, where this is not possibl e, 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 2003 (in Euros):   €221.5 million; 
- for 2004 (in Euros):   not yet available; 
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. 
  G/SCM/N/123/EEC/Add.8 
 Page 31 
 
 
8. Statistical data permitting an assessment of the trade effects of the subsidy : 
 The purpose of the programme is to finance innovation: 
 
- the expenditure financed concerns researc h 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 Atout-puma 
1. Period covered by the notification : 
 2003 and 2004. 
 2. General policy objective and/or purpos e of the subsidy (or aid scheme)
: 
 To support research and development projects aimed at enabling enterprises to acquire 
dissemination technologies. 
 3. Legal basis (reference, date)
: 
 Annual Finance Law;  
  Date of adoption by the Commission:  N 463/90 and N 10/97, confirmed on 7 June 1999. 
 
4. Form of the subsidy (i.e., grant, loan, tax concession, etc.)
: 
 Subsidy (for projects involving the feasibility stage):  maximum of 50 per cent in gross 
subsidy equivalent (subsidy ceiling of €40,000).  
 Advances repayable in the event of success: be tween 16.5 per cent in gr oss subsidy equivalent 
(advance fully repaid) and 40 per cent in gross subsidy equivalent (in the event of the total failure of 
the research project and non-repayment of the advance).  5. Beneficiaries of the aid and allocation mechanism (calculation method and conditions)
: 
- Beneficiaries  (who receives the subsidy, the producer, the exporter, other):   
Industrial enterprises. 
- Conditions :  Financially sound enterprises with fewer than 2,000 employees that are 
not subsidiaries of a group with 2,000 or more employees. 
6. Subsidy per unit or, where this is not possibl e, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year) : 
- for 2003, in Euros:   €32.4 million; 
- for 2004, in Euros: €3.9 million (provisional figure):   This amount covers support 
from regions only, the State no longer co-finances this arrangement. G/SCM/N/123/EEC/Add.8 
Page 32  
 
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 assessment of the trade effects of the subsidy
: 
 The purpose of the programme is to disseminat e technologies and to finance training expenses 
and research and development costs wit hout affecting the cost of production. 
  The programme has no effect on trade.  
3.6 Aid to Research Institutions in the Civil Aviation Sector 
1. Period covered by the notification
: 
 2003 and 2004. 
 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). 
 
4. Form of the subsidy
: 
 Non-repayable subsidy. 
 5. Beneficiaries of the aid and allocation mechanism
: 
 Mainly ONERA and ETW (European Transonic Wind Tunnel). 
 6. Total amount
: 
- In 2003 :  €2.7 million; 
- In 2004 :  €3.2 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. 
  G/SCM/N/123/EEC/Add.8 
 Page 33 
 
 
3.7 Civil Aviation Research 
1. Period covered by the notification : 
 2003 and 2004. 
 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). 
 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
: 
 26 enterprises were involve d in 2003, 30 in 2004. 
 6. Total amount
: 
- In 2003:   €56.3 million 
- In 2004:  €67.9 million 
7. Duration of the subsidy : 
 Permanent arrangement funded on a yearly basis under the Finance Law. 
 8. Statistical data
: 
 The aid goes entirely to research and therefore has no bearing on product manufacture. 
 
3.8 Young Innovative Enterprises (JEI ) 
1. Period covered by the notification : 
 2003 and 2004. 
 
2. General policy objective : 
 To support young innovative enterprises undertaking research and development projects. 
 G/SCM/N/123/EEC/Add.8 
Page 34  
 
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 or from income tax or corporation tax during the first three years of profitable 
business then a reduction of 50 per cent for the following two years of profitable business.  
The total sum of government support given to en terprises eligible for JEI status and the 
related advantages must not exceed the "de minimi s" aid ceiling of €100, 000 for each three-year 
period. 
 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  
7. Duration of the subsidy : 
 Scheme applicable to financial years commencing on or after 1 January 2004. 
 8. Statistical data
: 
 
 Not available  
4. SECTORAL REGIMES 
4.1 Tonnage-based tax scheme 
1. Period covered by the notification
: 
 2003 and 2004. 
 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. 
  G/SCM/N/123/EEC/Add.8 
 Page 35 
 
 
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 scheme 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 possibl e, total amount or annual amount budgeted for 
the subsidy (indicating, if possible, the average subsidy per unit in the previous year) : 
- Total amount estimated per year:  €11 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 assessment of the trade effects of the subsidy : 
 Not available. 
__________