The Urban Enterprise Zone – Territory Entrepreneur (ZFU-TE) scheme offers significant tax benefits for businesses establishing operations in designated urban zones in France. Companies can receive a tax exemption on profits up to €50,000 per year, with additional allowances for new hires. This initiative aims to stimulate economic growth and job creation in these areas. Note that the scheme is currently not open for new applications as it expired on 31 December 2021.
Objectives
The ZFU-TE scheme promotes economic development and job creation by providing a tax exemption on business profits for companies that set up operations in designated urban enterprise zones. This initiative aims to encourage investment in these areas, fostering a more dynamic local economy.
Beneficiaries
The ZFU-TE scheme is designed for businesses engaged in industrial, commercial, craft, or liberal professional activities that establish operations in designated urban enterprise zones (ZFU).
Eligible operations
Eligible operations under the ZFU-TE scheme include:
- Establishing new business activities in the designated urban zones.
- Hiring new employees, particularly those residing in ZUS or ZFU areas, for whom an additional allowance is granted.
Eligibility conditions
To qualify for the ZFU-TE tax exemption, companies must establish operations in a designated Urban Enterprise Zone (ZFU) and meet the criteria for new hires to benefit from additional allowances, as specified in the tax regulations.
Grant amount
The tax exemption allows for up to €50,000 per taxpayer per 12-month period, with an additional €5,000 for each new employee hired who is domiciled in a ZUS or ZFU and employed full-time for at least 6 months. The exemption is fully available for the first five years, followed by a degressive scale in the subsequent three years: 60% in the sixth year, 40% in the seventh, and 20% in the eighth year.
Frequently Asked Questions (FAQ)
- Can I still apply for the ZFU-TE scheme?
- No, the ZFU-TE scheme expired on 31 December 2021 and is no longer accepting new applications.
- What types of businesses can benefit from the ZFU-TE tax exemption?
- The ZFU-TE scheme is designed for businesses engaged in industrial, commercial, craft, or liberal professional activities that establish operations in designated Urban Enterprise Zones (ZFU).
- How long does the tax exemption last?
- The exemption is fully available for the first five years, followed by a partial exemption for three additional years, decreasing each year (60% in the 6th year, 40% in the 7th, and 20% in the 8th).
- What happens if my business exceeds specific revenue or employee limits?
- The provided source document does not specify detailed revenue or employee limits for this scheme. Please refer to official tax regulations for comprehensive eligibility criteria.
- Are there any sectors that are excluded from this scheme?
- The provided source document does not specify excluded sectors. Please refer to official tax regulations for comprehensive eligibility criteria.
Can I still benefit from ZFU-TE after the zones were dissolved in 2026?
Yes. Although ZFU-TE zones were formally dissolved on 1 January 2026, businesses that established operations before 31 December 2025 retain their exemption under the terms in force at the time of installation. The tapering schedule (5 years full + 3 years degressive) continues to run for those businesses.
How does the €5,000 bonus per hire work in practice?
Each new employee hired from 1 January 2006 onwards who resides in a ZFU or QPV and works full-time for at least six months raises the annual exemption cap by €5,000. For example, a business with three qualifying hires would have a cap of €65,000 instead of €50,000.
Can I combine the ZFU-TE profit exemption with the QPV exemption?
Generally no. These territorial exemptions are designed as alternatives, and cumulation rules prevent benefiting from multiple zone-based profit tax exemptions simultaneously. Contact Ministère de l’Economie, des Finances et de la Souveraineté Industrielle, Energétique et Numérique to confirm which regime best fits your situation.
Is my liberal profession (doctor, architect) eligible for ZFU-TE?
Yes, liberal professions are eligible provided they meet all other criteria (50 employees max, turnover below €10M, physical establishment in the zone, local hiring conditions). However, if you practise partly outside the zone, you must either employ at least one full-time sedentary worker in the zone or generate 25% of turnover from ZFU clients.
What happens if I exceed 50 employees during the exemption period?
You lose the exemption for the tax year in which the threshold is exceeded. The headcount condition is assessed each tax year. If you fall back below 50, you may be able to reclaim the exemption for subsequent years, subject to verification by Ministère de l’Economie, des Finances et de la Souveraineté Industrielle, Energétique et Numérique.