France boasts a rich and diversified economy, a pro-business culture, and a highly educated and skilled workforce. This is why foreign investors flock to the French market to expand their business outreach to the European Union. Flanked by six countries – Spain, Luxembourg, Germany, Italy, Switzerland, and Belgium – France holds a prominent position globally as one of the most advanced countries in the world.

Setting up a company in France is an effortless process for France and European Union citizens. However, it is not so simple for foreigners wishing to enter the French market. To launch and operate a business smoothly in France, one must be familiar with the country’s laws, industry regulations, and government norms.

Benefits of Starting a Business in France

Starting a business in France offers numerous benefits to business owners:

1. Large European Market: Paris, the capital city, is the country’s core financial center and a venture capital hub. Besides great investment opportunities, you can also attract investors to your company.
2. Government Support: In 2019, significant changes to French unemployment benefits included financial assistance to entrepreneurs while they establish their businesses.
3. Tech Startups: The French government takes a special interest in tech startups. Entrepreneurs can acquire a tech visa, and the government fosters a favorable environment for tech innovation.
4. Manufacturing Sector: With manufacturing holding the biggest share in the French economy, business owners in this domain receive extensive support to boost global competitiveness.
5. Tax Incentives: France offers significant tax credits to companies involved in research and development, tech, manufacturing, tourism, and more.

Requirements for Starting a Business in France

1. Resident Permit: All foreigners must obtain a resident permit to carry out long-term commitments and operate a business in France.
2. Work Visa: A work visa is essential for starting a business in France. Business visas are granted selectively to individuals who can contribute positively to France’s economy.
3. Regulated Business Permits: Some occupations and businesses in France, such as accountants, vets, hairdressers, builders, and wine dealers, require special permits and registration with relevant authorities.
4. Company Name Check: Verify the availability of your chosen company name on the Institut National de la Propriete Industrielle (INPI) website. Register your company name and logo as trademarks to ensure exclusivity.
5. Taxation:
   • Corporation tax: 25%
   • Capital gains tax: 19% plus social charges of 17.2% for residents
   • Dividend incomes: 12.8% or general tax rate after deducting 40% of company tax
   • Withholding tax for non-residential individuals: 30%
   • Standard VAT rate: 20%
6. Bank Account: Open a local bank account to deposit the minimum capital investment. A confirmation of the account opening is essential for business registration.

Types of Business Structures in France

1. Sole Trader: Sole traders and their businesses are considered a single legal entity. Personal assets can be included in business resources unless declared otherwise.
2. Joint Venture: A simplified version of starting a business where an international company partners with a local French company, akin to a partnership business but with elements of a joint-stock company.
3. Company (Société): Separate from the legal entity of the owner, a company must have a trade name, an official address, and requisite minimum assets. It will be taxed according to France’s corporate tax regime.
   • Enterprise Unipersonelle à Responsibilité Limitée (EURL): Owned by a single person/entity and run as a single shareholder company with limited liability.
   • Société à Responsibilité Limitée (SARL): A French private limited liability company with 2 to 100 partners, where shareholders share liability based on their capital investment proportion.

Company Registration Process

Pre-registration Requirements

• Resident permit
• Work visa
• Financial assistance
• Capital investment
• Shareholders and related documentation
• Registered company name
• Local bank account
• Managing director
• Certificate of incorporation
• Financial statements
• Articles of Memorandum of Understanding (MOU)

Registration Process

1. Deposit the address and identity proof to the concerned authorities.
2. Register your company’s name by providing personal credentials.
3. Draft and notarize the mandatory and statutory company documents.
4. Submit the necessary documents to the trade registrar to register your company as a legal entity in France.

Post-registration Formalities

• Filing for tax registration
• Offering the share certificate to the company’s shareholders
• Registering employees for social security
• Displaying the company seal

Cost of Incorporating a Company in France

Incorporating a company in France costs approximately 3,600 Euros. Online registration starts from 550 Euros. Professional services for managing and incorporating your business range from 2,000 to 3,000 Euros annually. Registering micro-enterprises is generally free, but commercial/trading activities must register with the Chambre de Commerce et d’Industrie (CCI), costing about 100 Euros. Manual-based operations require registration with the Chambre de Métiers, a mandatory five-day training costing 200 Euros, and an additional 180 Euros for listing on the registre des artisans.

Assistance for Foreign-owned Businesses

Foreigners must apply for visas and work permits, with European Union citizens, the European economic area, Swiss citizens, and French citizens exempt from restrictions. Foreigners can use an Autorisation Provisoire de Séjour (APS) resident permit to stay in France for a year and develop their business ideas.

Government Assistance

The French government offers extensive assistance to new startups, maintaining a balance between large corporations and small startups:

1. Funding: The government provides funding assistance based on the company’s name, size, project description, duration, location, cost, and requested funding type and amount.
2. Research and Development Support: The government provides research and development assistance to foster startup growth.
3. Financial Assistance: French banks offer startup loans, such as Prêt à la Création d’Entreprise (PCE) and Prêts Bancaires aux Entreprises (PBE). The ACCRE scheme offers financial aid to unemployed individuals starting a business, while the NACRE scheme provides interest-free loans and free business consultation.
4. Other Assistance:
   • Subvention
   • Tax exemption
   • Tax credits
   • Repayable advance on zero-interest loan
   • Low-interest loans
   • Co-financing and guarantees
   • Capital injection

By understanding the business environment, requirements, and support available, you can successfully navigate the process of starting and growing a company in France.

Learn: How to Setup Business in Sri Lanka