CONGRATULATIONS – YOUVE TAKEN THE DECISION TO DO YOUR BUSINESS INVESTMENT IN FRANCE!

This guide will take you step by step through the business setup procedure: short, simple and above all – comprehensible.

Contents

  • What kind of establishment do you need?
  • The right legal form for your business in France
  • Getting your people into the French territory
  • Tax rules to ease up your business takeoff
  • Rich offering of financial aid, breaks, exemptions and support

What kind of establishment do you need?

Depending on your specific type of investment, there are different steps to take. To start with, let’s find out which scenario fits your case:

For minor investments in French stock exchange listed companies, declaring the transaction to the French National Bank will be enough.

Do you wish to buy a whole activity from a French company or at least a part of its activity?

Are you planning to create a business requiring a startup investment of more than 1.5 million Euros?

Or will you acquire more than a third of the total capital or votes in a French listed company?

In all these cases, you will declare the transaction at the French Department of the Treasury (Direction générale du trésor).

For some specific fields of business considered being delicate, such as Chemistry, Security or Army, you make a demand for authorization to the French Financial Minister. In case of doubt about your business being considered as within a delicate field in France, simply contact your nearest Invest in Lyon Agency that will be happy to help you.

Naturally, a part of creating a business is to get it registered. To do so, you can choose between the French business e-registration service, or one of the many Business start-up centers spread over the French territory. Whatever option you choose, it will only take a couple of days from the moment you do registration until it comes into effect and your French business is born.

Indeed, after several major reforms of regulatory framework and administrative procedures, business opportunities in France have become truly accessible to international business investors. Optimized procedures make it fast and easy for your investment in France to take form.

When opening a business in France, there are three different forms of establishments and you can pick the option that is best suited for your business strategy:

1. Business liaison office

The Business liaison office is the simplest establishment form, purely representing the main establishment in your country. Functioning as an hundred percent dependent extension of the foreign company, it doesn’t have permission to trade.

2. Subsidiary

The Subsidiary has a local representative with commercial and trading mandate. The subsidiary is representing the foreign mother company, which is held responsible for the French subsidiary’s actions and involvements.

3. Affiliate company

The affiliate company depends under French law and can initiate business activities of all kinds. The affiliate company is carrying the entire responsibility for its actions.

The right legal form for your business in France

When you opt for starting an Affiliate with full rights on French territory, you commit to ordinary business set-up steps such as assigning legal representatives, writing the company statutes and defining a name, purchasing an insurance to cover your business, and doing the crucial choice of legal form for your company.

Though further options are available, three Legal forms are dominating the French business world:

1. SA (Société Anonyme) Anonymous corporation

The SA is the best fitting alternative when you have the intention to run big business in France. You’re allowed to issue new shares or obligations to raise capital to your business. Shareholders are free to trade shares, increase or withdraw their ownership.  Seven shareholders are required as well as a 37 000 Euro minimum starting capital. The CEO shareholder running the business may have the same legal status as the company employees.

From a Bank or Investor point of view, the SA is the least risky business form since the raised capital corresponds to a large amount of money.

The SA requires a Board of Directors, Supervisory Committee, Statutory Auditor and a yearly General Assembly.

2. SARL (Société à Responsabilité Limitée) Corporation with limited responsibility

A small budget is enough to create a SARL. Shareholder responsibility is limited to the amount of her or his investment. The minority shareholder company director may have the same legal status as the company employees. The limitation of stakeholder responsibility can be withdrawn, thereby extending responsibility to a personal level, if partners such as banks or debt holders demand for it.  If the company suffers from an inappropriate management, the director can be held personally responsible for debts to the French social security system.

3. SAS (Société à Actions Simplifiée) Simplified Stock Exchange Listed Corporation

A small budget will do for creating the SAS, since there’s no minimum requirement for fixing the starting capital. The shareholders decide on the starting capital themselves, knowing that at least half of the fixed amount need to be freed at the company setup phase. The shareholders define the code of conduct and how to delegate business responsibilities within the company.

Getting your people into the French territory

To get your key staff members into the country and soon be up and running the company on French territory, the first thing to do is to anticipate. Launch the demand procedures about two months before planned leave for France.

As employer, you make the demand for your expatriating staff members.

VISAs and permits

In order to provide well-fitted solutions for different business export and establishment needs, there are several options for VISA, work-permit and resident’s status on French territory. According to the individual situations of your expatriating staff members, you will choose a suiting immigration status among the existing options. Which option to choose also depends on the country you’re coming from.

When defining expatriation and residential status, you will also approach questions about expatriate taxation status and social legislation covering business and staff in France.

Several exceptions have been bedded into the French regulatory framework, to enable your key talents to enter the country quickly, smoothly and under cost-efficient conditions and get on with the business startup in France.

For guidance on how to do the best of expatriation for your French business project, you can simply contact your country’s Invest in France Agency, or then, when on-spot, you turn to the nearest Regional Directorate for Companies, Competition, Consumption, Work and Employment (DIRECCTE : Directions régionales des entreprises, de la concurrence, de la consommation, du travail et de l’emploi). DIRECCTE will channel you through to the next stops, at the Consulate and further at the Prefecture.  The DIRECCTE cunning experts’ purpose is to facilitate your business setup!

Tax rules to ease up your business takeoff

When you consider taxation and what conditions you might get in your new business hosting nation, the first thing to do is to check if your country has agreed on a Bilateral Tax Convention with France. If so, it will be a supporting framework for your business development, guaranteeing cost-efficiency and protection from double taxation.

When taking a moment to look closer, you will discover that the French tax system combined with European Union taxation rules are creating an interesting climate for establishing and running your company in France.

A main rule when doing business in France is that taxation will be based on your business resultsyou will never pay for more than your true ROI.

The French tax system has been engineered to make your business investment in France awarding. You will discover the tax incentives of investing in business startup or in existing French companies, as well as when you create or invest in French business groups. Indeed, for Groups of affiliated companies, the French system opens up several opportunities to spread and redistribute results, benefits and liabilities. For instance, you have the possibility to spread profits or losses from one affiliated company over all the French group entities. You can thereby even out and arrange business results and taxation within the respect of French tax system and law.

Repatriation of earnings & profits

Since France has signed Bilateral Tax Conventions with most industrialized countries, your international business is likely to obtain beneficial conditions for repatriating profits from the French affiliate. Bilateral Tax Conventions stipulate low, standardized tax rates. A minimum investment of ten percent in the French affiliate company is the only condition for accessing the low tax rate standards. 

Simplified VAT & customs procedures

When you set up your business in France you will be given an Intracommunity Value Added Tax number. Since VAT is applied in all countries of the European Economic Community, it will give you easy access to business opportunities across the whole European Union trading zone. Your business in France will reclaim any VAT that it has been charged with. If the VAT on your purchases exceeds the VAT on sales, the exceeding part will be refunded to your company. Several business fields benefit from lowered VAT rates – ask your nearest Invest in Lyon Agency for details.

In line with the forefront position of French e-administration, France is a step ahead in making customs clearance procedures available electronically for your French business setup. Thanks to the electronic system including duty payment service and automatic goods clearance, you will make major time savings by avoiding paperwork for business export and import.

The European Union applies truly attractive conditions for trading between member countries, which your French business setup will benefit from. Most transactions between European countries are duty free. 

Affordable local taxes

Besides a couple of contributions at the national level, such as Corporate tax and Customs duties on imports and exports, several types of taxes are administered at a local level, to cover maintenance and services of French districts. Your will pay the rates defined by the local district of your French business investment. Local taxes are calculated on the value of your business premises consisting of buildings and land, and on the added value of your French business activity, in case of exceeding 500 000 Euros. The tax rates are low for a European country, and there are several cases of tax exemption, such as for innovative young business setups and investments in green energy businesses. 

Major tax breaks

When you seize the occasion to invest in France today, your investment may benefit from current major tax breaks.

In 2015, the Employment tax break for increasing competitive power and recruitment capability (CICE) will cut the global labor cost with six percent. The tax break calculation is based on your company’s payroll expense. The CICE will add considerable value to your existing business opportunities in France.

The French Research & Development tax break (CIR) will give you a 30 percent break on all types of R&D investments up to the 100 million Euro threshold. The 30 percent rate is quadrupled if you’ve hired junior doctoral research personnel to work in your R&D activity during their first two years of employment. Under certain conditions, the CIR break for your company investment in France can reach the impressive amount of 80 000 Euros.

Having a family is not supposed to be a hinder when doing business in France.

I order to offer your coworkers a sustainable solution for combining work and family life, your business in France can have access to a Family tax break. This break will cover up to 50 percent of your team members’ child care service costs and up to 25 percent of costs for household services.

No need to worry about new and unknown tax rules – as a foreign investor in France you are given direct access to support, provided from the source itself: “Tax4business France” is an information and advisory service directly under the French Government’s Public Finances General Directorate (Direction Générale des Finances Publiques). You will have the best experts answering your questions and giving you advice regarding French tax politics and rules.

Rich offering of financial aid, breaks, exemptions and support

When you decide to invest in France, you will not be left to cope on your own in the new environment. The French Government has made available a rich offering of financial aid and support, and you can approach them even before arriving in the country. By opening a French bank account, you establish the physical conditions for benefiting from French financial aid. There’s no need for prior registration on French territory – you can contact the bank of your choice today.

Types of financial aid provided by French Government to foreign business investors:

  • Subsidized loans without interest or with a low interest rate
  • Grants for profitable investments and for R&D
  • Financial aid to obtain business premises
  • Tax breaks
  • Tax exemptions
  • Exemptions from employer’s social security contributions
  • Government sponsored guarantees
  • Direct capital investment
  • Financial aid for recruiting and training talents
  • Financial aid for investing in and developing green energy business

Bpifrance is the public investment bank of France created in 2013. Covering concerns about seed money, export loans, stock exchange listing and much more – thanks to Bpifrance you can get solid financial support to your business development in France.

Invest in Lyon Agency is your interlocutor to help you find relevant aid and support for your startup investment. The Invest in Lyon network will be your helping hand for contacts within the French public sector, from governmental departments and down to local authorities.

Don’t hesitate, when you contact us, you take the first step on your French business adventure!

More information about French legislation, contact us !