Investment in FCPIs and FIPs: we must not be blinded by the tax advantage

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Subscribers article

With 1.1 billion euros in subscriptions last year, FIP and FCPI target wealthy taxpayers in search of tax exemption.
With 1.1 billion euros in subscriptions last year, FIP and FCPI target wealthy taxpayers in search of tax exemption. Leo Torri / AGF Foto / Photononstop

Investing in SMEs to finance the economy, this is what offer innovation mutual funds (FCPI) and other investment funds proximity (FIP), with a carrot tax bonus: they provide a tax reduction equivalent to 18% of the amount invested. With 1.1 billion euros in subscriptions in 2017, FIP and FCPI target wealthy taxpayers in search of tax exemption, customers of private banking network services or wealth management advisors (CGP).

What is it about ?

Founded in 1997, under the leadership of the then Secretary of State for Research, François d'Aubert, the FCPIs are intended to finance innovative start-ups. As for the FIPs, they were created in 2003 with characteristics close to the FCPIs, except that the innovation criteria were replaced by an investment constraint in regional SMEs.

FIPs and FCPIs must invest at least 70% of their assets in companies with less than 250 employees with a turnover of less than 50 million euros or a balance sheet of less than 43 million euros, according to the official definition SMEs by the European Union. "To be eligible for FCPIs, innovative SMEs must also invest 10% of their current expenses in research and development, or obtain the innovative company label from BPIFrance"explains Eric Gaillat, founder of Calao Finance, a management company of FIP and FCPI.

What tax benefit?

Since 2012, the FIP and FCPI give right to 18% tax reduction, within a limit of 12 000 euros investment per year for a single person, and double for a couple. Today, a single person can have up to 2,160 euros of tax reduction a year by investing 12,000 euros in FCPI and as much by investing in FIP, or 4,320 euros for 24,000 euros of investment divided half- half in FIP and FCPI. These ceilings are doubled for a couple. The tax authorities even give an extra boost for investment in Corsica, the relevant FIP ​​benefiting from a tax reduction of 38%. Vatel Capital and Calao Finance are still offering this year.

What performance?

Attracted by the tax cut and the prospect of enriching themselves with future French nuggets, subscribers of FIP and FCPI are often disappointed by their results, as evidenced by their regular claims. "Savers are not sufficiently aware that the tax advantage granted by the state is the counterpart of a real risk", summarizes Marielle Cohen-Branche, mediator of the Autorité des marchés financiers (AMF). Their main complaints are related to losses and blockage of capital.