Global Insight | November 2023

France is implementing an attractive tax credit for investments in favour of green industry (C3IV)

Following the Minister of the Economy, Finance, and Industrial and Digital Sovereignty’s presentation of the bill’s four priorities for the green industry to the Council of Ministers on 16 May 2023, a proposal has been formulated by the Minister of Ecological Transition and Territorial Cohesion, along with the Minister Delegate to the Minister of the Economy, Finance, and Industrial and Digital Sovereignty, responsible for Industry.

This proposal aims to establish a tax credit incentivising companies to undertake new industrial projects in the crucial sectors of energy transition, namely batteries, wind power, solar panels, and heat pumps.

In this context, article 5 of the finance bill for 2024 proposes the creation of a tax credit to encourage companies to carry out new industrial projects in four key sectors of the energy transition. The contemplated tax credit would be up to 45% of the investment (under definition).

The entry into force of this tax aid is subject not only to its adoption by Parliament but also to an examination by the European Commission confirming its compliance with the European Union law on State aid.

Subject to future debates in Parliament and authorisation from the European Commission, expenditure by companies allowing: the production of equipment dedicated to the aforementioned sectors.

The production of essential components designed and used mainly for the production of the equipment is defined:

The company carrying the project must justify that at least 50% of its turnover will be achieved by companies carrying out downstream activities of the production chain of the four aforementioned sectors. The production or recovery of critical raw materials necessary for the production of equipment and components is defined in points I and II: the company carrying the project must justify that at least 50% of its turnover will be achieved by companies carrying out activities in the production of essential components or downstream of the production chain of the four aforementioned sectors.

The final list of essential components and critical raw materials concerned will be specified by order after the entry into force of the measure.

The C3IV would be calculated on the basis of tangible investments (buildings, installations, equipment, machines and base land necessary for the operation of this equipment) and intangible investments (patent rights, licenses, know-how or other intellectual property rights), subject to compliance with certain conditions. Its application would be subject to the issuance of prior approval by the French Tax Authorities, after assent from the environment and tax control agency energy (ADEME) on the eligibility of the project. This request, which can be submitted now , must in any case be submitted before the opening date of the real estate construction site.

If you want to know more information, please contact:

Delphine Parigi
Partner
DPZ Avocats
France
E : delphine.parigi@dpz-avocats.com