Capital subscription tax relief, JEI, JEIR, ESUS: the 2026 rates

Quick answer. Subscribing in cash to the capital of an unlisted SME gives an income-tax reduction of 18% (Tax Code art. 199 terdecies-0 A), raised to 25% for an ESUS, 30% for a young innovative company (JEI), 40% for an impact young innovative company (JEII) and 50% for a breakthrough young innovative company (JEIR). The payment caps, the carry-forward of any excess and the holding period differ by regime, and JEI, JEII and JEIR share a common envelope of 50,000 euros of reduction over 2024-2028.

Between the base rate and the JEIR rate, the tax benefit goes almost from single to triple. But behind these headline rates lie very different rules: wider payment caps for the JEI, excess lost and non-carryforwardable for the innovation regimes, time-bound subscription windows, and a global cap that can absorb part of the benefit. For the investor as for the start-up preparing a round, reading these rates without reading their conditions leads to poor decisions. The framework is set by article 199 terdecies-0 A of the French Tax Code and its 0 A bis and 0 A ter variants, completed by the 2026 finance law (law no. 2026-103 of 19 February 2026) which created the JEII category. Here is the full picture for 2026.

The scheme, long called the Madelin reduction, rewards risk-taking in the capital of unlisted SMEs.

The reduction equals 18% of the payments made to subscribe in cash to the capital of an eligible SME, at incorporation or during a capital increase (Tax Code art. 199 terdecies-0 A). The subscription must be made in money, and the shares held for at least five years, on pain of the benefit being challenged. This is the common base: the innovation regimes do not create a separate scheme, they raise this rate for certain targets. A useful feature of the base rate: the fraction of payments exceeding the annual cap can be carried forward over the next four years, which is not the case for the raised rates.

Four regimes raise the rate above the 18% base, depending on the nature of the company subscribed to.

For subscription to the capital of an accredited social-utility solidarity firm (ESUS), the reduction is raised to 25%, its application window being set by decree since 28 June 2024; beyond that, keeping this raised rate remains subject to validation by the European Commission (see the watch point below). For a young innovative company (JEI) within the meaning of article 44 sexies-0 A, the rate reaches 30% for payments made from 1 January 2024 to 31 December 2028 (Tax Code art. 199 terdecies-0 A bis). The 2026 finance law added the impact young innovative company (JEII), at 40%, for payments made from 21 February 2026 to 31 December 2028 (Tax Code art. 199 terdecies-0 A ter, 40% for the subscriptions in 3° of I). Finally, for a breakthrough young innovative company (JEIR), defined by research expenses representing at least 30% of charges, the reduction climbs to 50% (Tax Code art. 199 terdecies-0 A ter, 50% for the subscriptions in 1° and 2° of I), for payments made from 1 January 2024 to 31 December 2028. These increases channel savings towards social utility and deep innovation.

The JEII and the JEIR are not the same, and a single start-up usually falls into only one of these categories.

The breakthrough young innovative company (JEIR) targets deep, research-intensive innovation: it is characterised by research expenses representing at least 30% of its charges, which makes it the most capital-intensive and riskiest segment, rewarded with the highest rate (50%). The impact young innovative company (JEII), created by the 2026 finance law, instead targets firms whose business model pursues an ecological or social transition objective, without requiring the same R&D threshold; it gives a 40% reduction. In other words, the JEIR rewards research intensity, the JEII rewards an impact purpose. A company that does not cross the 30% research-expense threshold but carries a transition project will fall under the JEII; a deep-tech firm with heavy R&D will fall under the JEIR. For the investor, this distinction governs both the applicable rate and the nature of the evidence to request from the company.

How eligibility is proven#

JEI, JEII or JEIR status is assessed at company level, at the close of the financial year, against the conditions of article 44 sexies-0 A and its variants introduced by the 2026 finance law. There is no systematic prior accreditation for JEI status: the company assesses its own eligibility, but can secure its position through a binding ruling (rescot) from the tax authority. The ESUS, by contrast, requires a formal accreditation issued by the prefecture. On the investor side, the benefit therefore rests on the subscription certificate and on the status evidence provided by the company: it is up to the company to document its qualification, and up to you to keep these documents in case of an audit.

The headline rate means nothing until you cross it with the cap and with the fate of any excess.

For the base rate, the ESUS, the JEII and the JEIR, the payments giving the right to the reduction are capped at 50,000 euros per year for a single, widowed or divorced person, and at 100,000 euros per year for a married or civil-partnership couple under joint taxation. The JEI is an exception, with clearly higher caps: 75,000 euros for a single person and 150,000 euros for a couple. This particularity applies only to the JEI: it follows directly from the text of article 199 terdecies-0 A bis, which retains payments up to 75,000 euros or 150,000 euros, whereas article 199 terdecies-0 A ter (JEII and JEIR) stays at 50,000 euros or 100,000 euros. Above all, the fate of any excess differs. At the base rate, the fraction of payment above the cap carries forward to the following years. For the JEI, the JEII and the JEIR, the excess fraction of a given year is not carryforwardable: it is simply lost. This is the costliest trap of the scheme, because it argues for spreading payments rather than concentrating everything in a single year.

The reduction does not escape the global cap on tax benefits, and the innovation regimes add an envelope of their own.

The benefit obtained falls within the global cap on tax niches, set at 10,000 euros per year, which may limit combining this reduction with other schemes in the same year. Beyond that, the innovation regimes provide a common envelope, expressly written into the law: the total benefit from articles 199 terdecies-0 A bis and 199 terdecies-0 A ter (so JEI, JEII and JEIR combined) cannot provide a tax reduction exceeding 50,000 euros over the whole period from 1 January 2024 to 31 December 2028. This limit is set out in black and white in both articles, which cross-refer to each other: "the total benefit resulting from the application of the present article and of article [...] cannot provide a reduction in the tax due exceeding 50,000 euros over the period from 1 January 2024 to 31 December 2028". These two caps, the annual niches cap and the 50,000 euros multi-year envelope, stack and must be anticipated from the planning of the payment, failing which part of the expected benefit stays theoretical.

Our view: the headline rate is not the real benefit#

In our investor files, the most common mistake is to reason on the rate alone. A 50% JEIR is appealing, but it applies within a 50,000 euros cap, with no carry-forward of any excess, and it shares with the JEI and the JEII a multi-year envelope of 50,000 euros of reduction. Conversely, a JEI at 30% offers a much wider payment cap, 75,000 euros for a single person, which can produce a higher annual reduction in absolute value despite a lower rate. We therefore always reason in the amount of reduction actually deductible, not in percentage, and we systematically cross the rate, the cap, the carry-forward and the global cap. On the start-up side raising funds, JEI, JEII or ESUS eligibility is a real argument with subscribers, to combine with the structuring of the round, as we describe for love money and business angels and for the pre-seed to series A raise.

The underestimated risk: clawback through early sale#

The benefit is acquired subject to holding the shares for at least five years. An early sale, outside limited exemption cases (death, disability, dismissal, certain suffered events), triggers the clawback of the reduction. In a start-up context, where a buyout or liquidation can occur early, this risk is far from theoretical. An investor who has set their cash flow on the tax gain must factor in that a premature liquidity event can take it back.

A business owner with 75,000 euros to invest brought us two opportunities: a JEI at 30% and a JEIR at 50%. The reflex was to go for the highest rate. Rebuilding the real benefit nuanced the picture. On the JEIR, the payment is retained only within the 50,000 euros limit, that is a reduction of 25,000 euros, the 25,000 euros excess being lost with no carry-forward. On the JEI, the 75,000 euros fall entirely within the cap, for a reduction of 22,500 euros. The gap in reduction narrowed sharply, and the risk of the breakthrough project, earlier-stage and more capital-intensive, remained higher. The decision was not taken on the rate, but on the quality of the project and on the amount of reduction actually deductible in the year, the rest of the budget being directed to the following year to avoid losing the excess.

In practice: securing eligibility and the benefit#

Before paying, we methodically check the following points:

• Confirm the regime targeted by the company (SME, accredited ESUS, JEI, JEII, JEIR) and obtain the supporting evidence: JEI status within the meaning of article 44 sexies-0 A, ESUS accreditation issued by the prefecture, the R&D expense ratio for the JEIR, or the transition purpose for the JEII.
• Calculate the benefit as an amount, not as a rate: apply the payment cap specific to the regime, then check the 10,000 euros global cap and the 50,000 euros envelope over 2024-2028 for JEI, JEII and JEIR.
• Spread payments over several years when the excess is not carryforwardable, so as not to lose the fraction above the cap.
• Obtain and keep the subscription certificate issued by the company, a document required in case of audit.
• Set the holding horizon to at least five years and anticipate the effect of an early buyout or liquidation on the acquired reduction.
• Combine these subscriptions with the overall wealth structuring, where relevant through a holding company, without letting the tax gain steer the decision alone.

A few pitfalls keep coming up in the analysis of these reductions.

• The 25% ESUS rate: durability not guaranteed. This rate is only secured within a window set by decree, and its continuation beyond that depends on validation by the European Commission (State aid). Absent validation, the regime may revert to the 18% base rate or not be extended. The exact end date of the window should be checked at the time of payment against the rules in force: do not set an ESUS payment on the sole assumption that the 25% rate is maintained.
• Confusing the caps: the JEI benefits from 75,000 / 150,000 euros, the other regimes from 50,000 / 100,000 euros. Applying the wrong cap distorts the whole calculation.
• Forgetting that the JEI, JEII and JEIR excess is not carryforwardable, unlike the base rate: the fraction above the cap is definitively lost.
• Overlooking the 10,000 euros global cap on tax niches, which can absorb part of the benefit if other schemes are used in the same year.
• Ignoring the common 50,000 euros reduction envelope for JEI, JEII and JEIR over the 2024-2028 period.
• Taking the benefit for granted without ensuring the shares are held for five years: an early sale challenges it.