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French Legislation for Foreign Investments

French Legislation for Foreign Investments

Updated on Tuesday 08th October 2019

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french_legislation_for_foreign_investments.jpgFrance is one of the most popular countries in the world and one of the top travel destinations. Its diversity, good infrastructure and economy attract numerous foreign investors. France’s neighboring countries make it a valuable site for business operations in terms of European and international trade and commerce. Although there have been some recent changes made by the French Government related to foreign investments in the county, there are still numerous opportunities and predictions for future investments in France that remain favorable. The legal support of our lawyers in France for opening a business in France is needed for foreign entrepreneurs in this country. You can address your inquiries to our team at any time.

Investment incentives in France

France has a free investment policy. However, there are certain restrictions and some economic sectors require previous approval from the French Ministry of the Economy. Foreign and national investors can benefit from incentive programs. These programs are meant to encourage beneficial investment and create new jobs. Investment incentives for investors are the following:

  • - subsidies: cash grants for regional development, regional subsidies for the creation of businesses etc.;
  • - loans and financing guarantees;
  • - special tax treatment.


These incentives can be negotiated according to the specifics of the investment. The organization responsible for promoting investment in France is the French Agency for International Investment.

Tax incentives for foreign investors in France

Foreign investors have certain benefits in France in terms of taxes. In certain parts of the country, the local communities may grant temporary total or partial business tax exemptions to companies that settle, expand or take over ailing companies. However, this help cannot exceed a period of five years. In certain situations, companies that take over ailing industrial organizations may benefit from a two year corporate tax exemption.
 

Regulations on foreign investments in France

As of May 2014, the French Government issued a new decree that expands the list of sectors in which foreign investors require prior authorization from the French Ministry of the Economy. Any foreign investment made in such strategic sectors is subject to approval. These sectors are:

 

  • - energy: electricity, gas, oil or other sources of energy;
  • - water: the water supply in accordance with the standards for public health;
  • - transport: transportation networks and services;
  • - public health.


Both EU investors and non-EU investors will need to seek approval before conducting any business in these strategic sectors in France.

 

Update on legislation on foreign investments in France

 
The French Minister for Economy allows the investments in sectors like energy telecommunications, public authority, health and transportation in companies already established in the country or by creating new enterprises. Prior authorization is needed for investments in this direction from the French government, in agreement with the Financial Monetary Code and especially Article L 151-3. Foreign entrepreneurs who buy shares in a French company of more than 33% are considered investors in the firm, as stated by the CFIFs or the Control of Foreign Investments in France. However, the French government can refuse an investment and can deny the authorization if the conditions imposed are not respected. All the legal details related to the legislation on foreign investments in France can be explained by our French lawyers.
 

Can foreigners establish joint ventures in France?

 
Yes, joint ventures can be easily established in France without the obligation of having a local partner. This is a flexible business structure which can be established by different kinds of companies (limited liability companies, joint-stock companies). There is no specific legal framework for joint ventures in France, but a general contract comprising complete information about the partnership is mandatory, mentioning that such a structure must respect the Commercial and Civil Code in France. Contractual joint ventures are allowed in France, so are the corporate JVs. Among the mandatory documents for forming a joint venture as a foreign investor in France, we mention the Articles of Association and the shareholders agreement, the latter one comprising details about the internal governing rules and other confidential aspects. If you want to know more about how to open a joint venture in France and about the regulations applicable to foreign investments, feel free to talk to one of our French attorneys.
 

Forms of foreign investments in France

 
Investors from non-EU countries need to obtain approvals from the entitled authorities in order to make investments in France. Foreigners can make direct or indirect acquisitions of shares in a company in France or can set up companies and have complete control in their firm, as long as the activities are not restricted in the country. Legal advice for international investors in France can ask for legal advice from our lawyers in France.
 

Making investments in France

 
France is a popular destination for foreign investments and it is the second-largest investment recipient in Europe after Germany. The quality of the labor force, the fast digitalization in most of the sectors, the ease of doing business and the appealing encouragements offered by the French government make the country a significant player among international business hubs. In 2018, about 33% of the investments made in France came from the country-partner UK in important sectors like financial services, IT, engineering, consultancy and many more. Many companies from UK relocated to France for the appealing business sector and also to protect the activities and business direction from Brexit. The internal French market plays a major role in matters of investments and profits, a solid reason why international entrepreneurs decide on doing business in this country. The strategic geographic location of France is also an important factor considered by investors and that because the country has excellent connections to all continents. Below, you might find interesting information about the investment and the business direction in France:
 
  • the total FDI inward flow stood at approximately USD 37 billion in 2018;
  • more than 50% of the investments come from countries like UK, Spain, Italy, Luxembourg, the Netherlands;
  • according to the “2019 Doing Business” report, France ranks 32ndout of 190 worldwide economies;
  • the total FDI stock registered in France in 2018 was around USD 824 billion;
  • around 48% of the total investments made in France were directed to the manufacturing sector.
 
The French legislation for foreign investments might seem complicated to some entrepreneurs, but complete support and guidance can be provided by one of our advisors. If you want to start a new business in France or wish to invest in this country, our law firm in France can provide you all of the needed assistance and advice, so feel free to contact us.