FCPI Tax-Free: Reduce your taxes with FCPIs

Managing your tax situation is an important lever for optimizing your assets and reducing your income tax. Among the effective solutions for reducing your tax bill, the FCPI (Fonds Commun de Placement dans l'Innovation) stands out for its tax advantages. Not only do these funds enable you to benefit from a tax reduction, they also offer the opportunity to invest in innovative companies. Investing in an FCPI also enables you to diversify your portfolio and adopt a balanced investment strategy.

The FCPI is a collective investment fund that enables investors to support innovative companies, mainly SMEs (small and medium-sized enterprises) and start-ups, while enjoying significant tax benefits. These funds are mainly invested in shares or equity interests in companies with strong growth potential in the technology or healthcare sectors. The FCPI does, however, entail risks, notably of capital loss, low liquidity and uncertain returns, as it invests in developing companies.

One of the main attractions of FCPI funds is the tax benefits they offer investors. By investing in these funds, you can benefit from the government's income tax reduction schemes, while supporting innovative, job-creating projects. Here are the main advantages.

Income tax reduction

FCPI funds enable investors to benefit from an 18% tax reduction on the amount invested, up to a tax ceiling. This benefit significantly reduces tax liability, while supporting innovative projects.

Capital gains exemption subject to conditions

Capital gains realized on the sale of FCPI units may also be exempt from income tax and social security contributions, subject to a minimum holding period of 5 years. This exemption enables investors to maximize their return by reducing their tax burden.

A scheme to encourage innovation and growth

In addition to direct tax benefits, FCPIs enable you to help finance innovative projects and support the economy. By investing in companies developing cutting-edge technologies, you play an active role in value creation and the growth of technology sectors.
 

To benefit from the tax advantages of investing in FCPI (Fonds Commun de Placement dans l'Innovation), several criteria must be met.

Eligibility requirements

The investor must be a private individual domiciled in France. They must then invest in an eligible FCPI, i.e. a fund that invests primarily in innovative, unlisted SMEs in the development phase. The aim is to encourage research and innovation within these companies.

Holding period and investment ceilings

To qualify for the tax reduction, the investment must be held for a minimum period of 5 years. This period guarantees that the investor is actually participating in the financing of innovation over the long term. The maximum investment in a FCPI fund is €12,000 for a single person and €24,000 for a couple, which entitles the investor to an income tax reduction of 18% of the amount invested, subject to the maximum limits.

AMF approval

Finally, it is important to note that FCPI funds must be approved by the Autorité des Marchés Financiers (AMF), guaranteeing their compliance with current tax regulations. This approval also ensures that the fund complies with the transparency and security standards required to protect investors, particularly with regard to the use of funds and the information provided.

Private equity and Fonds Communs de Placement dans l'Innovation (FCPI) are two complementary tools for optimizing wealth. Private equity involves investing in unlisted companies, often start-ups or developing businesses with high growth potential. This type of investment can generate significant returns thanks to the value of the companies and their expansion. Eurazeo Wealth Solutions supports investors in the field of Private Equity, offering investment opportunities via dedicated funds.

FCPI funds invest specifically in innovative companies, such as those in the technology or ecological sectors. They offer a significant tax advantage, enabling investors to reduce their income tax. These funds enable sector diversification, while exposing investors to companies with high growth potential.

By combining Private Equity and FCPI, it is possible to create a complete investment strategy: Private Equity offers direct control and equity investment, while FCPIs enable investors to benefit from tax advantages while supporting innovation.

Investing in unlisted or innovative companies can entail the risk of significant losses, especially given the illiquidity of the assets and the uncertainty associated with the companies' development. Before investing, it is therefore essential to assess your risk tolerance and to consider these investments over the long term.
 

Innovation mutual funds (Fonds Commun de Placement dans l'Innovation or FCPI) can offer interesting opportunities, but they also entail significant risks. These funds invest primarily in innovative companies, often in growth sectors that are also highly volatile. It's important to understand that investing in FCPIs can result in a loss of capital, as innovative companies are often subject to unpredictable market fluctuations. What's more, the low liquidity of some of the companies in which these funds invest can make it difficult to sell shares when needed. Investors should also consider sector risk, which arises when the fund is concentrated on a specific sector, making it vulnerable to fluctuations in that sector.

Investors must be prepared to accept these risks, while maintaining a long-term investment strategy.

To maximize the tax benefits of an FCPI, a number of criteria need to be taken into account. It's important to check that the fund invests in innovative, eligible companies, which enables the investor to benefit from tax breaks. Past performance can provide an insight into the fund's management, although it does not guarantee future results. Management fees should also be examined, as excessive fees can impact net returns. The minimum investment amount is another aspect to consider, while taking into account the investment horizon, generally 5 to 10 years, to take full advantage of tax benefits. It is also advisable to choose a fund managed by a company recognized for its transparency and expertise, as this plays a key role in the success of the investment.

The FCPI offers a unique opportunity to reduce your tax bill while supporting innovation, provided you carefully weigh up the risks and the duration of the investment.