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# [RÉUNION] LODEOM Preserved: Paris Drops the Reform, Businesses Relieved
- URL: https://businessoi.media/en/la-reunion-lodeom-preservee-paris-renonce-a-la-reforme-les-entreprises-soulagees-en/
- Published: 2026-07-18T02:45:54.000Z
- Updated: 2026-07-18T02:45:54.000Z
- Description: Paris drops the LODEOM reform: €750M in fiscal and social exemptions are preserved for Réunion businesses. A relief for 22,000 manufacturing jobs.
- Author: Emmanuel TAOCHY
- Tags: La Réunion, Économie, emploi, Revue matinale, #en

The French government has ultimately abandoned its plan to reform the **LODEOM**, the payroll tax exemption scheme that has been one of the main competitiveness levers for overseas territory businesses since the 1980s. The decision, long-awaited after a unanimous mobilization of Réunion's economic stakeholders, preserves a total package of **€750 million** in fiscal and social advantages.

## €750 Million on the Line

The executive's proposed reform would have cut two complementary mechanisms:

- **€350 million** in social contribution exemptions (the LODEOM social scheme itself),
- **€400 million** in investment tax credits (tax relief for investment).

For an island where **85% of chamber of commerce members are micro-enterprises with fewer than 10 employees**, and where the employment rate is only **52%** versus 70% on the mainland, both mechanisms play an irreplaceable structural role.

## An Industry Under Pressure

Réunion's manufacturing sector directly employs **22,000 people** and accounts for 6% of regional GDP. It had already been struggling: construction lost **1,500 jobs** over two years, while industry shrank at **1.4% per year**. Over **1,100 business failures** had been recorded in recent years.

Faced with these figures, Regional Council President Huguette Bello had described the proposed reform as «a threat to employment for all Réunion families.» The local MEDEF made its position crystal clear: «Stop this cutting. Don't touch social LODEOM.»

## Why It Matters

LODEOM has existed since the 1980s and has been recognized by the European Union as a structurally justified compensation for the *geographical constraints* of outermost regions. Its preservation sends a stability signal to Réunion's entire economic fabric, which aspires to develop new sectors — renewable energy, agri-food, digital — in a maintained tax relief environment. For outside investors, it confirms that Réunion retains an attractive fiscal framework, differentiated from mainland France by recognized structural advantages.