( ) Page: 1/35 SUBSIDIES

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1 1 August 2013 ( ) Page: 1/35 Committee on Subsidies and Countervailing Measures Original: French SUBSIDIES NEW AND FULL NOTIFICATION PURSUANT TO ARTICLE XVI:1 OF THE GATT 1994 AND ARTICLE 25 OF THE AGREEMENT ON SUBSIDIES AND COUNTERVAILING MEASURES EUROPEAN UNION Addendum The following addendum to the notification of the European Union relates to the subsidy programmes of France.

2 - 2 - TABLE OF CONTENTS 1 SME SCHEMES Regional Premium for the Creation of Enterprises (PRCE) Regional Employment Premium (PRE) Industrial Redevelopment Aid (ARI) REGIONAL SCHEMES Metropolitan France Tax reduction for new enterprises Tax reduction for enterprises located in rural revitalization areas Land-Use Management Premium (PAT) Corsica Exemption, subject to approval, from corporation tax on profits resulting from new activities created in Corsica Tax exemption for profits realized by enterprises set up in Corsica in the crafts, industrial, hotel, construction and public works sectors Profits tax exemption for industrial, commercial, crafts and agricultural enterprises operating in Corsica on 1 January 1997 or which establish operations there between this date and 31 December 2001 (Zone franche Corse) Tax credit for certain investments made and exploited in Corsica French Overseas Departments (FOD) Long-term tax treatment in French Overseas Departments VAT deduction for certain exempted products Deduction of investments in French Overseas Departments and Territories Temporary exemption, subject to approval, from corporation tax for the creation of activities in French Overseas Departments Reduced taxation of profits from operations in French Overseas Departments Tax reduction for profits from operations in Overseas France Freight support in the Overseas Departments Urban areas in difficulty Measures on behalf of Urban Free Zones (ZFU) R&D SCHEMES Tax credit to promote research National Research Agency (ANR) Technology research institutes (IRT) and institutes of excellence in the field of carbon-free energy (IEED) Fund for Enterprise Competitiveness (FCE) OSEO Innovation Aid Scheme for Research, Development and Innovation (RDI) Industrial Innovation Agency Aid for Industrial Innovation Promotion Programmes (PMII) Aid for innovation in the shipbuilding industry Aid for innovation in the digital sector and aid for shared innovation platforms... 30

3 Support for institutions engaged in research for the sustainable development of air transport Research for innovation and the sustainable development of air transport Young Innovative Enterprises (JEI) SECTORAL REGIME Tonnage-Based Tax Scheme National ultrafast broadband programme (Part B)... 35

4 - 4-1 SME SCHEMES 1.1 Regional Premium for the Creation of Enterprises (PRCE) 2. Policy objective of aid scheme Job creation and economic development. 3. Legal basis Article L of the General Code on Local Authorities (CGCT). 4. Form of the aid Business grant with a ceiling of 25,000, but which may be increased to 35,000 in priority areas defined by decision of the Regional Council. 5. Beneficiaries of the aid and allocation mechanism Beneficiaries Enterprises created less than 12 months prior to submission of the application. Allocation mechanism The premium is paid directly to the enterprises by the local authorities and in particular the regions, which are responsible for the implementation of this scheme. Conditions Enterprises must undertake to create a minimum number of permanent jobs by recruiting persons linked to the enterprise by open-ended employment contracts. 2011: 3,381,294 (amount declared by all the local authorities having submitted their annual reports on State aid expenditure in 2011). 2012: Amount not available; the local authorities' annual reports on State aid expenditure in 2012 to be submitted at the end of June, pursuant to the provisions of Article L of the CGCT. Provision applicable indefinitely. No precise data can be provided. However, since the total amount of aid granted annually and the maximum amount of aid that can be granted to each enterprise are low, the scheme has no significant impact on trade.

5 Regional Employment Premium (PRE) 2. Policy objective of aid scheme Job creation and economic development. 3. Legal basis Article L of the General Code on Local Authorities. 4. Form of the aid Business grant with a ceiling of 11,000 per job over three years, up to a total annual amount of 160,000 per enterprise. 5. Beneficiaries of the aid and allocation mechanism Beneficiaries Small and medium-sized enterprises, with the exception of those operating in the following sectors: the coal industry, transport, iron and steel industry, shipbuilding, synthetic fibres, automotive industry and financial services. Allocation mechanism The premium is paid directly to the enterprises by the local authorities and in particular the regions, which are responsible for the implementation of this scheme. Conditions As a general rule (job creation as the result of the recruitment of a person linked to the enterprise by an open-ended employment contract), the aid amounts to a maximum of 20% of gross earnings, subject to the payment of social security contributions for the new employee for three years. The enterprise must create one or more jobs, unrelated to any new investment, and not have dismissed or made redundant any staff in the 12 months prior to submitting the application. 6. Subsidy per unit or, where this is not possible, total amount or annual amount budgeted for 2011: 4,270,094 (amount declared by all the local authorities having submitted their annual reports on State aid expenditure in 2011). 2012: Amount not available; the local authorities' annual reports on State aid expenditure in 2012 to be submitted at the end of June, pursuant to the provisions of Article L of the CGCT. Ten years from No precise data can be provided. However, since the total amount of aid granted annually and the maximum amount of aid that can be granted to each enterprise are low, the scheme has no significant impact on trade.

6 Industrial Redevelopment Aid (ARI) Aid in the form of repayable advances to industrial or industrial services enterprises with productive and job-creating investment projects in order to promote a business-friendly environment and regional industrial redevelopment. Schemes exempt from prior notification No. X 65/2008 and No. X 68/2008. Repayable advance. Beneficiaries (who receives the subsidy, the producer, the exporter, other) Industrial and industrial services enterprises. Eligible amount: cost price of new equipment (excl. replacement investment). Levels of aid: 30% for SMEs; 15% for major businesses in areas eligible for regional aid. 6. Subsidy per unit or, where this is not possible, total amount or annual amount budgeted for Amount for 2011: Amount for 2012: The scheme applies until 31 December Scheme contributing to industrial redevelopment and job creation throughout the territory. 2 REGIONAL SCHEMES 2.1 Metropolitan France Tax reduction for new enterprises 1. Title of the aid scheme Profits tax exemption for new enterprises set up in areas eligible for regional aid, rural revitalization areas and urban redevelopment areas. 2. Period covered by the notification

7 General policy objective and/or purpose of the subsidy (or aid scheme) To promote the creation of new enterprises in areas with geographical, economic or social disadvantages. 4. Legal basis (reference, date) Article 44sexies of the General Taxation Code, deriving from Article 14A of Law No of 23 December 1988, extended by Article 92-I of Law No of 30 December 1999 and then by Article 92 of Law No of 30 December 2003 amended by Article 87 of the Amending Finance Law for 2006 No of 30 December 2006, by Article 45 of the Amending Finance Law for 2007 No of 25 December 2007, by Article 62 of the Amending Finance Law for 2009 No of 30 December 2009, and by Articles 108 and 129 of Finance Law for 2011 No of 29 December Form of the subsidy (i.e. grant, loan, tax concession, etc.) Exemption from profits tax until the end of the twenty-third month following the month of set-up, followed by a reduction for profits earned over the three subsequent 12-month periods (75%, then 50%, then 25%). Enterprises which set up in rural revitalization areas between 1 January 2004 and 31 December 2010 are eligible for exemption from profits tax until the end of the fifty-ninth month following the month of set-up, followed by a reduction for profits earned over the subsequent nine 12-month periods (60% in the first five 12-month periods, 40% in the sixth and seventh 12-month periods, and 20% in the eighth and ninth 12-month periods). For accounting periods closed as of 1 January 2007, eligibility for the benefit is subject to compliance with Commission Regulation (EC) No. 1998/2006 of 15 December 2006 on de minimis aid. 6. Beneficiaries of the aid and allocation mechanism (calculation method and conditions) - Beneficiaries (who receives the subsidy, the producer, the exporter, other): New enterprises in the legal and economic sense (excluding resumption, merging, restructuring, and extension of pre-existing activities), at least 50% of the share capital of which is held directly or indirectly by natural persons, and which are set up in specified areas. - Allocation mechanism: By operation of law. - Conditions: Genuinely new enterprises set up in eligible areas and the headquarters and all activities and operating resources of which are established in the area concerned. However, in the case of enterprises exercising a non-sedentary activity, conditions of establishment are considered to have been met if turnover generated outside eligible areas does not exceed 15% of total turnover (above this threshold, profits are taxed but on the basis of turnover generated outside such areas). 7. Subsidy per unit or, where this is not possible, total amount or annual amount budgeted for Total amount for 2011: 100 million ( 100 million in 2012). Average subsidy per unit: around 3,106 in Duration of the subsidy and/or any other time-limits attached to it Five years (or 14 years for enterprises created between 1 January 2004 and 31 December 2010 in rural revitalization areas), the scheme being applicable to enterprises set up until 31 December Statistical data permitting an assessment of the trade effects of the subsidy Around 32,200 beneficiaries in 2011.

8 Tax reduction for enterprises located in rural revitalization areas 1. Title of the aid scheme Tax exemption on profits earned by enterprises created or taken over in rural revitalization areas. 2. Period covered by the notification General policy objective and/or purpose of the subsidy (or aid scheme) To promote the creation or takeover of enterprises in areas with geographical, economic or social disadvantages. 4. Legal basis (reference, date) Article 44quindecies of the General Taxation Code derived from Article 129 of Finance Law for 2011 No of 29 December Form of the subsidy (i.e. grant, loan, tax concession, etc.) Tax concession. Exemption from profits tax until the end of the fifty-ninth month following the month of set-up or takeover, followed by a reduction for profits earned over the subsequent three 12-month periods (75%, then 50%, then 25%). Eligibility for the benefit is subject to compliance with Commission Regulation (EC) No. 1998/2006 of 15 December 2006 on de minimis aid. 6. Beneficiaries of the aid and allocation mechanism (calculation method and conditions) - Beneficiaries (who receives the subsidy, the producer, the exporter, other): Enterprises with less than ten employees, 50% of the share capital of which is directly or indirectly held by natural persons, and which are created or taken over in rural revitalization areas. - Allocation mechanism: By operation of law. - Conditions: Enterprises with less than ten employees, not engaged in excluded activities (e.g. banking, finance, insurance, management or property leasing), created or taken over (excluding extension of pre-existing activities) in eligible areas, and the headquarters and all activities and operating resources of which are established in the area concerned. However, in the case of enterprises exercising a non-sedentary activity, conditions of establishment are considered to have been met if turnover generated outside eligible areas does not exceed 25% of total turnover (above this threshold, profits are taxed but on the basis of turnover generated outside such areas). 7. Subsidy per unit or, where this is not possible, total amount or annual amount budgeted for Total amount for 2012: 4 million. 8. Duration of the subsidy and/or any other time-limits attached to it Eight years. The scheme applies to enterprises created or taken over up to 31 December 2013.

9 Land-Use Management Premium (PAT) Creation, extension or takeover of production activities in priority areas (areas eligible for regional aid), or support for research, development and innovation activities throughout the territory. The current scheme is governed by two decrees and an order: Decree No of 11 May 2007 concerning the land-use management premium for industry and services; Decree No of 15 June 2007 concerning the land-use management premium for research, development and innovation; Order of 3 March 2010 establishing the composition and operating rules of the Interministerial Commission on aid for the localization of activities, the procedures for preparing and submitting applications for the premium, the procedures for the notification of decisions, the list of qualifying sections of the classification of economic activities or products, and the closing date for the submission of applications. Subsidy. - Beneficiaries: Enterprises whose sector of activity is listed in Annex 2 of the Order of 3 March 2010, i.e. mainly the manufacturing industry, waste management and wholesale trade and certain services. - Allocation mechanism: Decision by the Minister for Town and Country Planning. - Conditions: Industry and services PAT Three categories of projects are eligible: creation of activities: o where the enterprise invests at least 5 million and creates 25 jobs; or o where the enterprise creates at least 50 jobs; extensions: o where 25 jobs are created and this represents an increase of more than 50% of the company's workforce; or o where at least 50 jobs are created; or o where the enterprise's eligible investment amounts to 10 million; takeovers of sites which are in difficulty, leading to the takeover of at least 80 jobs and the investment of at least 5 million.

10 Research - Development - Innovation PAT The programme envisaged must lead to the creation of at least 20 jobs or to research costs of at least 7.5 million. 6. Total annual amount 2011: 38 million. 2012: 34 million. General scheme valid until 31 December Number of assisted jobs created or maintained 12,880 10,820 Productive investments assisted 837 million 773 million Assisted R&D and innovation expenditure 143 million 65 million 2.2 Corsica Exemption, subject to approval, from corporation tax on profits resulting from new activities created in Corsica To promote job creation and economic development in Corsica. Article 208quater A of the General Taxation Code, deriving from Article 88 of Law No of 29 December 1990, amended by Article 4-I of Law No of 27 December Tax concession. Exemption from profits tax for a period of 96 months. - Beneficiaries (who receives the subsidy, the producer, the exporter, other): Companies subject to corporation tax on new activities launched in Corsica before 1 January 1999 in the industrial, crafts, construction and agricultural sectors. - Allocation mechanism: Approval. - Conditions: Subject to approval. None. Budgetary impact ended in Eight years. The scheme closed on 1 January 1999.

11 This measure no longer has any effects Tax exemption for profits realized by enterprises set up in Corsica in the crafts, industrial, hotel, construction and public works sectors None. To encourage the creation of new enterprises in Corsica. Article 208sexies of the General Taxation Code, deriving from Article 22 of Law No of 30 December 1987, last amended by Article 4-II and -III of Law No of 27 December Tax concession. Exemption from profits tax for a period of 96 months. - Beneficiaries (who receives the subsidy, the producer, the exporter, other): Companies subject to corporation tax and established in Corsica before 1 January Allocation mechanism: By operation of law. - Conditions: The enterprises must conduct all their business in Corsica. None. Eight years. The scheme closed on 1 January This measure no longer has any effects Profits tax exemption for industrial, commercial, crafts and agricultural enterprises operating in Corsica on 1 January 1997 or which establish operations there between this date and 31 December 2001 (Zone franche Corse) To promote the creation and maintenance of operations in Corsica.

12 Article 44decies of the General Taxation Code, deriving from Article 1 of Law No of 26 December 1996 and amended by Article 1 of Law No of 30 December 1998, by Article 33 I 1º a and b of Law No of 1 August 2003, by Article 45 of the Amending Finance Law for 2007 No of 25 December 2007 and by Article 108 of the Finance Law for 2010 No of 30 December Tax concession. Reduction on taxable profits up to a ceiling of 61,000 per 12-month period. Reduction of 100% for the first sixty months of operation, then 80%, 60%, 40% and 20% for each of the four subsequent 12-month periods. The profits exempted may not exceed 61,000 per 12-month period, and eligibility for the exemption is subject to compliance with Commission Regulation (EC) No. 1998/2006 of 15 December 2006 on the application of Articles 87 and 88 of the Treaty to de minimis aid. - Beneficiaries (who receives the subsidy, the producer, the exporter, other): Industrial, commercial and crafts enterprises and, under certain conditions, companies engaged in non-commercial activities and agricultural enterprises, for their new or existing activities established in Corsica. - Allocation mechanism: By operation of law. - Conditions: Enterprises must possess operating resources in Corsica enabling them to conduct their operations there autonomously. Insignificant budgetary impact in Five years (+ four years of degressive reduction). As this subsidy has not been extended, the scheme closed with effect from 1 January This scheme no longer has any trade effects Tax credit for certain investments made and exploited in Corsica To promote investment in Corsica. Article 244quater E, 199ter D and 220 D of the General Taxation Code, deriving from Article 48 of Law No of 22 January 2002 on Corsica. Article 244quater E was last amended by Article 39 of the Amended Finance Law for 2011 No of 28 December 2011 and Article 32 of the Amended Finance Law for 2012 No of 29 December 2012.

13 Tax concession. Tax credit equivalent to 20% of pre-tax investment costs. Note: For investments made as of 1 January 2015, the tax credit rate will be set at 10%. - Beneficiaries (who receives the subsidy, the producer, the exporter, other): Small and medium-sized industrial, commercial, crafts, liberal-professional and agricultural enterprises established in Corsica. - Allocation mechanism: Upon option by the enterprise. - Conditions: Investments eligible for tax credit are those used in Corsica, other than replacement investments, and at least 25% of which is financed without State aid. Investments made in certain sectors of activity subject to Community constraints are excluded. Eligible investments must be used in Corsica for at least five years. For the vast majority of innovating enterprises and SMEs covered by Community regulations, receivables (amounts due) for tax credits calculated in respect of investments made as of 1 January 2012 are immediately repayable. Total amount of tax credit for 2011 and 2012: 34 million in 2011 and 45 million in Number of beneficiaries in 2011: 3,515 enterprises. Average amount of the subsidy per unit in 2011: around 9,700. This aid scheme applies to investments made between 1 January 2002 and 31 December Not available. 2.3 French Overseas Departments (FOD) Long-term tax treatment in French Overseas Departments To contribute to the promotion of the Overseas Departments and, more generally, to encourage their economic development. Article 1655bis of the General Taxation Code, deriving from Decree No of 28 June 1958 and last amended by Article 44 of Law No of 30 December 1996.

14 Tax concession. This arrangement mainly involves exemption from corporation tax on reinvested profits and from import and export duties and fees on certain products. This scheme may not be applied concurrently, except with regard to mining companies operating in the department of Guyana, with the exemption arrangements provided for under Article 208quater of the General Taxation Code. - Beneficiaries (who receives the subsidy, the producer, the exporter, other): Public limited companies, partnerships limited by share capital, and limited liability companies the purpose of which is research and mining in the Overseas Departments; public limited companies, limited liability partnerships and limited liability companies with agricultural, forestry or industrial activities in the department of Guyana; and companies the sole purpose of which is to conduct industrial activities in the departments of Guadeloupe, Martinique and Reunion comprising an investment programme for a minimum of 3,048, Allocation mechanism: Prior approval by the Minister of the Economy, Finance and Industry. - Conditions: See above. Total amount for 2011 and 2012: under 500,000. The duration of the subsidy is specified in the authorization for each particular case and is limited to a maximum of 25 years, plus, where appropriate, installation time not exceeding five years. It applied to companies that had submitted an application for authorization prior to 31 December The subsidy has not been extended. No company requested an authorization in 1996 or Six authorizations were granted to mining companies in 1998 and No authorizations were granted in Two authorizations were granted in VAT deduction for certain exempted products To promote economic development in Overseas Departments and investment by local enterprises, by enabling new capital goods purchased by these enterprises to benefit from the uncollected recoverable VAT (TVA NPR) special mechanism. Article 295 A of the General Taxation Code (CGI) deriving from Article 30 I 2 of Law No of 27 May 2009 on French Overseas economic development.

15 Tax concession. Persons eligible under the TVA NPR mechanism are authorized to increase their VAT deduction by a VAT amount calculated fictitiously, based on the value of new capital goods exempt from VAT on purchase or import (in accordance with the provisions of Article and 5 of the CGI). These goods are listed in Articles 50undecies and 50duodecies of Annex IV to the CGI. - Beneficiaries (who receives the subsidy, the producer, the exporter, other): Enterprises subject to VAT established in the Overseas Departments of Guadeloupe, Martinique and Reunion and engaged in activities there which are eligible for the deduction by application of Article 271 of the CGI. - Allocation mechanism: Deduction of VAT. - Conditions: The deduction of uncollected VAT takes place following the import or purchase of exempted new capital goods. Total amount for 2011: 100 million (fiscal expenditure). Total amount for 2012: 100 million (fiscal expenditure). Permanent scheme. Not available Deduction of investments in French Overseas Departments and Territories To contribute to the economic development of French Overseas Departments and Territories. Initially codified under Articles 238bis HA and 238bis HC of the General Taxation Code, deriving from Article 22 of Finance Law No of 11 July 1986, this scheme, which has been amended several times, is now codified under Articles 199undecies B, 217undecies and 217duodecies of the Code. This scheme was established under the Finance Law for 2009 No of 27 December 2008 and Law No of 27 May 2009 on the economic development of Overseas France. Tax concession. Deduction of the amount of eligible investment from the profits subject to corporation tax, or an income tax reduction for taxpaying natural persons.

16 Beneficiaries (who receives the subsidy, the producer, the exporter, other): Enterprises and partners in a company subject to the tax regime provided for in Article 8 of the General Taxation Code (partnerships) or members of a grouping referred to in Article 239quater or 239quater C of the same Code (economic interest groupings) which make productive investments overseas intended for use in certain sectors of activity, or, solely in respect of enterprises subject to corporation tax, which subscribe in cash for shares in companies subject to corporation tax that invest overseas in those sectors or for shares in regional development companies in the Overseas Departments. - Allocation mechanism: Prior authorization must be obtained for eligible investments in excess of 250,000 or 1 million, depending on the type of financing arrangements. Authorization is automatic for investments below these amounts, with the exception of investment in the following: the transport, recreational boating, agriculture, sea fishing and aquaculture sectors, the coal and iron and steel industries, the shipbuilding or synthetic fibres sectors and the automotive industry; investment in relation to the restoration and rehabilitation of graded hotels, tourist accommodation and holiday villages or in failing businesses, or investment required for the exploitation of a concession for local public services of an industrial or commercial nature; with some exceptions, such investments require authorization as of the first euro. - Conditions: Fixed assets, which must be tangible, new and redeemable, must be acquired, created, or leased by an enterprise engaged in agricultural, industrial, commercial or crafts activities outside the following sectors: trade; cafés, tobacconists and bars/public houses, as well as catering 1 ; business advisory services and consultancy; education, health and social welfare; banking, finance and insurance; all real estate activities; the cruise industry, car repair, rental/leasing services without operators 2 ; business services 3 ; leisure, sporting and cultural activities 4 ; postal services; and investments in installations generating electricity from solar radiation. Total amount for 2011: 875 million and for 2012: 660 million, it being understood that these amounts were disbursed pursuant to both Articles 199undecies B and 217undecies of the General Taxation Code and that a significant proportion of the fiscal expenditure relating to the arrangement under Article 217undecies of the General Taxation Code relates to the construction of welfare housing. The current scheme is in force until 31 December Amounts disbursed for applications approved in 2011: - Article 199undecies B: 241 million. - Article 217undecies: 441 million. 1 With the exception of restaurants which are run by a person who has been awarded the title of maître restaurateur and which have been audited for the purposes of the award of that title and, where applicable, tourist restaurants which were graded on the date of publication of Law No of 22 July 2009 on the development and modernization of tourism services. 2 With the exception of the direct rental of pleasure boats or to natural persons using, for a period not exceeding two months, private motor vehicles within the meaning of Article 1010 of the CGI. 3 With the exception of maintenance, cleaning, packaging on a toll basis and call centres. 4 With the exception, on the one hand, of activities which are a direct and key component of hotel or tourism activities and which do not involve games of chance or gambling and, on the other hand, of audio-visual and cinematographic production and broadcasting; and associative activities.

17 Amounts disbursed for applications approved in 2012: - Article 199undecies B: 202 million. - Article 217undecies: 353 million Temporary exemption, subject to approval, from corporation tax for the creation of activities in French Overseas Departments To promote economic development and employment in the Overseas Departments. Article 208quater of the General Taxation Code, deriving from Article 9 of Law No of 21 December 1960, as last amended by Articles 86-I and 86-II of Law No of 28 December Tax concession. Temporary exemption from corporation tax for profits resulting from the authorized activity within the limits set forth in the authorization. The exemption does not apply to capital gains from the transfer of all or some of the company's shares or fixed assets. - Beneficiaries (who receives the subsidy, the producer, the exporter, other): Companies which, in a limited number of listed sectors, create a new activity likely to contribute to the economic development of the Overseas Departments and create new jobs. - Allocation mechanism: Prior authorization from the Minister for the Budget. - Conditions: Activities in agriculture, industry, the hotel trade, tourism with the exception of the cruise industry, fisheries, alternative sources of energy, construction and public works, transport, crafts, computer services, audio-visual and cinematographic production and broadcasting, maintenance services for all qualifying sectors, concessions for local public services of an industrial or commercial nature, and medium-standard welfare housing. Total amount for 2011: 0, and for 2012: 0. Exemption is granted for a ten-year period starting from the actual commissioning of the installations to be used in carrying out the authorized activity. The scheme applies to companies that submitted an application for authorization prior to 31 December The subsidy has not been extended. No authorization issued since 2005.

18 Reduced taxation of profits from operations in French Overseas Departments To promote economic development and employment in the Overseas Departments. Article 217bis of the General Taxation Code, deriving from Article 40-I of Law No of 12 July 1965, as last amended by Article 87 of Law No of 28 December This scheme was established under Law No of 27 May 2009 on the economic development of Overseas France. It was terminated by Article 10 of Finance Law for 2012 No of 28 December 2011, in respect of accounting periods closed with effect from 31 December Tax concession. One-third reduction of profits or losses resulting from operations conducted in the Overseas Departments. - Beneficiaries (who receives the subsidy, the producer, the exporter, other): Enterprises subject to corporation tax and conducting an activity in certain sectors in the Overseas Departments. - Allocation mechanism: By operation of law. - Conditions: Enterprises engaged in agricultural, industrial, commercial or crafts activities outside the following sectors: trade; cafés, tobacconists and bars/public houses, as well as catering 5 ; business advisory services and consultancy; education, health and social welfare; banking, finance and insurance; all real estate activities; the cruise industry, car repair, rental/leasing services without operators 6 ; business services 7 ; leisure, sporting and cultural activities 8 ; associative activities; and postal services. Total amount for 2011: 185 million. The scheme is applicable to accounting periods closed before 31 December With the exception of restaurants which are run by a person who has been awarded the title of maître restaurateur and which have been audited for the purposes of the award of that title and, where applicable, tourist restaurants which were graded on the date of publication of Law No of 22 July 2009 on the development and modernization of tourism services. 6 With the exception of the direct rental of pleasure boats or to natural persons using, for a period not exceeding two months, private motor vehicles within the meaning of Article 1010 of the CGI. 7 With the exception of maintenance, cleaning, packaging on a toll basis and call centres. 8 With the exception, on the one hand, of activities which are a direct and key component of hotel or tourism activities and which do not involve games of chance or gambling and, on the other hand, of audio-visual and cinematographic production and broadcasting.

19 Not available Tax reduction for profits from operations in Overseas France To promote economic development and employment in the Overseas Departments. Article 44quaterdecies of the General Taxation Code, deriving from Article 4 of Law No of 27 May Tax concession. Tax reduction for profits from operations in Overseas France. - Beneficiaries (who receives the subsidy, the producer, the exporter, other): Small and medium-sized enterprises subject to income tax or corporation tax which have operations in the Free Zones for Activities (ZFA) in Guadeloupe, Guyana, Martinique and Reunion. - Allocation mechanism: Upon option. - Conditions: Enterprises operating in Guadeloupe, Guyana, Martinique and Reunion qualify for a profits tax reduction if the following conditions are satisfied: they employ fewer than 250 employees and have an annual turnover of less than 50 million euros; the operation's principal activity is in one of the sectors eligible for the tax reduction provided for in Article 199undecies B of the General Taxation Code, or is one of the following: accountancy, business advisory services, engineering, technical consultancy. The enterprise must also be subject to an actual tax regime or to one of the regimes defined in Articles 50-0 and 102ter. Finally (if the amount of the reduction is 500 or more), the enterprise must incur expenditure for vocational training and make a payment to the Experimental Youth Development Fund, the minimum spending on these actions being proportional to the amount of the tax concession. Total amount for 2011: 72 million, for 2012: 74 million. The scheme is applicable to accounting periods opened by Not available.

20 Freight support in the Overseas Departments - To offset the extra transport costs incurred by private enterprises and public services within the national boundaries, from the European port of departure to delivery in the Overseas Departments, on the one hand, and from the Overseas Department production unit to the European port of arrival, on the other. - To promote the development of private enterprises and public services and to generate employment, by offsetting the transport costs incurred by the beneficiaries. Law No of 27 May 2009 on the economic development of Overseas France, and Article 24 in particular. Decree No of 29 December 2010 on freight aid for enterprises in Overseas Departments, Saint Pierre and Miquelon, Mayotte, Saint-Barthélemy, Saint-Martin, and Wallis and Futuna. Direct subsidy. - Beneficiaries: Enterprises in all production sectors except the following: the automotive, synthetic fibres, iron and steel, and coal industries and the fisheries sector, as well as the agricultural products listed in Annex I of the Treaty on the Functioning of the European Union. - Eligible expenses: - In geographical terms: cost of transport between an Overseas Department and the European continent and inter-island transport in the Guadeloupe archipelago (importation). Inter-Overseas Department transport is excluded. - Categories of expenditure: pre-tax cost of maritime or air transport, including insurance, handling and pre-clearance temporary storage charges; o of raw materials (primary or intermediate products) and equipment, at importation, needed for an enterprise's production cycle; o of locally produced finished products delivered to the European continent. - Basis of calculation: the cost of transport, whichever the European port or airport of origin or destination, is the cost of equivalent transport between the Overseas Department concerned and continental France. 2011: 29 million. 2012: 29 million. The scheme is in effect until 31 December 2013.

21 Not available. 2.4 Urban areas in difficulty Measures on behalf of Urban Free Zones (ZFU) To promote the creation and maintenance of activities in Urban Free Zones. Article 44octies of the General Taxation Code, deriving from Articles 2, 5A and 5C of Law No of 14 November 1996 on implementation of the Urban Regeneration Pact (creation of 44 "first-generation" ZFUs on 1 January 1997) and extended by Law No of 30 December Measures extended to 41 new ("second-generation") ZFUs provided for by Law No of 1 August 2003 on town planning and urban renewal (enterprises established in ZFUs on 1 January 2004 or which set up operations in such a zone between that date and the date of publication of Law No of 31 March 2006 on equal opportunities), i.e. 3 April Technical adjustments to the measures under the Amending Finance Law for 2003 No of 30 December The measures created by Article 44octies A deriving from the aforementioned Law No ("third-generation" ZFUs) replace the measures provided for by Article 44octies which ceased to apply to the creation of activities from the day after the date of publication of the Law on equal opportunities, i.e. 3 April The exemption codified under Article 44octies A, as amended by Article 157 of Finance Law for 2012 No of 20 December 2011, is applicable to activities created between 1 January 2006 and 31 December 2014 in all ZFUs. These measures are also applicable, within the limits of the old de minimis regulation, to activities already engaged in before 1 January 2006 in the new ZFUs established by the Law on equal opportunities. Activities created in "first generation" and "second generation" ZFUs between 1 January and 2 April 2006 may be placed under Article 44octies or 44octies A. Updating of references within Article 44octies and Article 44octies A (in Article 45 of the Amending Finance Law for 2007 No of 25 December 2007, Article 2 of the Finance Law for 2010 No of 30 December 2009, and Articles 108 and 129 of the Finance Law for 2011 No of 29 December 2010). 4. Form of the subsidy (grant, loan, tax concession, etc.) Article 44octies: Exemption from profits tax for five years, then a reduction of 60%, 40% and 20% for the first, second and third 12-month periods following the exemption period. For enterprises with less than five employees, a reduction of 60%, 40% and 20% for the first five, the sixth and seventh, and the eighth and ninth 12-month periods following the exemption period. Exempt profits may not exceed 61,000 per taxpayer, per 12-month period. In the "first generation" ZFUs, the exemption is subject to compliance with Commission Regulation (EC) No. 1998/2006 of 15 December 2006 on the application of Articles 87 and 88 of the Treaty to de minimis aid. As regards taxpayers engaging in or creating an activity in one of the "second generation" ZFUs before 1 January 2004 or eligibility for the benefits granted after 1 January 2007, exemption is granted subject to compliance with the aforementioned regulation.

22 Article 44octies A: Exemption from profits tax for five years, then a reduction of 60%, 40% and 20% for the first five, the sixth and seventh, and the eighth and ninth 12-month periods following the exemption period, whether the enterprise employs five or more employees. Exempt profits cannot exceed 100,000 per taxpayer, per 12-month period, increased by 5,000 for each new employee hired from 1 January 2006 who is domiciled in a sensitive urban zone (ZUS) or ZFU and is employed full-time for a period of at least six months. For taxpayers engaged in activities before 1 January 2006 or having created an activity since 1 January 2012 in the "third generation" ZFUs, exemption is granted subject to compliance with Commission Regulation (EC) No. 1998/2006 of 15 December 2006 on the application of Articles 87 and 88 of the Treaty to de minimis aid. - Beneficiaries (who receives the subsidy, the producer, the exporter, other): Industrial, commercial, crafts and non-commercial activities for their new or existing activities established in ZFUs. - Allocation mechanism: By operation of law. - Conditions: Enterprises must carry out an actual activity in a ZFU and must be physically established there, with operating resources for the activity engaged in. In the case of non-sedentary activity established in a ZFU but carried out entirely or partially outside of that zone, the activity is assumed to be carried out within a ZFU when at least one sedentary full-time employee carries out his/her work within the premises located in a ZFU set aside for the activity, or when the enterprise realizes at least 25% of its turnover through clients located in the ZFU. As for the 41 "second-generation" ZFUs, new conditions have been established by Law No of 30 December 2003 regarding payroll numbers, turnover or balance sheet total, holding of capital when the enterprise has been set up as a company, and the enterprise's sector of activity. The conditions regarding payroll numbers and the holding of capital were relaxed by Law No of 18 January 2005 on planning for social cohesion. These conditions also apply to the new "third-generation" ZFUs created by Law No of 31 March A new condition has been established for enterprises with at least one employee that have set up activities in a ZFU as of 1 January 2012: Article 44octies provides that exemption from profits tax is subject to eligibility for exemption from social charges laid down in Article 12 of Law No of 14 November 1996 concerning implementation of the Urban Regeneration Pact. Total amount for 2011: 215 million (amount for 2012: 215 million). Article 44octies: Five years of total exemption, followed by a degressive reduction of 60%, 40% and 20% over three or nine years (depending on whether the enterprise employs less or more than five employees). These measures are no longer applicable to the creation of activities from the day after the date of publication of Law No of 31 March 2006 on equal opportunities, i.e. 3 April Article 44octies A: Five years of total exemption, then a degressive reduction of 60%, 40% and 20% over nine years.

23 Around 23,800 beneficiaries in R&D SCHEMES 3.1 Tax credit to promote research To encourage research activity by enterprises. Articles 244quater B, 199ter B, 220 B and 223 O of the General Taxation Code. 4. Form of the subsidy (grant, loan, tax concession, etc.) Tax concession - tax credit for certain research spending by enterprises. - Beneficiaries (who receives the subsidy, the producer, the exporter, other): Industrial, commercial and agricultural enterprises. - Allocation mechanism: Automatic, on simple declaration. Tax credit equivalent to 30% of research expenditure for the calendar year up to a ceiling of 100,000,000; reduced to 5% for the portion of research expenditure exceeding this ceiling. The tax credit is 40% the first year and 35% the second for enterprises receiving the tax credit for the first time and for those that have not benefited from it for the past five years, subject to a series of conditions, in particular there must be no dependent relationship within the meaning of Article of the General Taxation Code with any enterprise that has benefited from the tax credit over the same five-year period. Note: the 40% and 35% rates have been abolished for tax credit calculated in respect of expenditure as of 1 January 2013 (Article 71 of the Finance Law for 2013 No of 29 December 2012). As regards collection expenditure, in principle the maximum tax credit for research is 200,000 over a period of three financial years, in accordance with the de minimis rule in Commission Regulation No. 1998/2006 of 15 December Conditions: Submission of a declaration indicating the amount of the research expenditure incurred by the enterprise over the calendar year. Total amount for 2011: 3,070 million and for 2012: 2,850 million. In principle, the research tax credit is set off against the profits tax due for the year when the research expenditure was incurred. For the enterprise, any tax credit in excess of the profits tax constitutes a receivable from the State, in the same amount, which is used to pay the profits tax due for the three years following the year for which it is recorded. The portion of the tax credit which remains unused at the end of this period is repaid.

24 For certain categories of enterprises (new enterprises, failing enterprises, young innovative enterprises, SMEs within the meaning of Community legislation ), the research tax credit receivable is repaid immediately. Indefinite period. The aid has no effect on trade as it is linked to the enterprise's research activity and not to its production or commercial capacity. This is a general and non-specific fiscal measure which is not regarded as State aid by the French authorities. 3.2 National Research Agency (ANR) - To create new partnerships between public research and industrial research. - To launch projects in new fields of research and technology. - To foster the development of research and the transfer of technology in the regions. Agreement of 7 February 2005 establishing the National Research Agency Public Interest Group (GIP ANR). Decree No of 1 August 2006 relating to the organization and operation of the ANR. Regulations of 20 December 2007 relating to the procedures for the allocation of aid by the ANR (applicable to calls for projects issued between 2008 and 2012). Decree No of 13 February 2002 relating to State subsidy rates for investment projects and the corresponding advances. - Subsidy (grant) appearing on the green list (Article 8.2(a)) and representing a maximum of 50% of the total cost of the programme for enterprises. In certain cases, governed by Decree No of 13 February 2002, direct government aid may amount to 100% of subsidizable expenditure (associations, foundations, public interest groups - GIP). - All enterprises and public bodies engaged in fundamental research work or pre-competition development activities may apply under the same conditions. - Beneficiaries (who receives the subsidy, the producer, the exporter, other): The ANR is not intended to provide aid to enterprises, but to support research projects. Forty-one calls for projects, 1' of which were open to international bidders, were launched in Forty-nine calls for projects, 15 of which were open to international bidders, were launched in In 2011 and 2012, 8.4% and 8.6% of the grants went to enterprises and around 52% to public research institutions. Overall, some 85% of the grants go to public enterprises (research institutions, universities, engineering schools, etc.).

25 The distribution of grants by type of beneficiary has hardly changed since the creation of the ANR in Commitments made following the ANR's calls for projects since 2005: 2011: 557 million, including 48.1 million allocated to enterprises. 2012: million, including 46.6 million allocated to enterprises. Permanent arrangement. The projects in question are part of the upstream phase of the R&D process. The subsidies have no measurable impact on the trade performance of the enterprises involved. Only scientific and technical content is considered in the selection and evaluation of projects. This is general, non-specific aid within the meaning of the Agreement. The aid is notified strictly in the interests of transparency. 3.3 Technology research institutes (IRT) and institutes of excellence in the field of carbon-free energy (IEED) Under a joint public-private investment approach, the purpose of the scheme is to foster research partnerships by creating a limited number of technological innovation parks with a worldwide dimension that bring together, in a single location, teaching establishments, public and private research laboratories, prototyping and industrial demonstration resources, and industrial players. The purpose of the subsidy is to fund training and R&D activities, as well as feasibility studies conducted by IRTs and IEEDs. It is also designed to cover costs associated with intellectual property rights where the IRTs or IEEDs come under the definition of SMEs given in Annex 1 of Commission Regulation (EC) No. 800/2008. Amending Finance Law for 2010 No of 9 March Subsidy (grant). The beneficiaries are IRTs and IEEDs selected on the basis of criteria of scientific excellence, following a call for projects launched by the ANR under the programme "Investing for the Future". The subsidies are designed to support the implementation of R&D projects by IRTs and IEEDs, either individually or jointly with public and private partners. The aid for each project is allocated on the basis of an analysis by scientific experts. The maximum amount of aid for each project is determined pursuant to Commission Regulation (EC) No. 800/2008.