Paris is one of the most sought after locations for multinational companies, along with other cities like London of Frankfurt. Besides being one of the most visited cities in the world, Paris is also a leading investment center.
France is not only an economic destination, with more than 600 foreign investors choosing the country every year because of its competitiveness. France dictates a certain standard for business.
France’s policies on foreign direct investments
Foreign direct investments (FDIs)
play a major role in the French economy.
They are also one of the most important attraction points for entrepreneurs from all over the world. The government recognized the importance of foreign investments
because of the economic benefits they bring. An increased employment rate is one of the major advantages of foreign investments
and companies created by EU and non-EU investors in France.
Even if France does not have a specific law providing for FDIs, the government compensates through investment subsidies, freedom and equal treatment applied to overseas entrepreneurs when compared to local ones.
Foreign entrepreneurs considering investing in France should note that:
they will benefit from freedom in setting up any type of company, as France is one of the less restrictive countries in the world from this point of view;
the holding company regime is one of the most advantageous in Europe, as it is possible to set up this type of structure here;
there are various incentives for industries like research and development (R&D), the industrial sector, such as manufacturing, information technology, etc.;
both tax and non-tax incentives are available in most regions of the country;
freedom of buying real estate, including commercial buildings as a private investor or through a company.
has many strengths when it comes to attracting foreign investors
and our local agents can offer more information on the different laws that comprise provisions on investing in France
and the benefits for overseas entrepreneurs
The French workforce and labor costs, an incentive for foreigners who want to invest in France
can boast one of the most skilled workforces in Europe
. With good universities delivering specialized personnel, France is among the best countries in Europe to offer high quality services at low costs, which is one of the most important reasons announced by foreign investors
who operate here. This is also one of the reasons why multinational companies have established branch offices in France
and they come to invest in France.
According to several reports, the average costs incurred with employees are significantly lower in France than in other European countries, such as Germany. Also, it is less costly to set up and operate a business in France than in the United States. These are just a few of reasons why France is an attractive country for foreign investors.
Foreign investors receive assistance from the French government
There are many years now since the government has enabled various incentive schemes for foreign investors coming to France
. This is also why the number of foreign enterprisers has grown considerably in France. Among these, the tax credit granted to foreign and French companies
with commercial activities here which can benefit from a reduced tax rate of 6% related to employment costs. The government also enabled an incentive for companies in the research and development industry which can benefit from 30% tax credits from expenses incurred throughout a year, in a limit of 100 million euros.
The main incentives for foreign investors in France
Foreign investors who want to invest in France
will usually benefit from various incentives
. As mentioned above, not all of them are granted as tax subsidies
, however, where such tax exemptions and deductions
are available, they target small and medium-sized enterprises (SMEs). Such businesses will usually take the form of limited liability companies
Among the tax advantages available for foreigners who invest in France, we can mention:
- subsidies for investments in specific sectors;
- discounts and cost reductions;
- loan guarantees;
- deductions of expenses incurred with personnel training.
Other incentives are offered for job creation and investments in underdeveloped regions. The food industry
and activities related to the protection of the environment also benefit from various incentives.
If you want to open a company in France
and need assistance, our local consultants are at your disposal with support in drafting and filing the documents with the Companies Register
Tax benefits available in France
who create new companies in the so-called enterprise zones have the most to benefit from tax holidays in France
. They can also obtain tax credits if they register companies to operate in the Northwestern and Southwestern parts of the country, among which Corsica, which is severely underemployed. For setting up businesses in these areas, French companies
can benefit from partial or total tax exemptions for up to 5 years. Foreign investors will also benefit from an expedited company registration procedure and lower incorporation fees.
Our French company formation advisors can offer more information on the corporate taxes that need to be paid here.
Special economic zones in France
Just like other countries, France
too has special economic areas
which are divided into 3 categories:
There are 3 enterprise zones located in Aubagne-la-Ciotat, Dunkirk and Toulon-la-Seyne. Here, companies can benefit from a 10-year tax holiday provided that certain requirements are met. Then, there are the privileged investment zones of Bassin Minier and Sambre Avesnois, where a tax credit of 22% is available. Gex and Haute-Savoie are France’s free zones. Here, companies can benefit from no customs duties related to importing and exporting goods.
A good news for foreigners interested in investing in France in the next years is a reduction of the corporate tax. Starting with 2020, the rate of the tax has been lowered to 28% and further cuts are announced for the year to come, so in 2022, the corporate tax will drop to 25%.
In terms of foreign investments, France:
- in 2018, the country’s FDI flows increased by 25% reaching 37 billion USD;
- is the 12th largest FDI recipient in the world;
- was the 4th country in the world by FDI inflows in the first half of 2019;
- ranks 32nd
in the World Bank
’s Doing Business Report for 2020.
Investors who are interested in setting up a company in France
should know that the country has a good investment rating
, provided by renowned credit rating agencies
. According to the information provided by such agencies, the local market is stable, being credited with high indexes, such as AA
(awarded by the Standards &Poor’s) or Aa2
(awarded by Moody’s). Our team of French company formation representatives
can provide assistance to the investors who want to invest
on the local market.
AA rating, awarded to France by Standards& Poor’s
The AA rating is awarded by the credit rating agency Standards& Poor’s for long term credits. The ratings are awarded from a scale starting from NR (rating hasn’t been requested) to AAA (highest rating awarded by the agency).
The long-term issue credit rating is based on the following:
• the likelihood of payment, which refers to the possibility of the respective state to meet its financial obligations;
• the nature of the financial obligation;
• the protection the state can assure in an unforeseen event, such as bankruptcy or reorganisation or any other event that would disrupt the terms agreed upon.
The AA rating is the second highest rating offered by Standards& Poor’s, after the AAA.
AA designates that the respective country has a strong capacity to meet its financial obligations and it differs from the AAA rating only to a small degree.
New foreign investment rules in France
In order to ease the access of foreign enterprisers on the French market, the Government has issued a decree through which new regulations have been enabled for both EU and non-EU investors. First of all, the term “foreign investment” has been redefined and now applies based on the country of origin of the investors. Secondly, the list of investment sectors has been expanded to 11 French industries. However, for 7 of these industries prior approval from the Ministry of Economy (MINFEI) is required.
Even if the new legislation for those who want to invest in France provides for more stringent conditions, certain overseas companies are not required to apply for approval with the MINFEI. These are:
- - companies in the same corporate group in which a common shareholder owns more than 50% of the voting shares;
- - investors who have already received authorization for investing in a sector and now apply for a second approval.
Our company registration agents in France can offer more information on the new laws on foreign investments.
Industries open to foreign investments in France
According to the French laws on foreign investments, the following industries are open to overseas enterprisers and companies seeking to set up subsidiaries or branch offices here:
- - tourism;
- - automotive;
- - software;
- - telecommunications;
- - research and development;
- - biotechnology;
- - electricity and renewable energy.
France also offers a great number of incentives and tax exemptions to foreign investors and is still considered one of the less restrictive states in the world when it comes to foreign investment legislations.