FCPI and FIP 2026: income-tax reduction, risk and liquidity

Quick answer. FCPI (innovation mutual funds) and FIP (local investment funds) grant an income-tax reduction of 25% of the amounts paid in 2026, capped at EUR 12,000 for a single person and EUR 24,000 for a couple per fund category, raised to 30% for Corsica and Overseas FIP. In return, the shares are locked up for 5 to 10 years, exposed to a risk of capital loss and burdened with high fees. The reduction falls within the overall EUR 10,000 tax-break cap. A tax gain never offsets a capital loss: the investment must stand on its own merits.

FCPI and FIP let you invest in unlisted SMEs while cutting your income tax. The FCPI targets innovative companies, the FIP regional SMEs within a defined geographic area. It is a form of private equity accessible to individuals, but with a risk profile unlike a classic investment: you must understand it before subscribing, as with any choice to invest in an SME.

For an already heavily taxed director, these funds can complement an overall wealth-optimisation strategy, provided you do not confuse the tax advantage with investment quality.

An FCPI or FIP is a fund managed by an authorised management company, which invests in a portfolio of unlisted SMEs. By subscribing to shares, you become the holder of a fraction of that portfolio.

• FCPI. At least 70% of the assets are invested in companies qualified as innovative under regulatory criteria.
• FIP. The fund invests in regional SMEs, within a limited geographic area (a few neighbouring regions). Specific FIP target Corsica and the Overseas territories.
• Management company. It selects, monitors and sells the holdings. Its skill and fees directly affect your performance.

• Rate. The income-tax reduction is 25% of the amounts paid for subscriptions made since 28 September 2025 (against 18% previously), under Article 199 terdecies-0 A of the tax code. It is raised to 30% for Corsica and Overseas FIP.
• Cap. Amounts paid are retained within the limit of EUR 12,000 for a single person and EUR 24,000 for a couple, per fund category. The maximum reduction is therefore EUR 3,000 (single) or EUR 6,000 (couple) per category at the 25% rate.
• Tax-break cap. This reduction falls within the overall EUR 10,000 annual tax-break cap.
• Holding condition. You must keep the shares for at least five years to retain the advantage. On exit, any capital gains are exempt from income tax (but remain subject to social levies).

The tax advantage comes with a downside subscribers often underestimate.

• Capital-loss risk. The funds invest in unlisted SMEs, inherently risky. The loss can be partial or total. A 25% reduction does not protect against a 40% drop in the value of the shares.
• Lock-up and illiquidity. Shares are locked up for 5 to 10 years; the real duration is often near the upper limit. During this period, you cannot recover your funds: liquidity is virtually nil.
• High fees. Entry and annual management fees (often 3 to 5% a year) significantly reduce the net performance. Compare them before subscribing.

This is a different logic from property tax relief, which leaves a tangible asset, or from Girardin industriel, which is sunk-cost but without market risk on a retained asset.

The director already at the tax-break cap. If your other advantages reach EUR 10,000, FCPI/FIP add no further reduction. Check your situation before subscribing.

The exit after five years. The income-tax exemption on capital gains only applies after five years of holding; social levies remain due. And the exemption is worthless if there is no gain.

The link with the IFI. These funds do not reduce the IFI (which only covers real estate); for the IFI, see our article on the director's IFI.

• Tax does not rescue economics. A 25% advantage is quickly erased by a capital loss: first judge the quality of the fund and the management company.
• The real duration often exceeds 5 years. Anticipate a lock-up of 7 to 10 years and total illiquidity.
• Fees matter. At equal gross performance, high fees can turn a gain into a net loss.
• Past performance is no guarantee. Examine the management company's track record without treating it as a guarantee.
• The tax-break cap applies. Coordinate these reductions with your other advantages to stay within EUR 10,000.

Recently, a heavily taxed director was considering subscribing to FCPI to cut his tax. The sales pitch led with the 25% reduction. We refocused the analysis on the essentials: net return after fees, capital-loss risk and the real lock-up duration. The conclusion is simple: the 25% tax advantage does not cover a loss risk that can exceed it, and the annual fees erode performance throughout the holding period. We recommended strictly limiting the allocated share and treating it as a risky investment, not a mere tax reduction.

Our conviction, as accountants registered with the Ordre, is that FCPI and FIP are only justified for genuinely taxed individuals, who accept the risk of unlisted assets and a long lock-up, and who have first assessed the fund's quality. The tax advantage is a bonus, never the reason to invest. For a director, this choice fits an overall wealth management, sized to their risk capacity.

Hayot Expertise advice. Before subscribing, ask yourself three questions. Can you lock up these funds for 5 to 10 years without needing them? Do you accept a capital-loss risk that may exceed the tax advantage? Do the management company and fee level seem sound? If yes to all three, limit the allocated share and treat the deal as a risky investment, calibrated to your tax and risk tolerance. Otherwise, a more liquid investment or a tangible asset will be preferable.