The 2012/01/02 at 15:00
Supporting economic development overseas while reducing one’s own tax (in accordance with the LODEOM law on France’s overseas development outside of the mainland). This is the recipe offered by the “Girardin Industrial” scheme. GPS Finance is a financial and tax engineering firm specialised in the assembly and follow-up of tax exemption operations stemming from Article 199 undecies B and 217 undecies of the Girardin Industrial Bill. This legal text, currently in force, grants tax reductions in exchange for investments in corporate industrial equipment on the territory of the DOM-COMs (French overseas departments and authorities), through an SNC (société en nom collectif or general partnership) or an SAS (société par actions simplifiée, similar to a limited liability company, editorial note).
“The products in question are various types of production equipment such as agricultural greenhouses, irrigation systems, mechanical tractors or construction site equipment,” indicates Franck Imbert, the company’s Sales Manager. “Tax break beneficiaries may be natural persons or companies in mainland France.” To take advantage of this system, mainland French companies must have a corporate tax bill upwards of 100,000 euros. As for an individual, a minimum income tax bill of 10,000 euros is required. “By investing 10,000 euros with, for example, 30 % in yield, the tax reduction comes to 13,000 euros,” specifies the Manager.
Sums invested are to solely benefit operators residing in the DOM-COMs, primarily Guadeloupe. To qualify, they must present clean balance sheets for at least the last five years and have the capacity to finance themselves for the material purchased, in order to benefit from a significant tax break and an equipment buyback rate, after a five-year period, of 1 symbolic euro. Mainland French companies benefiting from this system are often SMEs with 50 to 100 employees, or smaller innovative companies in the IT sector for example, whose pre-tax profits are considerable. For larger companies, GPS Finance offers the setting up of an investment schedule, over two to three years, for more flexible starting costs and the generation of more regular savings.
What is also interesting is being able to benefit from what is known as a “one-shot” operation, that is investment exclusively for the tax year currently underway. “If a company has an excess of cash one year due to good performance, it can choose to participate straight away in an economic development project in a DOM-COM, benefiting from the associated tax break rather than paying extra tax the following year,” continues Franck Imbert. “This participation will correspond to a share in tax reduction for that same year.
A maximum of precautions are taken to make the investment secure. The work of GPS Finance consists in checking with the operator’s banking and accountancy experts to verify the sound economic health of the operator who will benefit from the investment. “Even when the operator’s situation is judged satisfactory for all players involved, we opt for a specific insurance coverage that covers, in case of default, financial loss relating to the operation,” indicates Franck Imbert. “Finally, we have also chosen to simultaneously invest in a minimum of four supports. In this way, if one of these four companies nonetheless defaults, the consequences on the global result remain minimal. Risk is thus pooled. With these different levels of precaution, the tax payer or the company choosing an operation under the Girardin Industrial system is thus optimally protected from possible economic dangers, although all tax breaks are related to a notion of risk taking.”
Since 2007, the firm has successfully notched up over 150 operations of this type. Indeed, after monitoring by tax authorities for all these projects, none has been reclassified or caused any losses for the beneficiary, thanks to legal and administrative rigour, and complete transparency due to comprehensive technical dossiers available to GPS Finance partners, namely independent asset management consultants (“CGPI” in French), public accountants, notaries and private banks.
The head office of GPS Finance is in Guadeloupe. This local presence alongside operators who benefit from the investments via the Girardin Industrial Bill is a precious asset. Franck Imbert explains that this situation “allows us to judge for ourselves, without any intermediary, the size of the operation, the coherency of material needs with this operation and its development. We also observe the state of the local market in question. We have optimised visibility over all of activity, enabling us to provide independent asset management consultants, public accountants, notaries and lawyers, with an entirely finalised and reliable product in terms of security.”