FranceIntroduction to Starting a Business in France
Starting a business in France can be a lucrative venture, given the country’s strong economy and favorable business environment. With a highly skilled workforce and a strategic location in the heart of Europe, France offers a unique opportunity for entrepreneurs to expand their business and tap into a market of over 500 million consumers within the European Union. The French market is known for its diversity and innovation, making it an attractive destination for businesses across various sectors.
Why Choose France for Your Business?
France is an attractive destination for foreign investors due to its robust economy, highly developed infrastructure, and business-friendly atmosphere. The country offers a range of benefits, including a highly educated workforce, a favorable tax environment, and a streamlined administrative process. Additionally, France’s strategic location provides easy access to other European markets, making it an ideal location for businesses looking to expand their operations. The French business culture is also supportive of innovation and entrepreneurship, providing a fertile ground for new ventures to thrive.
The French Economic Landscape
France has a diversified economy, with a strong focus on innovation, research, and development. The country is home to a number of world-class industries, including aerospace, automotive, and luxury goods. France is also a leader in the field of renewable energy, with a strong focus on reducing carbon emissions and promoting sustainable development. The country’s economy is driven by a highly skilled workforce, with a strong emphasis on education and training. This makes France an ideal location for businesses that prioritize innovation and sustainability.
Business Opportunities in France
France boasts a rich and diversified economy, a pro-business culture, and a highly educated and skilled workforce. This is why foreign investors flock to the French market to expand their business outreach to the European Union.
It is flanked by six countries – Spain, Luxembourg, Germany, Italy, Switzerland, and Belgium. Being one of the most advanced countries in the world, France holds a prominent position globally.
Setting up a company in France is an effortless process for France and the European Union citizens. However, it is not so simple for foreigners wishing to enter the French market. To launch and operate a business smoothly in France, one must be familiar with the country’s laws, industry regulations, and government norms.
Benefits of Starting a Business in France
Starting a business in France offers numerous benefits to business owners:
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France is a business-friendly country with one of the largest European markets – Paris, the capital city, is the country’s core financial center and a venture capital hub. So, besides great investment opportunities, you can also attract investors to your company.
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In 2019, the government made significant changes to the French unemployment benefits. One of the most beneficial among them is that business owners are paid by the social security system while setting up their company in France. Essentially, the French government offers financial assistance to budding entrepreneurs while they establish themselves.
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The French government takes a special interest in tech startups. Business owners looking to launch their tech startup can acquire a tech visa and enter the country. Besides, the government takes numerous steps to create a favorable environment for tech innovation. Hence, startup founders can leverage these advantages to expand their outreach in the European market.
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Setting up a limited liability company, such as a Société à Responsibilité Limitée (SARL) or an Entreprise Unipersonnelle à Responsabilité Limitée (EURL), in France offers the benefit of limiting owners’ liability to their investments while ensuring regulatory compliance, making these structures appealing for small to medium-sized businesses.
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With manufacturing holding the biggest share in the French economy, it is the ideal market for business owners in this domain. The government offers extensive support to its manufacturing industry to boost its global competitiveness.
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France’s conducive business policies encourage foreign investment. Additionally, the French government offers significant tax credits to companies involved in research and development, tech, manufacturing, tourism, etc.
Requirements for Starting a Business in France
Resident permit
All foreigners must obtain a residence permit in France to carry out long-term commitments. A residence permit allows you to stay and operate your business venture. It is the most basic requirement for non-EU citizens to reside and start a business in France.
Work visa
The requirement of a work visa is also an essential criterion for starting a business in France. It is accompanied by a permit that allows expats to work or run a business in the country.
Business visas are also available. However, business visas are granted to very selective people who, according to the French government, can contribute positively to France’s economy.
Regulated business
Some occupations and businesses in France have strict rules and regulations. These occupations include:
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Accountants
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Vets
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Hairdressers
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Builders
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Wine dealers
If you want to start a business in these sectors, you must acquire special permits and register your company with the relevant French authorities.
Check your company name
You can check if your chosen company name already exists by visiting the official website of Institut National de la Propriete Industrielle (INPI). This website contains the names of all registered businesses in France.
If you want to be the sole owner of your company name and logo, you must register them as trademarks. By doing so, you can ensure that no other business can use your company name and logo.
Taxation
The French government has affordable and flexible taxation policies for businesses. Your tax requirements to do a business in France include –
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A corporation tax of 25%.
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Capital gains tax of 19% plus the social charges of 17.2% for residents of France.
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Dividend incomes fixed at 12.8% or in line with the general tax rate by deducting 40% of the company’s tax already paid as distributed profits.
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For dividends paid to non-residential individuals, a withholding tax of 30%.
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20% standard VAT rate
In addition, companies must pay the applicable customs and excise duties on all products imported from outside the EU.
Bank account
To set up an offshore company in France, you must open a local bank account to deposit the minimum capital investment. A confirmation of the account opening is also essential from the bank’s side for business registration.
Types of Business Structures in France
Choosing the right business structure is crucial when starting a business in France, as different types offer unique benefits suited to various business sizes and objectives.
France has provisions for three legal business entities:
Sole trader
Under France’s legal framework, sole traders and their businesses are considered a single legal entity. In this case, all your personal assets are your business resources. However, you can make a declaration that your home or residence will not be included in this. Under this legal structure, you can establish a micro-organization as your prime setup.
Another good option for sole traders is the Entrepreneur of Industrial Limited Liability (EILL). Your personal assets are not included in your business assets in this system. While you can operate your business in your name, you can also apply for a trading name.
Joint venture
This is a simplified version of starting a business compared to a joint-stock company. In a joint venture, an international company partners with a local French company to expand its business in France. It is like a partnership business but with some essential elements similar to a joint-stock company.
Company
If you choose to set up a company (société), it will be separate from your legal entity. A company is considered a separate legal entity, limiting personal liability to the initial contributions made when setting up the company. Though company creditors will protect the company assets, you can be prosecuted if you use company assets for personal purposes.
To register your business as a company, it must have a trade name, an official address, and the requisite minimum assets. As a registered company, your business will be taxed according to France’s corporate tax regime. Creating a company is a long-drawn process wherein you must appoint officers, record your status with the tax office, publish legal notices, etc.
There are two main types of companies in France:
Enterprise Unipersonelle à Responsibilité Limitée (EURL)
It is owned by a single person/entity and is run as a single shareholder company with limited liability. A EURL is managed by a ‘gerant’, also known as the managing director or company secretary. A gerant may or may not be the company’s owner.
Société à Responsibilité Limitée (SARL)
Company Registration Process
The steps involved in offshore company registration in France are –
Pre-registration
The pre-registration requirements of company registration in France demand you fulfill the following criteria:
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Resident permit
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Work visa
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Financial assistance
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Capital investment
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Shareholders and related documentation
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Registered company name
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A registered bank account
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Managing director
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Certificate of incorporation
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Financial statements of the company
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Articles of memorandum of understanding (MOU)
Registration process
After you’ve readied the relevant documents, you can apply for the registration by following these steps:
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Deposit the address and identity proof to the concerned authorities
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Register your company’s name by providing personal credentials
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Draft the mandatory and statutory company documents and notarize them
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Submit the necessary documents to the trade registrar to register your company as a legal entity in France
Post-registration
You must also complete the post-registration formalities, including:
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Filing for tax registration
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Offering the share certificate to the company’s shareholders
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Registering employees for social security
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Displaying the company seal
Setting Up Your Business Finances
Setting up your business finances is an essential step in establishing a successful business in France. This includes opening a business bank account, registering for taxes, and obtaining any necessary licenses and permits. Proper financial management is crucial for compliance with French regulations and for the smooth operation of your business. Ensuring that your business finances are in order will help you navigate the French market more effectively and set a solid foundation for your venture.
Opening a Business Bank Account
Opening a business bank account in France is a relatively straightforward process. You will need to provide proof of identity, proof of address, and proof of business registration. You will also need to provide a business plan and financial projections. It is recommended that you open a business bank account with a French bank, as this will make it easier to manage your finances and comply with French tax regulations. Some popular banks for business accounts in France include BNP Paribas, Société Générale, and Crédit Agricole. Having a local bank account will facilitate transactions and help you build a strong financial foundation for your business in France.
How Much Does it Cost to Incorporate a Company in France?
The cost of incorporating a company in France is approximately 3,600 Euros. The cost of registering your company online starts from 550 Euros.
A professional lawyer or accountant can handle the whole process of incorporating a company in France. The yearly accountancy fees for managing and incorporating your business would be between 2,000 to 3,000 Euros.
Generally, you can register micro-enterprises in France for free. However, for businesses involved in commercial/trading activities, they must register with the Chambre de Commerce et d’Industrie (CCI), which costs about 100 Euros. Businesses engaged in manual-based operations must register with Chambre de Métiers. They must undertake a mandatory five-day training (stage préalable à la creation), which costs 200 Euros, and an additional 180 Euros to be listed on the registre des artisans.
Are Foreigners in France on Certain Passes Allowed to Start a Business in France?
For offshore company registration in France, you must apply for visas and work permits. However, the citizens of the European Union, the European economic area, Switzerland, and French citizens can start a company in France without any restrictions.
Foreigners not belonging to these countries must have an Autorisation Provisoire de Séjour (APS), also known as the resident permit, to set up a company in France. They can use this permit to stay in France for a year and develop their business ideas.
Government Assistance for Foreign-owned Businesses in France
The French government assists new startups while the European Union maintains the uniformity of these regulations. The regulations aim to maintain a balance between big corporations and small startups, creating a fair business environment.
Here are the details of government assistance for starting a business in France.
Funding by the French government
The French government has a very liberal policy of providing funding to newly growing businesses. The beneficiary must apply for funding assistance considering the following:
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The name and size of the company
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The description of the project, its duration, and location
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List of the cost of the projects
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The type and amount of funding requested
Research and development support
The government helps you expand your startup by offering research and development support. Initial research is crucial for the foundation of any business. Hence, the research and development assistance provided by the French government is an excellent incentive for the startups.
Financial assistance
French banks provide financial assistance to startups and new business owners. These include a start-up loan Prêt à la Création d’Entreprise (PCE) for up to 7,000 Euros. Another business loan, Prêts Bancaires aux Entreprises (PBE), can help new business owners set up their ventures.
Besides these business loans, the French government has the ACCRE scheme that offers financial aid to unemployed people who want to start a business by paying reduced social charges. Another scheme called NACRE provides interest-free loans to business startups along with free business consultation.
Other forms of government assistance
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Subvention
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Tax exemption
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Tax credits
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Repayable advance on zero-interest loan
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Low-interest loans
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Co-financing and guarantees
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Capital injection
How Can Multiplier Help?
Launching a business in a foreign country requires meticulous planning, research, and capital. Once the incorporation process is complete, you must also hire the right resources. It is a long process, which could be tricky without professional help from a global PEO–EOR firm.
Multiplier can ease your burden by onboarding employees, managing their payroll, and managing your international employee team. Our experts can help you employ talent in a foreign country without setting up a subsidiary. You get to test new markets and focus on the administrative aspects of your business while we handle the routine HR operations.
