The complete guide for a foreign company to do business in France

About France

The French Republic (France) is the largest country of the European Union. It also crowns as the second largest economy in the European Union and fifth largest in the world. In fact, it is one of the top 10 countries in the world in terms of GDP.

The territories of France extend from the Mediterranean Sea to the English Channel and the North Sea, and from the Rhine to the Atlantic Ocean. Thanks to its geographic location in the heart of Western Europe, it boasts of a world-class transport network with over 11,000 km of motorway and high-speed train links to other European cities.

The country offers a business-friendly environment with cooperative government, favourable tax laws and legal framework in line with European standards. With an emerging economy and strong public facilities, it is an ideal place to do business.

This article covers everything you need to know about doing business in France, right from understanding the country’s tax and legal compliances to knowing about the types of business entities that can be formed.

Doing Business in France

France has a well-developed economy and is known to have one of the highest Human Development Index in the world. The economy is based on a strong private sector as well as on a national economy. The major business sectors in the county are tourism, electronics, transportation, food processing, textiles and chemicals. Apart from a large industrial base, France is also known for having substantial agricultural resources and a highly skilled workforce.

As per the ‘Ease of Doing Business Report’ of The World Bank, France ranks 32 for the 2019 survey.

Types of Business Entities for Incorporation in France

You can incorporate the following types of business entities in France:

• Société à Responsabilité Limitée – Requires minimum 2 and maximum 50 shareholders and a managing director.
• Entreprise Unipersonelle à Responsabilité Limitée – This is a sole trader and requires only one shareholder.
• Société Anonyme – Requires minimum 7 shareholders and there is no upper cap. It is run by the board of directors.
• Société par Actions Simplifiées – Requires minimum 2 shareholders and minimum capital requirement is € 2,300.
• Société par Actions Simplifiées Unipersonnelle – This is set up by a single person and minimum capital requirement is € 37,000 or € 225,000.
• Société Civile Professionelle – This business structure is limited to certain regulated professions.
• Société d’Exercice Libérale – This is similar to the limited liability company, simplified joint stock company and public limited company, for specific professions.
• Société Civile – This is a non-commercial partnership.
• Société en Nom Collectif – This is a general partnership.
• Franchises – This is contract with the franchiser.
• Partnerships – This is identical to the franchise contract, the only difference being it is not standardized.
• Bureau de Liaison – This is a representative office.
• Branch – This is a branch office of a larger company.
• Subsidiary – This is set up by the French company using standard business entities.
• Location Gérance – In this business structure, the owner of the business rents his business to others.
• Associations – This is a non-profit association.

Depending on the type of entity that you choose to incorporate, the rules and regulations vary. Every type has its own advantages and disadvantages. Therefore, one must analyse all the conditions before incorporating a business entity in France.

Benefits of Registering a Company in France

Some of the advantages of registering a company in France include:

• World-class infrastructure with good public facilities
• Skilled labour force
• Conducive business environment
• Strong legal framework which is in line with European standards
• No restriction on the investors to open a bank account or apply for a loan in France
• Excellent intellectual property protection regimes and tax incentives for creation, holding and disposal of rights therein.
  
  

Tax Registration and Filing in France

The corporate taxation in France is based on the territorial principle. All kinds of foreign companies carrying on business activity in France are required to pay corporate tax on their profits earned from French sources. However, French companies that are carrying on a trade or business outside France are not taxed at all.

Tax Structure