(Articles 109 and 110 of the 2016 Finance Act)
Articles 109 and 110 of the Finance Act provide several modifications and prorogations of the tax incentives for overseas investment, which can be summarized as follows.
Incentives for productive overseas investment are extended until 2020 for Overseas Departments (Sections 199 undecies B, 217 undecies and 244 quater W of the French Tax Code) and St-Martin, and until 2025 for Overseas Communities (Sections 199 undecies B and 217 duodecies of the French Tax Code). These incentives shall therefore be applicable as long as their tax events occur before December 31, 2020 or 2025.
In order to promote the tax credit for investment under Section 244 quater W of the French Tax Code - which allows companies to directly benefit from the tax aid - the turnover limit to be eligible for the reduction of income tax under Section 199 undecies B - which in particular allows rental schemes - is gradually lowered until 2020. However, no decrease of this limit is planned for the tax deduction under Section 217 undecies for companies subject to corporate tax.
The tax incentive for investment in the social housing renting sector is also extended and modified.
Among the main changes, it should be noted that the tax credit set forth in Section 244 quater X for some social housing organizations is extended to construction sites openings occurring before December 31, 2020 in the Overseas Departments, and, on the other hand, the tax reduction under Article 199 undecies C is extended until 31 December 2025 in Overseas Communities (for Overseas Departments, the extension is limited to December 31, 2017 but transitional measures are implemented).
Furthermore, the tax credit set forth in Section 244 quater X is extended to refurbishment works of social housing built more than twenty years ago, and limited to NPNRU districts. The rate of the tax credit is 20%,i.e., half of the tax credit provided for housing construction or acquisition operations.