Legal aspects of applying tax incentives and exemptions in France’s overseas departments to maintain socio-economic parity

the article examines the legal aspects of applying tax incentives and exemptions in France’s overseas departments as a key instrument for achieving socio-economic parity with the country’s mainland. The main focus is on analyzing the conflict between the need for state support of remote regions and compliance with the principles of European law—specifically, the rules of the Single Market and the prohibition of excessive state aid that distorts competition. The authors explore in detail the legal framework governing the granting of incentives (the national Tax Code, the Law on the Development of Overseas Territories) and analyze the practical challenges of implementation related to geographic remoteness, differences in development levels and economic structures of the departments, as well as the risks of abuse and dependency. The study is based on an analysis of French legislation, European Union state-aid directives, case law (including decisions of the Conseil d’?tat and the European Court of Justice), and international standards (OECD, WTO). The methodology includes comparative legal analysis, assessment of the socio-economic effectiveness of incentives, and examination of control mechanisms (reporting, auditing, information exchange with international partners). Special emphasis is placed on the need for an integrated approach that combines tax incentives with investments in infrastructure, education, environmental protection, and social services to ensure sustainable development. The findings underscore that the effectiveness of tax incentives depends directly on their targeted nature, attention to local specificities, transparency, and strict compliance with France’s international obligations. Key challenges remain balancing regional support with compliance with EU competition law, preventing abuses, harmonizing incentives with environmental standards, and ensuring tangible benefits for the local population through job creation and infrastructure development.

tax incentives, French overseas departments, legal regulation, socio-economic development, European Union