France’s tax authorities have updated guidance on income tax reductions for investments in SMEs, FCPI and FIP funds, JEIs and ESUS, reflecting legislative changes under the Finance Laws for 2025 and 2026.
France’s tax authorities have updated their guidance on income tax reductions for investments in small and medium-sized enterprises (SMEs), FCPI and FIP funds, and solidarity-based enterprises of social utility (ESUS).
The update published on 27 August 2026 incorporates changes introduced by legislation adopted since 2015, including the Finance Laws for 2025 and 2026.
Changes to SME investment relief
Under Article 199 terdecies-0 A of the French General Tax Code (CGI), individuals who are tax residents in France may qualify for the “Madelin” tax reduction on cash subscriptions to the capital of eligible SMEs.
The relief applies to both direct subscriptions and investments made through a holding company. The updated guidance reflects changes to eligibility requirements, holding periods and financing limits.
The Finance Law for 2026 increased the financing ceiling for eligible enterprises from EUR 15 million to EUR 16.5 million.
FCPI and FIP changes
The guidance also reflects changes to the treatment of FCPI and FIP investments.
The Finance Law for 2025 removed the tax reduction for subscriptions for FIP units, except for FIPs invested in eligible enterprises located in Corsica or overseas territories. It also created a tax reduction for subscriptions for FCPI units invested in young innovative enterprises (JEI).
The Finance Law for 2026 subsequently removed the tax reduction for subscriptions for FCPI units under Article 199 terdecies-0 A of the CGI.
For FIPs in Corsica and overseas territories and FCPI-JEI, the investment period for meeting the required investment quota was extended from 30 months to 48 months.
ESUS and JEI measures
The updated guidance covers tax reductions for investments in solidarity-based enterprises of social utility (ESUS), as well as young innovative enterprises (JEI) and young innovative enterprises with impact (JEII).
The increased 25% rate of the “ESUS” tax reduction has been extended to payments made up to 31 December 2027.
Holding period rules
Investors generally must retain securities received in return for eligible subscriptions until 31 December of the fifth year following the year of subscription.
Legislation provides exceptions to this requirement, including circumstances where the transferor fully reinvests the relevant amount within a maximum period of 12 months.
The updated guidance brings the tax authorities’ comments into line with the latest legislative changes and clarifies the rules applying to the relevant income tax reductions.
