France wants to adopt early stage tax incentives EIS and SEIS

The French government wants to triple the amount of business angels in the country. Officials want to adopt two UK programs, the EIS and SEIS, which provide early-stage tax incentives. As a result, the government hopes that business angels will invest 3 billion euros annually into startups, creating 200,000 jobs by 2027.

The effort is supposed to fulfill a pledge made by French President Macron during his re-election, to create more than 1 million jobs by 2027. “We must continue to develop our ecosystem of startups, because the best way to create jobs in France is to put the emphasis on young, innovative companies”, said Paul Midy, a French National Assembly member in charge of the proposal.

Tax reforms

The government has been providing funding to startups over the past decade, but now it wants to motivate more angel investors into the game. A team working on this effort has drafted a proposal including tax reforms to encourage large private enterprises to invest more of their profit into corporate venture funds.

These tax incentives come from the SEIS and EIS programs

The proposal also includes tax incentives for private savings accounts and insurance funds to invest more into startups. Additionally, the team also proposes tax breaks for individual investors in startups. This tax incentive comes from the Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS), which are active in the UK.

‘EIS and SEIS have had multiplier effect’

Investors who participate in seed rounds (in the first 150,000 euros of funding) receive tax breaks in the UK due to the SEIS. At the same time, the EIS offers tax breaks for investors in the stages of growth after that, up to 5 million euros in venture capital raised in a single year. Investors can look up which companies are certified for these tax breaks. “It’s been 30 years that these exist in the United Kingdom and it is a hit. Over the past 15 years, as the ecosystem developed, it had a multiplier effect.”

The French officials want to offer tax breaks between 18 and 50% to investors

The French officials want to offer tax breaks ranging from 18 percent to 50 percent to investors. The country has seen a surge in business angels in recent years, with 1.1 billion euros invested in 215 funding rounds in 2022. However, the sector is currently slowing down, due to the economic slowdown.