Various schemes allow investors to reduce their taxes while supporting economic projects of general interest. Among these, the Girardin Industriel Law occupies a special place. Its objective is twofold: to promote the economic development of overseas departments and territories (DOM-TOM) and to offer an attractive tax exemption opportunity to metropolitan investors. Discover how it works and its advantages to optimize your taxation.
The Girardin industrial law : a device of detaxation which‘address has all the Franvsais
Extended until December 31, 2029, the Girardin Law supports the economic development of overseas territories. All natural persons domiciled for tax purposes in France can benefit from this system. To benefit from the Girardin law, simply complete the 2042 IOM declaration which concerns investments made overseas.
What are the tax advantages offered by the Girardin Industriel system?
A considerable tax reduction
One of the main advantages of the Girardin Industriel system is the immediate tax exemption it offers. The investor benefits from a tax reduction from the year following his investment (up to 114% of the amount paid). This tax leverage effect is a considerable advantage compared to other tax exemption schemes. In addition to the tax reduction, the investor contributes to the economic development of French overseas regions by promoting the financing of local industrial projects.
Rates and capping of reductions
The Girardin Industriel law offers a tax reduction which can reach up to 52,941 euros for investments with tax approval and 40,909 euros for investments with full rights. As for the tax ceiling, it is set at 18,000 euros. For an investment in industrial Girardin as of right, 44% of the tax reduction is taken into account in the calculation of the capping of tax loopholes, while for an investment with tax approval, this percentage is 34% .
It is important to note that these investments involve risks, in particular the risk of tax reclassification if the conditions of the system are not respected, the financial risk associated with the possible loss of the capital invested, and the risk linked to liability for debts in case of creation of a Company in Collective Name.
How does the Girardin law work? ?
The Girardin industrial system operates on the basis of a direct tax reduction for taxpayers. First, the investor subscribes to shares in a general partnership (SNC). The latter buys new equipment then rents it for five years to a local company. At the end of the rental contract, the equipment is sold for a nominal amount to the renting company. In return for their initial financial commitment, the investor benefits from an income tax reduction equivalent to 120% of the amount invested on their next tax declaration. This is called tax leverage. This means that not only is the entire invested capital deductible, but the interest is also covered by tax exemption!
Conditions to benefit from the Girardin Industriel law
To benefit from the Girardin Industriel law, several eligibility criteria must be met:
- The investment must be made before December 31 of the tax year;
- The investment must be productive, that is to say intended for the purchase of material or equipment used in the context of an economic activity.
- The industrial equipment financed by this system must be new and intended for professional use.
- The tenant company as well as the industrial project must be located in an overseas department or territory.
The general partnership in charge of the project is required to rent the equipment for a minimum period of five years to this local company. The investor undertakes to keep his shares in the company for at least five years. In the event of non-compliance with this commitment, the tax advantages may be called into question.
It is therefore advisable to carefully study this system and its conditions before any commitment to maximize its benefits and minimize the risks.
© AbcBourse.com. All rights reserved
Did you like this article ? Share it with your friends using the buttons below.
This is a Smartvoice article: see legal notices