Overseas: what you need to know about the Girardin law

Governed by articles 199 undecies A and C of the General Tax Code, the Girardin law is a tax exemption system. Its aim is to support economic development in the field of industry and social housing, in certain isolated French regions where building materials are expensive.

This then concerns overseas departments and regions (Guadeloupe, Guyana, Réunion, Martinique and Mayotte) as well as overseas communities (French Polynesia, Saint-Barthélemy, Saint-Martin, Saint-Pierre-et- Miquelon, Wallis and Futuna).

In practice, the investor makes a contribution (with lost funds) to a holding company which buys new industrial goods or social housing and receives in exchange an income tax reduction depending on the amount invested, the type project and its location.

The investor also undertakes to lease or operate the property by overseas companies for at least 5 years.

The time between the date of the investment and the tax reduction is very short for this type of device. It is generally one year. This is called a one-shot investment.

Given the complexity of this tax system, many expert professionals offer their services to advise you or support you in your Girardin investment, such as the company Inter Invest and its Girardin system.

The Girardin social housing system was set up to compensate for the major shortages of social housing that exist in the overseas departments, regions and communities.

This type of investment then concerns financing operations in the construction or acquisition of social housing for the benefit of the Social Housing Organization (OLS).

For the investor to benefit from the planned tax reduction, the accommodation must meet certain criteria:

The maximum amount of the gross tax reduction is capped at €60,000. However, a retrocession rate of 70% applies to this amount. This means that 70% of the amount of the tax rebate must be paid back to the social housing organization (OLS) in the form of a reduction in rents and the sale price. Therefore, after the retrocession, the maximum net reduction is €18,000.

The Girardin industrial system encourages industrial development in the DROMs and COMs, where the cost of materials in particular is high. Here, the principle is to buy shares in a company that needs materials to operate.

There are two types of Girardin Industriel investment:

In order for the investor to benefit from his tax reduction, he must finance new productive projects in a company that carries out one of the following activities:

An industrial Girardin investment must also retrocede a percentage of the tax rebate to the operator of the equipment. This is 56% for an industrial Girardin with full rights and 66% for an industrial Girardin with tax approval.