4. Case examples – Policies for institutional conditions

The Entrepreneur’s Desk (Balcão do Empreendedor) initiative aims to simplify entrepreneurship and business management by offering a digital single point of contact for entrepreneurs and business managers. It allows them to (i) obtain all information regarding the development of an economic activity in Portugal, (ii) carry out administrative procedures online, including payments and (iii) obtain public services online when possible. The initiative also aims to reduce and simplify procedures as much as possible (e.g. reducing licensing requirements) in addition to digitising core processes.

Regulatory simplification is expected to reduce starting and operating costs for entrepreneurs and SMEs, hence facilitating business creation and boosting competitiveness: complying with regulatory requirement can be costly and time consuming for businesses, and identifying the appropriate administrative interlocutor for different procedures is complex. Licensing procedures were particularly cumbersome and hard to navigate in Portugal prior to the introduction of the Entrepreneur’s Desk, as various administrative levels were involved.

The Entrepreneur's Desk is an online platform for simplification and digitalisation of procedures regarding business creation. It acts as a single point of contact for entrepreneurs. It provides information (e.g. on legal requirements, procedures and available services) and allows entrepreneurs to carry out administrative procedures (e.g. incorporation, brand registration) and access public services online.

By mid-2016, more than one thousand procedures had been “dematerialised” (made available online), often simplified and made available to entrepreneurs through the Desk through the process of revising 163 laws and regulations. Notably, three important regulatory simplification initiatives were carried out through the Entrepreneur’s Desk. First, the Zero Licensing initiative1 eliminated the need for several licenses, replacing them by a simple communication through the Entrepreneur’s Desk. It aimed to simplify the processes of installation, modification and closure of certain establishments (catering and drinking establishments, businesses dealing with trade in goods, provision of services or storage), which previously involved contacts with multiple interlocutors at local and national levels. A second measure of note is the Industrial Licensing Service available through the Entrepreneur’s Desk. The service is part of the Responsible Industry System (SIR)2 initiative, which aims to boost economic growth and employment by facilitating private investment, in particular for industrial development, develop more streamlined and transparent public services, and foster accountability. The SIR also reinforces ex-post control mechanisms, safeguarding public and environmental safety. Third, the Local Accommodation Registry simplifies and digitises the administrative procedures linked to licensing businesses that provide temporary accommodation services, and modifying or ceasing such activities.

The Simplex+ 2016 programme, a government-wide regulatory simplification and administrative modernisation initiative, included several measures to further the Entrepreneur’s Desk initiative, notably the Entrepreneur’s Desk+ (Balcão do Empreendedor +) measure, which extended the licensing procedures available online to six new sectors of activity3. As part of Simplex+ 2017, a Map of Trades, Services and Restaurants linked to the Entrepreneur’s Desk has been developed. The map aims to create an online georeferenced database of existing commercial products and services in Portugal. This database aims to provide information to support the public administration to monitor, evaluate and design public policies for the commerce and services sector and, allow businesses to better evaluate and identify opportunities.

The Simplex+ 2018 programme merged the Entrepreneur’s Desk and the Citizen’s Portal (the corresponding one-stop-shop platform for citizens) into a single platform, the ePortugal portal, which aims to facilitate interaction with the State for natural persons and business entities by implementing a single platform for all documents and electronic procedures. ePortugal was launched in February 2019 and acts as the national “Single Digital Gateway”.

Portugal has a public administration digital transformation strategy, ICT 2020, which includes the principles of “digital by default” and interoperability between different systems. The European Services Directive4 was transposed into the Portuguese legislation in 2010, establishing principles on simplifying access and exercise of economic activities, namely digitally. The Entrepreneur’s Desk initiative was introduced the following year as a means to address the requirements of this Directive, and was further developed as part of a wider national effort to simplify interactions with the state and move towards more digitalised public services. These efforts are grouped under a series of umbrella initiatives, namely the Simplex programme (2006-11), with subsequent initiatives including the Simplificar programme in 2014 and the most recent Simplex+ 2017, Simplex+ 2018 and Simplex 2019 series of measures. The Simplex programmes involve the civil society and business associations in their development process through various meetings in different regions with representatives from the general public and different institutions to identify needs and generate suggestions for administrative simplification and digitalisation. The programme also involves public servants through the “Simplex Jam” meetings, collaborative work sessions between workers from different State services, where everyone can discuss ideas and proposals to modernise services and simplify procedures.

The implementation of the Entrepreneur’s Desk measures developed through the Simplex programmes is monitored through the Simplex platform which reports the level of implementation of all measures.

An impact assessment of 40 measures of the Simplex+ 2016 and 2017 programmes, funded by the European Commission, was released in late 2019.

Up until January 2020, a total of 320 processes were fully dematerialised, affecting 23 regulations. If information services (i.e. non-transactional) are considered, over 1 000 services are accessible through the Entrepreneur’s Desk. Because the implementation of many of the Entrepreneur’s Desk measures are in early stages, no impact assessment is yet available. However, the programme estimates a significant reduction of the administrative burden for entrepreneurs: an estimated 6 applications and 83 additional documents were needed to start a business before the reform, involving an average of 11 visits to four public services and assessments by a range of regulators and technicians for licenses.

By centralising the business registration and licensing process, the Entrepreneur’s Desk is also expected to improve transparency and incentivise municipalities to compete in terms of improving ease of administration for entrepreneurs.

In 2011 and 2012, around 2 000 requests per year were submitted through the Entrepreneur’s Desk. This number has been steadily increasing since, reaching 10 000 requests in 2014 and 80 000 in 2019. Licensing procedures accounted for nearly all requests in 2014, and around 70 000 requests in 2019. Most requests are made with the help of local services (90% over February 2014 – February 2015) and training was provided to municipalities to support adoption of the platform.

In the 2019 Impact Assessment mentioned above, the measure “Entrepreneur’s Desk +, from Simplex 2016 edition, was evaluated. Findings estimate a total cost savings of EUR 1 386 039 (EUR 712 302 from savings for the Public Administration and EUR 673 737 from beneficiaries’ savings), and increased Gross Value Added of EUR 1 064 215.

Challenges revolve mainly around the need to implement a Single Point of Contact with the entrepreneur, while maintaining the constitutional right of every municipality in establishing their own rules, regulations and taxes. This is also true, though to lesser extent, for each of the agencies in the central government administration. The central government involved municipalities and other relevant administrations in the development of the Entrepreneur’s Desk and subsequent simplification and digitalisation initiatives conducted through the Desk.

The Simplex process involves a stakeholder consultation, which allows the programme to identify areas for further modernisation and simplification, namely regulatory. This led to further developments of the Entrepreneur’s Desk, such as the inclusion of several simplified licensing procedures for specific trades and sectors and the combination of the Entrepreneur’s Desk, the Business Portal and the Citizen Portal to facilitate procedures and avoid procedure and document duplication.

The simplification and centralisation of business procedures through the Entrepreneur’s Desk is thought to have improved transparency for entrepreneurs and reduced barriers to entry, especially with regards to reduced or eliminated licensing procedures.

Key lessons to take into account for developing and implementing a similar measure in other contexts include:

  • Involvement of stakeholders was identified as a success factor for the Entrepreneur’s Desk design and implementation, namely to ensure that the system can be integrated into existing frameworks (taking into account local regulations and taxes) and is compatible with all IT systems upon its launch. The Entrepreneur’s Desk programme is expanded and updated progressively through the Simplex programme and other processes, allowing for user feedback to be incorporated. The use of stakeholder consultations is also thought to have improved uptake.

  • Similar measures should consider including cost-effectiveness criteria while digitalising entrepreneurship-related procedures. The Entrepreneur’s Desk (and Simplex) programme requires that new developments keep the cost identical or lower than previous procedures for users and for the administration. Programmes should consider setting up an appropriate monitoring and evaluation methodology to allow for such cost-effectiveness assessments to be made ex-ante and impact assessments ex-post.

  • Resources should be allocated to training the staff who will be required to use the platform with entrepreneurs as part of its introduction.


AMA (2019), “Sobre ePortugal”, Administrative Modernization Agency, https://eportugal.gov.pt/sobre (accessed on 23 May 2019).

AMA (2019), “Medidas”, Administrative Modernization Agency, www.simplex.gov.pt/medidas (accessed on 14 May 2019).

Caçador, F. (2015), “Zero Licensing and Entrepreneur’s Desk united to simplify business procedures”, Joinup, European Commission, https://joinup.ec.europa.eu/document/zero-licensing-and-entrepreneurs-desk-united-simplify-business-procedures (accessed on 23 May 2019).

EC (2018), eGovernment in Portugal, European Commission, https://joinup.ec.europa.eu/sites/default/files/inline-files/eGovernment_in_Portugal_2018_0.pdf

Government of Portugal (2017), Programme Simplex+ 2017, www.simplex.gov.pt/app/files/cd198ba7615a8ece81f4e6431c52c5fd.PDF (accessed on 14 May 2019).

OECD and EC (2017), “Entrepreneur's Desk”, STIP COMPASS database, https://stip.oecd.org/stip/policy-initiatives/2017%2Fdata%2FpolicyInitiatives%2F14250 (accessed on 14 May 2019).

The tax incentives aim to increase the supply of finance available to innovative start-ups by encouraging more investors to make investments in new and existing Australian firms. This is part of a suite of tax incentives that seek to improve the alignment of the tax system with a culture of entrepreneurship and risk-taking.

Many small firms in Australia struggle to obtain external finance between firm creation and the point where their activities generate revenue. Exit rates are often very high during this period of the business life cycle because firms are unable to generate enough revenue to cover their operating costs (Bloch and Bhattacharya, 2016). Therefore these tax measures aim to bridge the funding gap between pre-concept stage financing (often self-funding) and government incentives such as the refundable R&D tax credits and larger risk capital investments.

The tax incentives for early stage investors were introduced in July 2016 and are contained in Division 360 of the Income Tax Assessment Act 1997. These incentives provide eligible investors with:

  • a 20% non-refundable carry-forward tax offset on amounts invested in qualifying early-stage innovation companies (ESICs), with the offset capped at AUD 200 000 (approx. EUR 124 300) per investor per year (on an affiliate-inclusive basis); and

  • a 10-year exemption on capital gains tax for investments held as shares in an ESIC for at least 12 months, provided that the shares held do not constitute more than a 30% interest in the ESIC.

The tax incentives are designed to connect innovative start-ups with investors that have both the requisite funds and business experience to assist entrepreneurs in developing successful innovative companies, particularly at the pre-commercialisation phase where a concept is in development but the company requires additional investment to assist with commercialisation. To qualify under these tax incentives, both the company receiving investment and the investors must be eligible.

A company will qualify as an ESIC at the time of investment if it passes the “Early-stage Test” and either the “100 Point Test” or the “Principles-based Innovation Test”. In addition, a company may seek a ruling from the Australian Taxation Office as to whether its circumstances meet the principles-based test of an innovation company.

To pass the Early-stage Test, a company must:

  • have had expenditure of AUD 1 million (approx. EUR 609 000) or less in the previous tax year;

  • have had assessable income of AUD 200 000 (approx. EUR 124 300) or less in the previous tax year;

  • not be listed on any stock exchange;

  • be incorporated in Australia in the last three years; or have an Australian Business Number in the last three years; or be incorporated in the last six years with total expenditure in the previous three tax returns not exceeding AUD 1 million (approx. EUR 609 000).

The 100 Point Test is a self-assessment test: the company must assess itself against a set of innovation criteria using independent evidence, tax records and registration documents. It must award itself between 25 and 75 points for each criterion (e.g. R&D tax expenditure, undertaking an eligible accelerator programme, has enforceable rights on an innovation) and the company is considered an ESIC if it obtains at least 100 points.

Finally, to be qualified as an ESIC under the principles-based innovation test, the company must be able to demonstrate with existing documentation (e.g. business plan, commercialisation strategy) that it meets the following five requirements:

  • be focused on developing a new or significantly improved innovations for commercialisation;

  • have innovation with a high growth potential;

  • have the potential to successfully scale up that business;

  • have the potential to address a broader than local market; and

  • have the potential to have competitive advantages for that business.

The self-assessment tests were designed using a consultation process with the business community to help ensure that they reflect the different contexts for innovation. Moreover, allowing companies to self-assess against one of two tests increases the chances that a start-up will qualify to benefit from the tax measures because self-assessment makes the criteria more adaptable to different circumstances.

All types of investors can benefit from these tax measures, regardless of the method of investment5 (i.e. directly as an individual or corporation, or through a trust or partnership). However, “widely held companies” (i.e. those whose shares are distributed over large numbers of shareholders and traded daily over the stock markets) and 100% subsidiaries of these companies are not eligible. Moreover, trusts and partnerships are not directly entitled to the tax offset. However, specific rules apply in these cases to ensure the value of these tax incentives flow through to beneficiaries and partners, where such an investment method is chosen. To support investors in making their investment decisions, the Australian Taxation Office has created an online tool6.

These tax incentives are part of the National Innovation and Science Agenda (NISA) that seeks to stimulate innovation. The NISA contains 24 complementary measures focused on four key pillars:

  • Taking the leap: supporting entrepreneurs by increasing the supply of finance, embracing risk, adopting innovative ideas, and supporting the commercialisation of public research.

  • Working together: increasing collaboration between industry and researchers to create jobs and growth.

  • Best and brightest: developing and attracting world-class talent.

  • Leading by example: the Australian Government will lead by example by embracing innovation and becoming more agile.

Treasury reports on the usage of these tax provisions annually, based on administrative sources.

The tax measures have been independently assessed by several academic and tax policy specialists. These evaluation reviewed the impact of the measures in Australia and compared it against similar measures in other countries.

The tax incentives for investors in early stage innovation companies (ESICs) scheme is administered by the Australian Taxation Office. The measure commenced on 1 July 2016 and in the first two years of the scheme around AUD 630 million (approx. EUR 388 million) was invested in ESICs. Academic research on the impacts of this type of intervention typically report increases in early-stage investment, but evaluations often note that it is difficult to attribute this directly to the new tax measures. In addition, some researchers have suggested that guidance for investors could be improved (Brass and Trewhella, 2017; Bloch and Bhattacharya, 2016).

Research comparing the scheme with similar schemes in other countries using stylised scenario analysis where an investor is faced with a choice of making an investment in an early-stage company in Australia or the United Kingdom (UK)7 finds that the effective annual return on net investment after three years is lower under the Australian scheme relative to the UK scheme (18.5% vs. 38.6%) (Deloitte, 2019). It must be noted, however, that the Australian scheme is still in its infancy whereas the UK scheme was introduced in 1994.

The main challenge faced by the tax incentive was a low level of awareness among the population of potential investors and innovative start-ups in spite of efforts to promote the measures when it was launched (Financial Review, 2017).

An ongoing challenge is that some companies have faced difficulties convincing the tax authorities that they qualify as an innovative start-up. The process of obtaining a ruling requires firms to present their intellectual property, which can act as a disincentive for seeking investment through this mechanism (Financial Review, 2017). However, the self-assessment was designed to avoid exposing intellectual property and is used far more frequently than rulings from the Australian Taxation Office.

Although this tax incentive is relatively new, the experience offers some lessons for other countries since it itself is modelled after tax measures from the United Kingdom. Key lessons include:

  • Learn from international good practices. This tax incentive was modelled after the Seed Enterprise Investment Scheme in the UK, which was ranked by the European Commission as the most effective tax incentive for business angel and venture capital investment in new and small firms (European Commission, 2017). The adaptation of this successful UK scheme reduced the development time for the Australian incentive.

  • Invest in stakeholder consultation. The tax scheme relies heavily on a self-assessment process to determine the eligibility of firms and investors. It is therefore critical to ensure that the criteria are clearly defined, easily understood and sufficiently flexible to capture all of the targeted activities in different sectors. Defining appropriate self-assessment criteria required a strong consultation process with business and research communities to ensure that as many scenarios as possible could be considered.

  • Increase impact by putting resources into awareness raising. The main challenge faced during the initial years was a low level of awareness among targeted firms and investors. Greater efforts in promoting the new tax measures likely would have increased take-up, and therefore the impact of the measure. At the same time, evaluations suggest that guidance materials were not always well-understood by targeted firms so even when they were aware of the tax scheme, firms did not take advantage of it because eligibility was difficult to obtain for some of the targeted firms.


Australian Government, The Treasury (2019), “Tax incentives for early stage investors”, available at: https://treasury.gov.au/national-innovation-and-science-agenda/tax-incentives-for-early-stage-investors.

Australian Taxation Office (2019), “Tax incentives for early stage investors”, available at: https://www.ato.gov.au/Business/Tax-incentives-for-innovation/In-detail/Tax-incentives-for-early-stage-investors/.

Bloch, H. and M. Bhattacharya (2016), “Promotion of Innovation and Job Growth in Small‐ and Medium‐Sized Enterprises in Australia: Evidence and Policy Issues”, Australian Economic Review, Vol. 49, No. 2, pp. 192-199, https://doi.org/10.1111/1467-8462.12164.

Brass, J. and M. Trewhella (2017), “Early stage innovation companies - A deeper dive”, Taxation in Australia, Vol. 51, No. 8, pp. 427-431.

Colgan, P. (2018), “Tax breaks drew $300 million in investment for Australian start-ups in a single year”, Business Insider, available at: https://www.businessinsider.com.au/startup-investment-australia-impact-of-tax-breaks-2018-2.

Deloitte (2019), “ACS Australia’s Digital Pulse 2019: Booming today, but how can we sustain digital workforce growth?”, available at: https://www.acs.org.au/insightsandpublications/reports-publications/digital-pulse-2019.html.

European Commission (2017), “Effectiveness of tax incentives for venture capital and business angels to foster the investment of SMEs and start-ups”, Taxation Papers, Working Paper No. 68 – 2017, available at: https://ec.europa.eu/taxation_customs/sites/taxation/files/taxation_paper_69_vc-ba.pdf.

Financial Review (2017), “Early Stage Innovation Company investor tax breaks misunderstood”, available at: https://www.afr.com/work-and-careers/careers/early-stage-innovation-company-investor-tax-breaks-misunderstood-by-founders-investors-20170504-gvyr4x.

OECD (2017), OECD Economic Surveys: Australia, OECD Publishing, Paris, https://doi.org/10.1787/eco_surveys-aus-2017-en.

The objective of the Zones Franches Urbaines – Territoires Entrepreneurs (Urban Free Zones – Entrepreneurial Territories, ZFU-TE) is to foster economic development and job creation in urban distressed areas. The programme aims to trigger a direct reduction of local unemployment through new firm creation in the areas and the local job creation requirement of the scheme.

It also aims to generate a ripple effect of agglomeration, whereby the increased business activity incentivised by the programme would render the zones more attractive to other firms. This offers the potential to increase local economic dynamism, the availability of services and improve the environment and the quality of life of the residents (Lafourcade and Mayneris, 2018).

Residents of disadvantaged urban neighbourhoods are often at a disadvantage when looking for employment, in part because they are isolated from the type of jobs they can access because of physical distance, transport costs, or poor connections to public transport. This spatial mismatch leads to higher unemployment than surrounding areas and is not corrected by employment incentives with no geographical sensitivity, such as blanket reductions on social contributions on labour. The ZFU-TE programme aims to reduce spatial mismatch by bringing jobs closer to job-seekers. Moreover, other factors affect the employability of people living in disadvantaged neighbourhoods, including lower educational achievements and discrimination based on names and place of residence. By conditioning tax exemptions in ZFU-TE to local employment, the programme aims to offset some of these challenges (Lafourcade and Mayneris, 2018).

The ZFU-TE are areas covering disadvantaged neighbourhood of 10 000 or more inhabitants. They focus on areas combining several challenges such as high unemployment, high share of youth without higher education, and low tax potential8. Each of the 100 ZFU are related to one or more priority neighbourhoods (quartier prioritaire de la politique de la ville – QPV), which are neighbourhoods (of 1 000 or more inhabitants) with a high concentration of low-income households (Ministère de la Cohésion des Territoires et des Relations avec les Collectivités Territoriales, 2019; French Government, 2017). Criteria for QPVs and ZFUs have evolved over time.

Companies starting up or creating jobs in these areas benefit from temporary exemptions from taxes on profit. The exemption is total (100%) for the first five years and decreases progressively afterwards, going down to 60% for the sixth year, 40% for the seventh year and 20% for the eighth year of activity in a ZFU-TE.

The programme is open to all companies with 0 to 50 employees and a turnover under EUR 10 million, regardless of legal form. Some sectors (car manufacturing and shipbuilding, textile fibre manufacturing, steel, road freight, furniture leasing and rental of non-professional buildings, agriculture, and construction and sales) are excluded from the programme.

To be eligible, companies with two or more employees must fulfil either one of these conditions:

  • Staff residing in the ZFU-TE or the corresponding QPV must make up at least 50% of staff on either permanent contracts or short-term contracts of more than 12 months, or

  • Staff residing in the ZFU-TE or the corresponding QPV must make up at least 50% of all staff recruited since the move in the ZFU-TE on either permanent contracts or short-term contracts of more than 12 months.

The ZFU scheme evolved over time. It was initially started in 1996 as part of a wider set of measures aiming to foster development in deprived neighbourhoods. Initially, the scheme targeted disadvantaged neighbourhoods according to a three-tier system, the most disadvantaged tier being the ZFU. There were 44 ZFU in the first generation of the programme. Disadvantaged neighbourhoods benefited from tax breaks and social contribution exemptions whose generosity depended on the tier. A second wave of ZFU was initiated in 2004, identifying 41 additional ZFUs among neighbourhood previously covered in the second tier. An additional 15 ZFUs were added in 2006 (Briant, Lafourcade and Schmutz, 2015).

The programme was initially scheduled to run until 2001. It was later extended multiple times. The latest extension of the programme is scheduled to apply to all firms setting up in one of the ZFUs until 31 December 2020 (Commissariat général à l’égalité des territoires, 2016).

The ZFU-TE are part of a wider Urban Policy (Politique de la Ville) which aims to boost the development of disadvantaged urban areas and reduce territorial inequalities through a holistic approach involving local government and relevant non-governmental stakeholders. In 2016, the ZFU scheme represented 7% of the total budget for Urban Policy (Lafourcade and Mayneris, 2018).

The first systematic evaluation of the programme was commissioned by the government in 2009 (Briant, Lafourcade and Schmutz, 2015). Several evaluations of the ZFU programmes were conducted over the years, using KPIs measuring employment, wages and business creation. KPIs included:

In addition, the ZFU scheme was covered in several comparative studies assessing the impact of enterprise zones programmes in different countries (Chaudhary and Potter, 2019; Malgouyres and Py, 2016).

Overall the various evaluations conducted find that ZFUs were successful in attracting existing and new businesses which went on to create jobs. However, they also suggest an important displacement effect. A significant portion of firms settling in ZFUs were relocating, affecting the location of jobs but not necessarily creating new ones. Job creations were also concentrated in low-wage job categories. Some evaluations also suggest that the effect of ZFUs tapered down over time. Moreover, effects varied from one ZFU to another, with ZFUs starting off with relatively better characteristics (notably the level of connections with neighbouring areas) benefitting disproportionately from the measure (Lafourcade and Mayneris, 2018) with the exception of wage levels, which were slightly higher for more isolated ZFUs (Briant, Lafourcade and Schmutz, 2015).

Specific evaluation results include the following:

  • A 2008 evaluation of 41 ZFUs found a 15% increase in employment in the zones and a 24% increase in the number of firms, among which one-third were new and two-thirds were relocated (Rathelot and Sillard, 2008). The evaluation estimated that each job created costed between EUR 11 000 and EUR 73 000 in 2019 current prices (Chaudhary and Potter, 2019). The job creation was concentrated in the first year.

  • A 2013 evaluation found a 25% increase in firm births and a doubling of relocations. It also found a positive impact on the number of jobs and hours worked, but the effect was only significant in the first year (Givord, Rathelot and Sillard, 2013). A 2017 evaluation found a 27% increase in the probability that a firm will set up in the ZFU rather than the non-ZFU part of a municipality. The study also found a 24% increase in employment, with the rise being more pronounced in low-wage jobs (Mayer, Mayneris and Py, 2017).

  • Givord et al. (2018) estimated that after 2002, the flow of new enterprise to first generation ZFU no longer creates net employment but only offsets establishment closures in the areas. Explanations include a possible low competitiveness of participant firms leading them to fail at the end of the exemption period. Another explanation is the raise of mainstream (i.e. not geographically limited) tax exemptions on low income jobs during the 1990s and early 2000s, undermining the attractiveness of ZFUs.

The ZFU-TE (formerly ZFU until 2015) faced a number of challenges and evolved over time. Beyond the displacement effects discussed above, challenges included avoiding a mailbox effect, whereby firms open a small office in the designated area to benefit from the tax rebates but without creating significant new activity. This was addressed through conditioning advantages to local employment clauses for firms with employees.

Another challenge for the programme was to make sure that the jobs created benefit residents of the area (Lafourcade and Mayneris, 2018). With this objective, the condition on creating local jobs was strengthened over time. In 1997, firms needed to make 20% of their new hires from local residents. In 2002, this share was brought up to 33%. It was set to 50%, the current rate, in 2012 (Givord and Trevien, 2012). Moreover, a subsidy for firms hiring workers from QPVs (emplois francs) was also introduced. The programme was tested as a pilot in 2018-19 and extended to all QPVs in January 2020 (French Government, 2020).

Another issue faced by the programme was the complexity of the zoning system. The Court of Audit (Cour des Comptes) estimated that simplifying zone definition would help target the most vulnerable areas more effectively (Cour des Comptes, 2012). This was done through a 2014 law (Loi de programmation pour la ville et la cohésion urbaine) (French Government, 2014). The law also reduced the scope of the tax exemptions and its duration, thereby reducing the budget for the programme (Ministère de la Cohésion des Territoires et des Relations avec les Collectivités Territoriales, 2019) but also its attractiveness (Lafourcade and Mayneris, 2018). Before 2015, new and small firms operating in a ZFU-TE benefited from longer and more generous exemptions on local business taxes, corporate income taxes and property taxes. The exemption was total for 5 years and gradually reduced to 20% in year 13 and 14. A partial exemption on social contributions on labour was also granted for five years, conditional on having one-third of staff residing in the urban development priority area (Chaudhary and Potter, 2019).

The ZFU-TE scheme is a long-standing programme, which is well-evaluated. Evaluations find a significant positive effect on employment and enterprise creation but limited in scope and over time. The programme is perceived as efficient by policymakers, in spite of its aforementioned limitations. Based on the evaluations of the scheme, the following lessons can be drawn for the development of similar programmes:

  • The amount of tax and social security exemptions/reductions should be determined in relation to other existing general exemptions and reductions. One of the limitations identified by evaluations of the ZFUs is that the incentive gave a relatively modest advantage to firms settling in ZFUs when compared to place-blind incentives.

  • This type of enterprise zone policy should be combined with other interventions to improve connections to spatially isolated neighbourhood and address other challenges, as the impacts of the programme varied for neighbourhoods with different characteristics.

  • The evaluation of enterprise zones should be designed to identify a range of mechanisms to generate impact, as enterprise zone schemes affect the local economy in a variety of ways. Evaluations with a narrow focus may overlook some channels (Chaudhary and Potter, 2019). It is also important to design evaluation frameworks to compare treated neighbourhoods to comparable ones, as the targeted areas are traditionally at a disadvantage for firm and job creation so comparing them with national averages may lead to underestimating the impact of the programme.


Briant, A., M. Lafourcade and B. Schmutz (2015), “Can tax breaks beat geography: Lessons from the French enterprise zone experience”, American Economic Journal: Economic Policy, https://doi.org/10.1257/pol.20120137.

Chaudhary, N. and J. Potter (2019), “Evaluation of the local employment impacts of enterprise zones: A critique”, Urban Studies, https://doi.org/10.1177/0042098018787738.

Commissariat général à l’égalité des territoires (2016), Présentation des nouvelles mesures fiscales en faveur des quartiers prioritaires de la politique de la ville dans le domaine du développement économique, Commissariat général à l’égalité des territoires, Paris, https://www.cget.gouv.fr/sites/cget.gouv.fr/files/atoms/files/note-fiscalite-juin-2016.pdf.

Dieusart, P. (2018), “Les zones franches urbaines-territoires entrepreneurs : une progression du nombre d’établissements qui perdure, notamment dans le secteur du transport”, www.onpv.fr/uploads/media_items/onpv-fiches-mobilisation-du-spe-1.original.pdf.

French Government (2020), Questions-réponses : les emplois francs, https://travail-emploi.gouv.fr/IMG/pdf/dicom_qr_emplois_francs_2020.pdf

French Government (2017), Zone franche urbaine (ZFU) - territoires entrepreneurs, Glossary, https://www.service-public.fr/professionnels-entreprises/glossaire/R41206 (accessed on 16 September 2019).

French Government (2014), LOI n° 2014-173 du 21 février 2014 de programmation pour la ville et la cohésion urbaine (1), www.legifrance.gouv.fr/affichTexte.do?cidTexte=JORFTEXT000028636804&categorieLien=id.

Givord, P., S. Quantin and C. Trevien (2018), “A long-term evaluation of the first generation of French urban enterprise zones”, Journal of Urban Economics, https://doi.org/10.1016/j.jue.2017.09.004.

Givord, P., R. Rathelot and P. Sillard (2013), “Place-based tax exemptions and displacement effects: An evaluation of the Zones Franches Urbaines program”, Regional Science and Urban Economics, https://doi.org/10.1016/j.regsciurbeco.2012.06.006.

Givord, P. and C. Trevien (2012), “Les zones franches urbaines : quel effet sur l’activité économique ?”, Insee Analyses, Vol. 4, https://www.insee.fr/fr/statistiques/1521317.

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Malgouyres, C. and L. Py (2016), “Les dispositifs d’exonérations géographiquement ciblées bénéficient-ils aux résidents de ces zones ?”, Revue économique, https://doi.org/10.3917/reco.673.0581.

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← 1. www.pgdlisboa.pt/leis/lei_mostra_articulado.php?nid=1337&tabela=leis

← 2. Responsible Industry System (SIR), Decree-Law n.º 169/2012

← 3. (i) Activities of lenders, auctioneers and others provided for in the legal regime of activities of commerce and services and restoration; (ii) Activities related to the Sea; (iii) Livestock activities; (iv) and (v) two types of Industrial licensing; (vi) Preliminary urban planning. 

← 4. Directive 2006/123/EC

← 5. An investor will qualify for the incentives if it is either a legal person controlled by an individual considered a sophisticated investor pursuant to subsection 708(8) of the Corporations Act 2001; or a non-sophisticated investor that has invested AUD 50 000 (EUR 304 000) or less in the income year.

← 6. The tool is available at www.ato.gov.au/Calculators-and-tools/Host/✓anchor=ESIC&anchor=ESIC/questions#ESIC/questions

← 7. i.e. Seed Enterprise Investment Scheme, which the tax incentive for early-stage investors is based on

← 8. i.e. the potential tax revenue of the area if the average national tax rates were applied for all local taxes

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