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European Commission - Press release

State aid: Commission approves two schemes aimed at encouraging investment in innovative SMEs

Brussels, 5 November 2015

The European Commission has decided that two schemes planned by France with the aim of facilitating investment in innovative small and medium-size enterprises (SMEs) are in line with the EU rules on State aid.

In particular, the Commission is of the view that the two measures make up for a real gap in the market without unduly affecting competition within the single market.

On this point, Commissioner Margrethe Vestager, in charge of competition policy, said: ‘These two schemes provide better access to funding for high-growth-potential undertakings. They will enable the development of an environment that is conducive to job creation and growth, while limiting distortions of competition.’

The ISF wealth tax-SME scheme entails a reduction of 50 % up to a limit of EUR 18 000 per year in wealth tax (impôt de solidarité sur la fortune, or ISF) for individual taxpayers who subscribe to the capital of innovative SMEs by way of mutual funds for innovation (fonds communs de placement dans l'innovation, or FCPI) or local investment funds (fonds d'investissements de proximité, or FIP).

The scheme for exceptional depreciation of investment by businesses in SMEs supplements the ISF wealth tax-SME measure. It enables undertakings, whatever their size, to spread the depreciation of investments in SMEs over a period of five years. The investments concerned consist of the sums paid either for subscription in cash to the capital of innovative SMEs or for units or shares in venture capital funds,professional private equity funds or venture capital firms.

Both schemes, of a maximum duration of ten years, concern innovative SMEswhich, at the time of the initial investment, have been active in their market for less than ten years following their first commercial sale.

The Commission examined the compatibility of the schemes with the Guidelines on State aid to promote risk finance investments (see also MEMO/14/14). This examination showed the aid to be necessary to stimulate investment that would not be provided by the market unprompted, leading to a ‘funding gap’ for certain innovative SMEs. The lack of funding derives from the information asymmetry between investors and entrepreneurs, attributable to the relatively early stage of development and innovative nature of the undertakings concerned.

The Commission also verified whether the aid was both necessary and sufficient to prompt investors (individuals and companies) to invest in innovative undertakings. Moreover, unlike direct State intervention, the tax incentive scheme makes it possible to tap private savings and rely as much as possible on market mechanisms. The Commission further checked whether the aid was proportional to the intended objectives, both in terms of investors and of the SMEs benefiting from investment.


In France, younger firms and innovative undertakings encounter significant difficulties in accessing finance. This is a consequence of the risks inherent in their activities (developing products/technologies which have yet to prove their economic viability) and a lack of financial guarantees, but also reflects the fact that, in view of their limited size, they are not in a position to employ staff dedicated specifically to financial management. All too often, the directors of such businesses ensure strategic management and day‑to‑day operational tasks, while providing the capital.

The ISF wealth tax-SME scheme was authorised by a Commission decision of 2008 under the Risk Capital Guidelines. The French authorities renotified the scheme in order to bring it into line with the new rules in force.

The non-confidential versions of these two decisions will be made available under the case numbers SA.40725 (scheme for exceptional depreciation of investment by businesses in SMEs) and SA.41265 (ISF wealth tax-SME scheme) in the State Aid Register on the DG Competition website, once any confidentiality issues have been resolved. The electronic newsletter "State aid Weekly e-News" lists the most recent state aid decisions published in the Official Journal and on the website.


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General public inquiries: Europe Direct by phone 00 800 67 89 10 11 or by email

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