Every year France attracts thousands of entrepreneurs from all over the world who want to start conquering international markets by registering a French company.
The country provides generous tax benefits that significantly ease the tax burden for entrepreneurs for the first few years of company’s existence. The French government is constantly improving tax legislation to incentivise foreign investors and support the development of small and medium-sized businesses.
With a large domestic consumption market, a good location on the European map, a well-developed transport infrastructure and access to the markets of the European Economic Area, France has become an ideal location for entrepreneurs looking to take their business international.
High quality labour force, decent level of social guarantees combined with relatively low salaries are some of the benefits that stimulate the development for those foreign companies that hire French citizens.
The decision to open a company in France is usually made after a thorough study of all the pros and cons of this jurisdiction. Your French business can become profitable only after market research and thorough preparation.
Let’s start with a closer look at the main advantages and disadvantages of registering a company in France.
The French government is interested in the inflow of foreign capital, so it provides foreign entrepreneurs with favourable working conditions and reliable legal protection. Such instruments for attracting foreign business include:
Those foreign entrepreneurs who offer their goods and services on the French market appreciate not only the opportunities of the country’s strong economy, but also the huge number of solvent customers in the domestic market. To understand what prospects are open to a businessman in France, it is enough to look at the country’s economic statistics:
The second largest railway network and the third largest road network in Europe, modern maritime and airports allow French entrepreneurs to deliver their products quickly, safely and cost-effective to both domestic and foreign markets. A well-developed infrastructure gives French companies access to raw materials, technology and specialised labour and allows them to serve both domestic and international customers with maximum efficiency.
In France you will find many modern, highly educated professionals. The country ranks fifth in the world for the quality of higher education. Many of the country’s institutions, such as the Sorbonne, École Polytechnique and Sciences Po, are world-renowned and rank among the top universities. Thus, you will be able to find highly qualified professionals in almost any speciality. In addition, registration in France makes it easier to access professionals from other EU countries.
The French authorities understand the important role new technologies play in the modern economy. They have therefore created a platform for innovation by investing enormous sums in research and development. The French capital has created favourable conditions for the development of high-tech startups. To the south-west of Nice, the Sophia-Antipolis technopark operates, where companies, research centres, laboratories and institutes working in the fields of electronics, digital technologies, pharmacology and medicine are gathered in one place.
The French economy and business environment are excellent for business development. But our story would be incomplete if we left out the difficulties foreign entrepreneurs often face in France.
If you are going to offer your goods and services on the local market, prepare yourself for the fact that the French speak mostly in their own language. Only 37% of the local population speaks English. Therefore, a foreign entrepreneur needs to think in advance about how they will overcome language incompatibilities.
In recent years, the French government has taken a number of steps to simplify the procedure for starting new companies and the interaction of businesses with regulatory authorities. Nevertheless, it is sometimes difficult for foreign entrepreneurs to work in areas where the government is particularly careful about the quality of goods and services provided. Those companies of foreign origin who plan to employ French citizens also face quite serious bureaucratic obstacles.
In France, salaries for qualified staff are quite high. In addition, social protection measures and benefits for employees are largely paid for out of the employer’s pocket through high taxes, parental leave, sick leave, etc.
These difficulties should not be an insurmountable obstacle for those who plan to start a business in France. You can easily overcome them by planning your company’s work properly.
France has one of the highest standard corporate tax rates in Europe at 25 per cent.
The choice of the appropriate legal form is determined by the tasks that the businessman wants to fulfil with the help of a company registered in France. Joint stock companies, limited liability companies and various forms of partnerships are most popular with foreign entrepreneurs.
SARL or Société à responsabilité limitée is the French name for a limited liability company. There is also EURL or Entreprise unipersonnelle a responsabilité limitée (Sole proprietorship limited liability company).
Up to 70 per cent of all corporate structures in the Fifth Republic are registered as SARL or as EURL. This popularity is due to a number of reasons:
French and foreign entrepreneurs can register 2 types of such business organisations:
The liability of SAS shareholders is limited to the market value of their shares. Simplified Joint Stock Companies have great flexibility and can regulate:
Such companies are also free to sell their shares on the stock market.
This business structure is supposed to be managed by a President, whose position is filled by a hired manager or one of the company’s founders. Whoever manages SAS must be paid an official salary with all associated taxes and social fund contributions.
The founder of SASU can be a legal entity, so this commercial organisation is often used to register a branch of a foreign company, so that the newly created French company is fully owned by the head office.
Usually only experienced entrepreneurs who know how to profit from the benefits of this legal form choose simplified joint stock companies in France.
A French joint stock company is denoted by the abbreviation SA from La société anonyme.
As in SAS, the liability of shareholders here will be limited to the value of the shares they hold. However, the minimum amount of the authorised capital must be €37,000. This amount is paid by the founders in cash or by transferring tangible assets they own to the company, such as real estate or vehicles.
At least 2 founders are needed to establish a closed-type SA. A public joint stock company must have at least 7 shareholders.
The SA is managed by a board of directors with between 3 and 18 members. The composition of this governing body must be agreed by a shareholders’ meeting.
Joint stock companies in France are difficult to register and quite expensive to maintain. Therefore, this legal form is usually chosen by large foreign businesses.
Entrepreneurs choose unincorporated forms to register a business in the French Republic to profit from the following advantages:
What is the pass-through or single-tier taxation? This principle implies that the profits earned by an organisation are not taxed, but are at first distributed to the founders, who in turn report their income and pay taxes at their tax residency.
The partnership also requires that any changes to the share capital structure be agreed with all members of the partnership.
The most popular types of partnerships in France are:
Imperial & Legal will take care of most of the bureaucratic obstacles and help you avoid unnecessary expenses and random mistakes that can delay the company registration process for many months.
Professional legal support reduces the lengthy process of business registration to 5 stages.
At the preliminary stage, we will help you choose the best legal form for company registration based on your requirements and circumstances.
Then you need to check whether the company name you have come up with is suitable. This can be done on the website of the Institute of Industrial Property. It is necessary to come up with an original name that does not repeat the names of already registered organisations and trade marks. Our specialists will help you to check the possibility of registering a company under your proposed name and reserve it.
Your company will also need a legal address for incorporation. If you are planning to operate outside France, we will provide you with a suitable address that you can designate as your registered office.
Once you are clear about the type of company you will set up in France, its name and official address, it is time to decide on the structure of the future company. The founders must agree the amount of the authorised capital, the size and form of contribution of each participant, as well as the procedure for making management decisions. As a rule, the director of the company is appointed at the same stage.
All agreements reached are recorded in the constitutional documents. We use a standard reference form for constitutional documents, but we can tailor the documents to the specific company and circumstances at the client’s request.
In our example, we will show you how to open a SARL, a limited liability company. As already mentioned, this type of firms in France can have authorised capital of any size. The main thing is that this amount should not be less than €1.
In practice, of course, no one start their compony with such an insignificant amount as their charter capital. All founders must make a contribution to the share capital in a predetermined form – monetary, tangible or even intangible – if they are investing their unique professional skills or some patented technology (which can be valued in monetary terms) in a future enterprise. Equity can also be expressed in a written commitment to pay a certain amount in the event of the company’s bankruptcy.
Whatever the size of your authorised capital, when each member has made their contribution, the director of SARL must, within 8 working days, deposit at least 1/5 of this amount into an account opened specially for this purpose in a French bank, or into the account of the notary who will register your constitutional documents.
Your company is declared registered once the founders have signed its constitutional documents and/or memorandum of association in the presence of a French notary. Our experts will help you organise the signing procedure. Each company founder can sign in person, send an authorised representative or use an electronic signature if the procedure is carried out remotely.
According to the laws of the Fifth Republic, the establishment of a new company must be announced in one of the official media. This is usually done through a paper-based legal advertisement magazine or online through a legal news service. This service is chargeable and costs an average of €200-300.
Step 5: Official registration
Your company will not be able to start operating until it has been officially registered with the National Register of Companies, the Commercial and Industrial Register, the tax office and the social security authorities.
If you want to register a limited liability company, our lawyers will help you fill in the declaration (application for registration) and prepare notarised copies of the documents. The documents, together with a receipt for the registration fee, should then be sent to the office of the commercial court nearest to your official office. The French Commercial Court will take a decision within 2 days and officially register your company.
Corporate income tax on company profits in France is charged at the current rate of 25%.
The reduced rate (15%) applies to the first €38,120 of income of companies with a turnover of less than €10 million in the last tax year. In certain circumstances, the reduced corporate tax rate also applies to capital gains realised by a French company.
French companies pay corporate tax on any profits originated in France. Corporate income earned abroad is excluded from the taxable base unless there is a double tax treaty between France and the country of origin of that income, which regulates to whom and how much a French firm must pay on profits earned abroad.
Non-resident companies pay corporation tax on any profits earned in France, including income from the rental of real estate.
The basic VAT rate in France is 20%. Also, there is a reduced rates (10%, 5.5% and even 2.1%.) which are applied to some goods and services. Export operations outside the French Republic, as well as the provision of services to foreign residents, as a rule, are not subject to value added tax.
French businesses pay property tax (there are exceptions), are subject to small local taxes at the place of incorporation and make social security contributions when they pay salaries to employees (your costs can be as high as 50% of an employee’s earned income).
To find out how to reduce the tax burden on your French business, book a consultation with Imperial & Legal!
Licensed company
Imperial & Legal is regulated by the Office of the Immigration Services Commissioner (OISC) UK to the highest, third class licence. This licence is a guarantee of the quality and transparency of our work. Our representatives in France are licensed lawyers with many years of experience.
Individual approach and comprehensive services
We will select the right type of company and provide full legal support throughout the registration process. We will develop a customised solution and take care of communication with state authorities.
Imperial & Legal usually request the following documents from the entrepreneur:
If you are married or divorced, you will need to provide the relevant certificates.
Once you have officially registered your SARL at the Chancery of the local commercial court, your details will be transferred to the registries and the French tax office. An official letter will then be sent to your official address in France from the tax office requesting that the company be registered. As a rule, the tax office will give you 30 days for that.
You can register your company yourself on the website or ask our staff for help. Each registered company is assigned a unique tax number, you will need when you decide to open a French bank account or submit your annual tax return.
As you know, the share capital of a company registered in France is partially or fully paid by depositing the relevant amount in a bank deposit account or in the account of a notary.
The company gets access to the money once it is officially registered. Usually, this money is simply transferred to the company’s current account.
SCI stands for Société Civile Immobilière or Civil Real Estate Management Company. It is a fairly common type of organisation in France for tax planning and restructuring of the real estate assets of wealthy Frenchmen and foreigners.
It can help you to:
Société Civile Immobilière bears little resemblance to an ordinary commercial company. Rather, it is a practical legal tool for the above tasks.
Two participants are sufficient to establish a French SCI. The law does not regulate the size of the minimum authorised capital for this type of company, but it is usually quite large, as shareholders often use their real estate for equity participation.
Another characteristic feature of a civilian property management company is its limited duration of 99 years.
How to register a company in France. Advantages and disadvantages of doing business in this country. Types of companies and corporate taxes in France.
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