France, with its strategic location in the heart of Europe and robust economy, continues to attract foreign investors seeking to expand their business presence. This comprehensive guide will walk you through the essential steps and requirements for setting up your business in France as a foreign investor in 2024.
Why Choose France for Your Business?
With its economic and cultural heritage, France is a key player on the international stage, able to reconcile tradition and modernity. Its openness to global trade, its strategic role in major European institutions and its attractiveness to international talent reinforce its status as the preferred choice for companies seeking growth and competitiveness. Indeed, France offers many assets for foreign investors, making it an essential destination for business creation in Europe :
- Access to the European Union’s single market : France provides seamless access to over 450 million consumers and the benefits of harmonized trade regulations within the EU.
- World-class infrastructures : France ranks 7th globally in logistics performance with its high-speed railways (TGV), extensive motorways and international airports according to the World Bank’s LPI.
- Highly skilled and productive workforce : France ranks among the top 10 globally for education and training, supported by prestigious institutions such as HEC Paris and INSEAD, which regularly appear in global rankings for business education.
- Commitment to innovation and research : France allocates 2.4% of its GDP to research, placing it among the leading nations in innovation according to the GII 2023.
- Government incentives for foreign investment : Foreign investments are actively supported through tailored programs or tax reductions.
- Business France : it assists companies in navigating administrative processes and accessing funding.
- “Choose France” : it reduces corporate tax rates from 33% to 25% by 2022 to create a more business-friendly environment.
Understanding French Business Structures
Before you start the registration process, it’s important to choose the legal structure that’s right for your business. In France, foreign investors generally opt for two types of company : the SARL (Société à responsabilité Limited) and the SAS (Société par Actions Simplifiée), each offering specific benefits depending on the company’s needs.
- SARL (Société à Responsabilité Limitée)
The SARL is the most common type of commercial company in France, with 1,601,873 entities registered as of May 22, 2023. Primarily designed for small and medium-sized businesses, it is valued for its simplicity and legal security.
- Ease of creation : It is accessible to a wide range of entrepreneurs thanks to its minimal requirements.
- Limited liability protection : Partners or associates are only liable for corporate debts to the extent of their contributions. This limitation protects their personal wealth from the company’s creditors.
- No minimum capital requirement : There is no minimum capital requirement and SARL can be created with a minimum capital of €1. It offers financial flexibility to entrepreneurs.
- Possibility of management by a single person: SARL can be constituted by a single natural or legal person and this, from the moment of its constitution. It makes it an ideal option for sole proprietorships.
The SARL is a company that is easy to set up : few partners, a potentially reduced share capital. Its operation is simple and its partners benefit from limiting their liability to contributions. Due to these characteristics, the SARL remains a preferred solution for entrepreneurs looking for a stable and non-binding structure.
Legal basis : Articles L.223-1 to L.223-43 and R.223-1 to R.223-36 of Commercial Code
- SAS (Société par Actions Simplifiée)
The law of January 3, 1994, created the SAS to meet the expectations of modern companies and the business world. It particularly appeals to foreign investors because of its flexibility and adaptability.
- Organizational flexibility popular among foreign investors : SAS is based on the principle of contractual freedom. Its structure is defined by statutes, with mandatory roles like president, managing director, and sometimes auditor.
- Freedom in Management : Shareholders have significant leeway in designing the company’s management structure. This flexibility allows the SAS to adapt to the specific needs of the business, with a focus on the intuitu personae principle.
- No minimum capital: You do not need to have a minimum amount to set up an SAS, providing high financial accessibility.
- Ideal for subsidiaries of foreign companies: Foreign companies often choose the SAS structure to create subsidiaries because it is flexible, involves minimal formalities, and allows 100% ownership of the capital by a single entity.
- The partners limit their liability to their contributions, ensuring essential legal certainty, similar to the SARL structure.
With its flexible structure, SAS has become the first joint-stock company in France. It combines the advantages of a contractual organization with those of legal protection, perfectly meeting the needs of international companies seeking to operate safely while minimizing administrative constraints.
Legal basis : Articles L.227-1 to L.227-20 of Commercial Code
For more information on the different forms of company in France, you can refer to the French government’s entrepreneurship website and the French government’s business creation website.
Step-by-Step Registration Process
Setting up a business in France requires a series of steps carried out by the future representatives of the company, each of these steps is crucial to ensuring legal compliance and obtaining legal personality.
- Preparation and authentication of required documents
Before proceeding with registration, it is necessary to build a complete file and ensure that all required documents are authenticated :
- Statutes of the company : They define the rules of operation of the company and must be written with care.
- Proof of the registered office : It refers to a proof of the address of the registered office such as a lease, invoice or certificate of domicile.
- Identity document of Directors : It can be a passport or valid ID of the legal representatives of the company.
- Bank certificate for capital deposit : This document is issued by the bank and certifies that the minimum share capital has been deposited in a blocked account in the name of the company being formed.
- Publication of a notice of constitution
The creation of a company involves the publication of a notice of constitution in a legal notice (paper or digital). This notice must include essential information relating to the company, such as its name, legal form, registered office, and purpose.
Legal basis : Article R.232-4 of the Commercial Code
- Filing of the registration file
The future legal representatives are responsible for compiling a registration dossier including all the required information related to the constitution of a company and supporting documents.
You must deposit the registration file with the CFE or electronic counter (Guichet Électronique Unique). Since 1st January 2023, you must carry out all formalities exclusively via the electronic counter, which centralises the information and sends it to the relevant bodies, such as commercial courts, tax administration, and social welfare agencies.
- Registration in the Register of Trade and Companies (RCS)
Once the registration has been filed, the Commercial Court Registry carries out a regularity check.
- Verification of supporting documents : Registrars ensure that the information provided meets the legal requirements specific to the type of company created and that it corresponds to the documents submitted.
- Attribution of legal personality : Registration confers on the company the legal personality, allowing it to acquire rights and obligations independently of its partners. This legal personality protects the partners by separating their personal assets from that of the company.
- Obtaining proof of legal personality : Once registered, the company receives several official documents as proof of its legal personality.
- SIREN number : It is assigned by INSEE and legally identifies the company.
- Kbis extract : This official document is proof of the company’s registration and legal existence.
Legal basis : Article 1842 of Civil Code
- Enregistration with Tax authorities and Social security organizations
After registration, several registrations must be made with the competent authorities
- Tax service : The company must register with the tax authorities to obtain an intra-EU VAT number and ensure that it complies with its tax obligations, such as VAT declaration, corporation tax, and territorial economic contribution (CET).
- Social security bodies : Every company has to register its employees and managers with social security bodies. This formality allows the company to pay social contributions and guarantee social protection for workers.
- URSAFF for employee social coverage, self-employed social scheme for individual entrepreneurs
Legal Requirements and Compliance
Foreign investors have to meet several legal requirements to set up a business in France. These requirements vary depending on the legal structure chosen and the investor’s personal situation.
- Requirements for directors
Before it can start operations in France, the company must appoint one or more executives. These executives have to meet certain legal requirements :
- Number of directors : A French company has to have at least one director. This director can be a natural or legal person, depending on the structure chosen.
- Nationality of directors : There are no nationality restrictions on company directors. A foreign investor can therefore appoint a director or president without nationality conditions.
- Valid residency permit : Executives residing in France have to have a valid residence permit allowing them to pursue a professional activity.
Legal basis : Article L.223-18 (SARL) and L.227-1 (SAS) of Commercial Code
- Requirement for share capital
The share capital is one of the founding elements of a company. Depending on the legal form chosen, specific requirements apply regarding the amount and deposit of the capital.
- Amount of share capital : The share capital of the company depends on the legal form chosen.
- SARL and SAS can be constituted with a symbolic capital of €1. However, it is often advisable to set a higher capital to strengthen the credibility of the company vis-à-vis commercial and financial partners.
- SA can only be constituted with a capital of €37,000.
- Deposit of the Share Capital: The company must deposit the share capital amount into a bank account in its name. This deposit ensures the company’s solvency at the time of its formation.
- Proof of Deposit: The bank issues a certificate confirming the deposit of the funds, certifying that the entire capital has been deposited and is available in a bank account in France.
Tax Considerations and Obligations
Understanding the French tax system is essential to ensure the sustainability and success of your business. The French tax system mainly imposes two types of taxes on corporate profits, which are income tax (IR) and corporate tax (IS).
- Corporate Tax (IS)
The Corporate tax is a tax with a standard rate of 25% that applies to profits made by the company during the tax year.
However, small businesses can benefit from a reduced rate of 15% on the first €42,500 of profits. This reduced rate applies to companies that meet the following 2 conditions :
- Turnover less than or equal to €10,000,000 during the accounting year
- Fully released at least 75% of share capital held by natural
In addition, additional taxation can be applied if the profits are distributed to partners.
Legal basis : Articles 1A and 205 of General Tax Code
For further information on Corporate Tax, click here.
- Income tax (IR)
Income tax applies progressively to the profits of businesses or self-employed individuals (proprietorship or partnership) and is calculated on a progressive scale.
- up to €11,294 : exoneration
- between €11,294 and €28,797 : 11%
- between €28,798 and €82,341 : 30%
- between €82,342 and €177,106 : 41%
- more than €177,106 : 45%
The tax rates depend on the profit category and may apply a marginal rate based on the total income amount. Individuals may also benefit from a family quotient.
Legal basis : Article 1A of the General Tax Code (CGI)
For further information on Income Tax, click here.
- VAT Registration
VAT is an indirect tax that affects consumption by taxing the value added at each stage of the process of producing or marketing a good or service. In other words, VAT relates to the turnover made by companies. Indeed, A business must register for VAT if its turnover exceeds :
- €82,800 for the sale of goods
- €33,200 for the provision of services
In France, the VAT is subject to a different rate depending on the good or service :
- Standard rate : The standard VAT rate for most goods and services is 20%.
- Reduced rates : There is a list of sectors of activity that will be eligible for one of the reduced rates. The rate of VAT collected depends on the activity of the business.
- 10%
- 5.5%
- 2.1%
The VAT collected is returned to the State. However, the business can deduct the VAT paid on its business purchases. This VAT mechanism reduces the cost for businesses, provided they comply with the registration and declaration procedures.
Legal basis : Articles 256 et seq. of General Tax Code and EU Directive on VAT
Practical Steps for Business Setup
When setting up a company in France, entrepreneurs must take several practical aspects into account to ensure a successful establishment:
- Location Selection
The choice of location is a crucial step in the process of setting up a business in France. Several factors must be taken into account to ensure the success of your entrepreneurial project :
- Business districts vs. regional locations : Depending on your industry and business goals, you’ll need to choose between locating in a business district or in a regional location.
- Business districts offer greater visibility and networking opportunities, but costs are often higher.
- Regional zones can offer more affordable rental costs, while offering access to local markets and specific resources.
- Rent costs and lease terms : They can vary considerably depending on the location. They are essential to assess as they will impact the flexibility and future growth of the company.
- Proximity to target market and resources : Areas close to economic or industrial poles can offer optimal accessibility to logistics networks and specialized talent.
- Banking Relationships
Opening a professional bank account is essential for a business. Since it separates personal and professional finances and therefore ensures the company’s credibility with its partners and customers.
To open a professional bank account in France, the company will need to provide several key documents :
- Statutes of the company : It is a document attesting to the legal establishment of the company
- Proof of identity of the legal representative : It can be a passport or an identity card as long as it can identify the legal representative.
- Proof of the registered office address : It refers to commercial lease or any utility bill.
- Certificate of capital deposit (if applicable) : It is mandatory for some structures and the amount will vary depending on the legal form of the company
Foreign investors wishing to operate in France may need international banking services in order to facilitate foreign currency transactions, manage cross-border payments, or set up international credit lines.
Conclusion
Setting up a business in France as a foreign investor requires careful planning and attention to legal requirements. While the process may seem complex, the potential benefits of accessing the European market and France’s robust economy make it a worthwhile investment. Consider working with local professionals to ensure a smooth establishment process and compliance with all regulations.
Consult French legal and business advisors for the most current information and specific requirements, as regulations may change.
Ready to take the next steps in establishing your business in France? Here are some key actions to consider:
- Contact a qualified business attorney or notaire to review your specific situation
- Begin gathering required documentation for registration
- Research potential business locations and commercial property options
- Start networking with local chambers of commerce and business associations
Remember that while this guide provides a comprehensive overview, each business case is unique and may require specific adaptations to meet particular circumstances and regional requirements.
For additional support, consider reaching out to:
- Business France – The national agency supporting international investment
- Your home country’s chamber of commerce in France
- Professional accountants and tax advisors specializing in international business
With proper planning and professional guidance, you can successfully navigate the process of establishing your business presence in France.
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