Profit tax and local tax exemptions for businesses created in priority development zones

Article 135 of the 2019 Finance Act creates priority development zones (Art. 44 septdecies of the General Tax Code): they cover municipalities in mainland regions that combine a high poverty rate, a high share of young people not in employment or training, a low population density and where at least 30% of the population lives in inter-municipal bodies that themselves meet poverty, youth-inactivity and low-density criteria. SMEs (within the meaning of Annex I to Regulation (EU) No 651/2014) carrying out an industrial, commercial or craft activity, created in these zones between 1 January 2019 and 31 December 2020 are exempt from income tax or corporate income tax until the end of the 23rd month after their creation, then taxed on one quarter, one half and three quarters of their profits over the following three years. They are also exempt from the business property contribution and from property tax on built land on half of the base for seven years, followed by a decreasing allowance (Art. 1463 B, 1383 J), and local authorities may exempt the remaining part by decision (Art. 1466 B bis). The scheme was later extended; in 2026 the BOFiP covers businesses created until 31 December 2027.