Starting a Business in France
Starting a Business in FranceUpdated on Monday 30th August 2021
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France is the largest country in the European Union and the third largest country in Europe. The country has been at the heart of European history and it is one of the top locations in Europe to open a business. A major economic power, France attracts foreign investors worldwide who are interested in starting a business in France. The capital city, Paris, is a renewed cultural and business center, full of history and various business opportunities for entrepreneurs. Our lawyers in France are ready to walk you through the steps required for starting a business in France, one of the most powerful countries in the world.
Requirements for starting a business in France
Depending on the chosen business entity, there are a few requirements to consider when starting a business in France. Among these, the most important ones are the documents which need to be prepared. In the case of sole proprietorships, the list of documents needed is not very extensive, however, foreign citizens must have residence permits in order to set up this type of structure. Another requirement when opening a sole trader in France is to provide information and proof of one’s qualifications. The sole trader is usually employed by professionals in the accounting, law and medical fields in France. Similar requirements apply when deciding to set up a partnership in France.
Things change when opening a SARL or SA in France, as the list of documents to be filed with the Trade Register is more extensive. The following documents need to be considered for starting a business in France:
- the personal information of the shareholders (their names, addresses, residency are required);
- information about the directors of the company (at least one director must be appointed);
- the company’s Articles of Association which must be drafted in French and authenticated by a public notary;
- proof of the company’s legal address in France (this is a mandatory requirement no matter the type of structure chosen);
- all the documents submitted by foreign individuals or companies must be translated and notarized.
The same requirements apply when opening a branch or subsidiary of a foreign company. Our French lawyers can guide foreign investors who want to open companies on the documents they need to prepare for a fast and correct company registration procedure.
We invite you to read about starting a business in France in the infographic below:
Procedure of starting a business in France
France encourages foreign direct investments and the procedure of opening a company in France is straightforward and very accessible due to the online company registration option. By using the online procedure, entrepreneurs avoid the bureaucratic relation with the public authorities (tax authorities, the social security agencies, the Commercial Court etc.). Thus, the entire procedure of starting a business in France doesn't take longer than seven days. If you need legal assistance for the incorporation procedure, you may call our French lawyers.
Documents needed to open a business in France
The following documents must be prepared in order to start a business in France:
- the company name reservation form which is filed with the Commercial Register;
- the object of activity of the company which must be accompanied by a description;
- the names of the shareholders, proof their addresses and their passports;
- the names of the directors and copies after their passports or other identification papers;
- information about the allotment of the shares in the company.
Our French lawyers invite you to watch a comprehensive video about company formation in France:
Types of companies in France
According to Commercial Law in France, the following types of entities are available for registration in France:
- the sole trader, which is the simplest business form available for single enterprisers in this country;
- the private limited liability company which take several forms, one of the most employed one being the simplified limited liability company for self-employed professionals;
- the unipersonal limited liability company which is characterized by the fact that it has one shareholder;
- the joint stock company, also known as the public limited liability company;
- the simplified public limited liability company which is preferred by foreign companies interested in the French market;
- the partnership which implies having at least two members called partners.
Our attorneys in France can offer detailed information about each type of business form and help you with the procedures related to starting a business in France. In case you intend to open a company in Estonia, we can put you in contact with our partners.
Share capital requirements for starting a business in France
Foreign investor who want to start businesses in France must comply with the following share capital requirements imposed by the law:
- the sole trader needs no minimum share capital;
- the partnership does not require a minimum share capital;
- there is no minimum share capital imposed on the private limited liability company;
- the unipersonal limited liability company requires no minimum share capital;
- the joint stock company requires a minimum share capital of 37,000 euros.
Business registration numbers in France
Our attorneys in France can help foreign investors who want to register any of the types of companies above. The SIRET and SIREN numbers are two of the main identifiers of a company in France. The SIREN number is issued upon the registration of the business with the Trade Register and is made of 9 digits. The SIRET number is made of the SIREN number to which 5 digits are added. The last 5 digits represent the geographical location of the company in France. Another 5 digit code issued to a French company is the APE – it designates the main object of activity of the business.
Tax and social security registration of a company in France
Starting a business in France implies several steps and one of the final steps of the business registration process refers to obtaining a tax registration number and registering for social security purposes. French companies must also register for VAT, however, this requirement is not mandatory from the beginning. Obtaining a VAT number is mandatory only for trading companies in France, however, it also becomes mandatory for companies which register an annual income of 35,000 euros. French companies hiring personnel must also register for social security purposes as employers. It is also useful to note that French companies involved in trading activities can register with the Customs Authorities and obtain EORI number.
When it comes to the taxation of companies in France, the corporate tax which need to be paid is set at 33%, however, micro-enterprises benefit from a lower corporate tax. Also, France has signed numerous double tax treaties which provide for various deductions and exemptions. Our French law firm can guide foreign investors who open companies here on the tax and social security obligations they need to respect as employers.
Business licensing for companies in France
The last step which will enable a French company to conduct business activities is obtaining special licenses and permits. While the general licenses are issued by the municipality, other special licenses are issued by specific authorities. Foreign investors should also know that depending on the type of company they want to open, they need to register with different authorities, as it follows:
- if the company will complete commercial activities, it must register with the Chamber of Commerce and Industry;
- if the business will complete a specific trade or craft, it must register with the Chamber of Craftsmen;
- in the case of sole trader completing liberal professions, registration with URSSAF is required;
- for those operating in agriculture, registration with the Chamber of Agriculture is required;
- financial companies must register with the Central Bank and/or the Financial Supervisory Authority.
Other activities can also require obtaining other licenses or undergoing specific inspections. It is best to consult with our lawyers in France on the licenses and permits needed for your business, in accordance with the activities you plan on undertaking here.
Hiring personnel when starting a business in France
The French Labor Code governs the relationship between the employer and the employee. Employees have an online registration option in France. The procedure is simple and the employer must ensure that the employee obtains a pre-hiring declaration. Employees in France must be registered with the social security services. The employer must also register with the labor inspection and for the supplementary retirement funds, no later than three months after the business has been set up.
France is dedicated to investing in education. Its public spending on education (the percentage of GDP) is approximately 5.8%, larger than the approximate average value of 4.8% in the rest of the G20 countries. France also ranks high in terms of productivity: the country has one of the best hourly productivity rates, when compared to the European average. The high level of training and education of the average French employee reflects in these statistics. A high percentage of the French population is bilingual.
France is also known for its quality of life, reflected in criteria such as: costs of living, infrastructure, economy, environment, security, culture and leisure activities and others. The French Government is aware of the importance of entrepreneurship in France and in recent years the country has increased innovation incentives. France’s research tax credit applies to companies that incur Research & Development expenses. Such companies are eligible to receive the tax credit regardless of their size, business sector and nationality. The tax credit covers 30% of all R&D expenses, up to 100 million euros and 5% above this amount.
Start-up costs in France
On average, it is relatively easy to start a business in France in terms of costs and time, compared to the other G20 countries. Cost components include:
- facility costs,
- utility costs (electricity, telecommunications, and others),
- corporate tax.
Other start-up costs in France can include taxes for mandatory procedures, notary fees, the minimum share capital and auxiliary costs. On average, the time needed to start a business in France is 7 days, much lower than the G20 average. Our law firm in France can provide detailed information about all necessary start-up costs, depending on the type of company you choose to set up in France.
Reasons to invest in France
France is one of the most influential countries in the European Union and in the world, having great cultural, economic, military and political powers. The country is home to some of the largest companies in the world and many prestigious businesses originate in France or have been influenced by French culture. France has a mixed economy, comprising private enterprises and state properties. The French State governs some important business sectors such as: telecommunications, railways, energy and aerospace. France's main trading partners for imports and exports are: Germany, UK, USA, Spain, Italy, Belgium and the Netherlands.
An entrepreneur willing to start a business in France must be aware that France also offers a special attention to the education sector, having a highly centralized educational system and constantly investing in the formation of the future employees. Moreover, when it comes to educational programs for foreign students, France is considered the fourth most popular destination in the world.
Some of the most developed business sectors in France are the agricultural sector, the country being a large producer of agricultural products, and the tourism sector - France is among the top tourist destinations in the world. Its popular cities, popular sites and other attractions make tourism a very profitable business sector.
France is placed in the top 5 business destinations worldwide due to its economic standards and stability among other attractive features. The French economy is not only appreciated, but also sustained by a series of real aspects that are in most of the cases considered by foreign investors:
- As a global economic power, France is the second-largest market with more than 67 million consumers.
- There are more than 29 leading businesses established in France and that enjoy high success.
- Banking, insurance and the luxury goods market are powerful in France.
- Around USD 2,762 billion is the registered GDP in France this year.
- There are more than 28,000 foreign capital companies registered in France.
- Around 1,323 foreign investment projects have been accepted in 2018 in France.
- According to the 2018 Global Competitiveness Report, France ranks 8th out of 137 worldwide economies.
- The well-developed infrastructure and the strategic geographic location eases the business path with international investors in France.
- France has numerous European partners, the country being among the founders of the European Union.
- Paris, the capital of France is a leading global financial center with 4 French banks among the most powerful 20 banks in the world.
French holding companies
Another option for those interested in starting a business in France is the holding company which offers many advantages, especially from a fiscal point of view. Being a member state of the European Union, France follows the regulations of the EU’s Parent-Subsidiary directive. Thus, when a French holding company is controlling more than 10% of a subsidiary for more than one year, the dividends remitted by the EU subsidiary are free from taxation. However, on the basis of numerous double tax treaties signed by France with other countries, tax exemption can be applied in order to avoid the withholding taxes on dividends and also the companies can be exempt from paying corporate taxes, when the subsidiary is not in an EU country.
For more information about starting a business in France, please contact our law firm in France. We can provide a wide range of legal services, personalized according to your specific business needs in this country and also in other European states. If you need to set up a company in Malaysia, we can put you in touch with our local partners.