How can you open a business in France? How is the country’s fiscal system? Is the bureaucracy burdening? How does legislation apply for EU citizens? Business Review has prepared a special article that will answer all these questions for those who are interested in doing business in France.
Opening a business in France as a foreign resident is not too complicated, but there are some steps you’ll need to carefully consider or hire an expert who can help you in order to keep the process short and clear.
The most common business structures in France are SARLs (Société à Responsibilité Limitée), which are limited responsibility enterprises. Another option, if you’re going to work alone, is to be a sole trader or micro-enterprise, where you and the business are treated as one legal entity, unless you choose to be an EIRL (Entrepreneur of Individual Limited Liability). We’ll look at SARLs in detail here, as they involve more bureaucracy. However, it shouldn’t take more than a few days to complete the process.
These are the steps you normally have to go through for a limited company, according to the World Bank’s Doing Business Report:
- 1. Check name for uniqueness with the Institut National de la Propriete Industrielle (INPI) – it can be checked online
- 2. Deposit the initial capital at a bank – the initial capital (at least EUR 4,000) is blocked during the registration period and released upon presentation of a K-bis form (certificate of incorporation). The K-bis contains a unique number which needs to be written on all official documents and invoices. French banks are required to offer financial assistance to new businesses, including start-up loans up to EUR 7,000.
- 3. Publish a notice of incorporation of the company – online – EUR 5.50 per line of 40 characters (assuming 30 lines) – this is done in a newspaper authorized to publish legal notices. The notice must provide the name of the company and its manager, share capital, the object of the company and registered office.
- 4. File a request for a company’s registration with the Centre de Formalites des Enterprises (CFE) – online – EUR 41.50 – the CFE handles all formalities related to the trade register in the court, statistics, tax authorities, social security, labour, health insurance, unemployment ensurance, pension, Employment Pole and similar bodies.
- 5. Buy company books and have them initialed by the clerk at the Commercial Court – EUR 15 per book + EUR 3.12 stamping fee – Special accounting company books must be bought from the court or specialized stores. Inventory books are no longer required, but the company must purchase the minutes of the records and the ledger and have these books initialed by the clerk.
You are advised to have a business plan in place before you start your company, in order to show investors and bank account managers how the business will run.
As in other countries, corporate tax in France is separate to taxes applicable to income from the business paid as salary. The amount of corporate tax a company pays depends on turnover and capital structure, according to Expatica.com.
If you are setting up an EURL (limited company under sole ownership), you may choose to be taxed under the personal income tax system under the régime du reel or through French corporate taxation.
If your company is a SARL (limited company in joint ownership) you can choose to be taxed under the personal income tax system for the first five years of business if the business is small, or is a certain type of family business – otherwise you will be taxed through French corporate taxation.
Companies with a turnover of less than EUR 50 million and a profit up to EUR 75,000 will be subject to a corporate tax rate of 28 percent.
Small to medium companies with a turnover of less than EUR 7.63 million pay a tax rate of 15 percent for the first EUR 38,120 profit and 33.33 percent after this, providing you and other owners put in capital and 75 percent is held by individuals.
French corporate tax rates are expected to undergo reforms until 2020 under the bill, when 28 percent will become the standard French corporate tax rate for all companies; for example, the rate of 28 percent will apply to the first EUR 500,000 of all companies’ profits in 2018, and to companies earning less than EUR 1 billion from 2019.
Companies have to file a French tax return within three months of close of accounts or by April 30. French corporate tax is payable quarterly on March 15, June 15, September 15 and December 15. Exemptions apply if you’re a new company or paid less than EUR 3,000 in the previous year, in which case you can pay French corporate tax on a yearly basis.
If you want to hire workers, you will need to pay social charges for your staff. You have to pay employees a net salary plus another 75 percent in employers and employees’ contributions. French VAT is 20 percent. Micro-enterprises cannot charge or claim VAT in France.