How to Setup a Company in France: Guide 2024

French Economy & Business Overview

France, the seventh-largest economy in the world and the second-largest in the European Union, boasts a diverse and robust economic landscape. In 2023, the country’s GDP stood at approximately $3.2 trillion, reflecting a steady growth rate of around 2.1% despite global economic challenges. The service sector dominates the French economy, contributing around 79% to the GDP, with key industries including finance, insurance, and real estate. Manufacturing and industry account for about 19%, driven by aerospace, automotive, and luxury goods, while agriculture, though a smaller portion of the economy, remains significant, with France being the EU’s leading agricultural producer.

France's business environment is characterized by a strong emphasis on innovation and technology. The French tech ecosystem is thriving, with Paris emerging as a leading startup hub in Europe, hosting over 10,000 startups. The government supports innovation through various initiatives, such as the French Tech Visa and substantial tax incentives for Research & Development activities. The French Talent Passport, a residence permit designed to attract highly skilled foreign professionals, further enhances France’s appeal to global talent. As a result, France is home to several global tech giants and a vibrant community of small and medium-sized enterprises (SMEs) driving technological advancement.

In addition, France’s strategic location, well-developed infrastructure, and membership in the European Union make it an attractive destination for international business and investment. The country has been successful in attracting foreign investors, with inward foreign direct investment (FDI) inflows reaching approximately $40 billion in 2023, underscoring its status as a prime location for global business operations.

Benefits of Starting a Business in France

Starting a business in France presents numerous advantages for entrepreneurs and investors, driven by its robust economy, strategic market access, and supportive environment for innovation and growth. Below is a closer look at some of the benefits:

Diverse Economy

France boasts a diverse range of sectors, including aerospace, automotive, luxury goods, and agriculture, making it a global leader in several industries. For instance, France is renowned for its high-quality wine and cheese exports, while its automotive sector is home to leading brands like Renault and Peugeot. The country's diverse economic landscape offers numerous opportunities for businesses to thrive across various industries.

Skilled Workforce

With a population of around 67 million people, France has a highly skilled and educated workforce. The country invests heavily in education, particularly in technology and engineering disciplines. France ranks high in the European Union for tertiary education attainment, ensuring a steady supply of qualified professionals. Additionally, many French workers are proficient in English, enhancing the country's appeal to international businesses.

Strategic Geographical Location

France's strategic location in Western Europe provides businesses with excellent access to both regional and global markets. As a member of the European Union, France benefits from free trade within the EU and has preferential trade agreements with many other countries. Major cities like Paris and Marseille are key transportation hubs with extensive rail, road, and air networks, facilitating efficient logistics and distribution.

Rich Natural Resources

France is endowed with abundant natural resources that support various industries. Its agricultural sector is one of the most productive in the world, thanks to fertile land and favorable climate conditions. France is also a leader in renewable energy, with significant investments in wind, solar, and hydroelectric power. This wealth of natural resources provides a strong foundation for sustainable business practices and economic resilience.

Growing Technology Ecosystem

France's technology ecosystem is rapidly evolving, with a strong emphasis on innovation and digital advancement. The government supports this growth through initiatives like La French Tech, which promotes startup culture and provides funding for tech entrepreneurs. France is home to several tech unicorns, including BlaBlaCar and Doctolib, highlighting the country's competitiveness in the global tech market. Paris, in particular, has become a vibrant hub for startups and tech companies.

Favorable Business Policies

Recent reforms in France have made the business environment more attractive. The government has implemented measures to simplify administrative procedures, reduce corporate tax rates, and provide incentives for research and development. For example, the introduction of the "Société par Actions Simplifiée" (SAS) has streamlined the process of starting a business, making it easier and more flexible for entrepreneurs.

Who Can Start a Company in France?

Starting a business in France is an exciting opportunity that comes with a set of specific requirements you need to meet: 

1. Residence Status. You need to hold a valid residence permit if you are a non-EU citizen, or a citizen of the European Union.
2. Social Security Number. It is mandatory to have a social security number.
3. French Address. A valid French address is necessary for business registration.
4. Age Requirement. You need to be at least 18 years old.
5. Professional Qualifications. For certain professions, you may need to have specific qualifications or diplomas that are recognized by French authorities.

The Ministry of Economy's website provides comprehensive guidelines for foreigners wishing to open a business in France, including links to necessary forms and detailed information on the application process. This resource will help you navigate the requirements and ensure you meet all the criteria for setting up your business venture in France.

France Business Entities

Choosing the right business structure in France is crucial for the success and legal compliance of your enterprise. This section highlights the most popular types of French business entities, helping you understand their key features and determine which one best suits your needs.

Micro-entreprise

The micro-entreprise is not strictly a business structure but a tax status, making it ideal for freelancers. It offers simplicity in accounting, with no VAT charges or expense claims. The individual's professional and personal assets are combined, making it a straightforward option for those starting small-scale activities. Previously known as auto-enterprise, it remains a popular choice due to its ease of setup and minimal administrative burden.

Entrepreneur Individuel à Responsabilité Limitée (EIRL)

EIRL offers a sole trader status with limited liability, allowing individuals to operate under their name or a company name. It is easy to set up and provides a clear separation between personal and business assets. The French social security organization, URSSAF, provides a step-by-step guide to assist with the setup. This structure is beneficial for those who wish to safeguard their personal assets while running a small business.

Entreprise Unipersonnelle à Responsabilité Limitée (EURL)

EURL is similar to SARL but designed for single-person ownership. It offers limited liability, protecting personal assets from business liabilities. Although more complex to establish than EIRL, it allows for expense claims and requires articles of association and a registration fee. Moreover, the creation of an EURL must be publicly announced, which incurs additional costs. It is a suitable choice for individuals planning to expand and hire employees in the future.

Société par Actions Simplifiée Unipersonnelle (SASU)

SASU is a flexible entity for sole traders without turnover limits, offering limited liability and subject to corporate tax. It requires articles of association and administrative procedures for setup. One key benefit is the ease of transformation into a Société par Actions Simplifiée (SAS) if the business grows. This structure is advantageous for those looking to initially maintain a sole proprietorship but with the potential to expand and involve multiple shareholders later.

Société à Responsibilité Limitée (SARL)

SARL is a limited liability company that can have between 2 and 100 partners, making it ideal for family or friend business projects. No minimum capital is required, and liability is limited to the capital investment. It necessitates the signing of articles of association by all partners and a consensus on new associates. This structure is commonly chosen due to its flexibility and suitability for collaborative business ventures.

Société par Actions Simplifiée (SAS)

SAS provides significant legal flexibility in drafting articles of association, making it a preferred choice for start-ups and joint ventures. It operates similarly to SASU but is designed for multiple associates. The structure allows for physical or moral entity associates and offers excellent social security coverage. Its adaptability and ease of incorporating new shareholders make it popular among modern businesses seeking a dynamic and flexible framework.

How to Register a Company in France as a Foreigner?

Setting up a business in France as a foreigner is a straightforward process, whether you are an EU citizen or not. By following these steps, you can establish your company efficiently and legally, ensuring compliance with French regulations.

Step 1. Develop a French Business Plan

• Start by crafting a detailed business plan outlining your business mission, market analysis, financial projections, and operational strategy.
• Ensure your business plan is translated into French by a certified translator.
• Consider your target market, investment amount, business experience, and financial outlook.

Step 2. Choose the Company Structure and By-laws

• Choose the appropriate business structure. Common types include:some text
  • EURL: Single-person limited liability company.
  • SARL: Limited liability company (similar to LLC).
  • SAS: Simplified joint-stock company, suitable for foreign investors.
  • Branch: Extension of an existing foreign business.
• Register your company’s by-laws with a company formation agent or a lawyer. Specify your business activities.
• Determine your business category: commercial/industrial, trades/artisan, independent/freelance, or agricultural. 
• Register with the relevant centers (Centre de Formalités des Entreprises (CFE), Chambre des Métiers et de l’Artisanat (CMA), Chambre d’Agriculture (CA). 

Step 3. Set Up a French Business Bank Account

• Arrange for a business bank account, which can often be done remotely.
• Present your business plan and answer any queries from the bank manager.

Step 4. Deposit Capital in Your French Bank Account

• Deposit the required capital. While the legal minimum is €1, banks usually require around €4,000.
• Funds will be unblocked once the bank receives the Kbis certificate, confirming company formation.

Step 5. Announce Your New French Business Publicly

Announce the opening of your company in an authorized French newspaper, such as Le Parisien or Les Echos.

Step 6. Incorporate Your French Business

• Prepare necessary documents: completed application form, certified copies of passports, and utility bills.
• Send documents to relevant bodies including INSEE (for business directory registration), tax office (Centre des Impôts), commercial court (Greffe du Tribunal de Commerce), and social security office (URSSAF).
• Receive all official stamps to formalize your company incorporation.

Step 7. Register Your Business in France

• Obtain the certificate of incorporation and unique 14-digit company number (SIRET and SIREN).
• Use the Kbis to activate your business bank account and unblock share capital.
• Receive a VAT number and contact details from the tax office. Apply for an EORI number if you plan to trade internationally.

Step 8. Hire a French Accountant

Engage a professional French accountant to handle your tax and accounting matters. This will ensure compliance with French laws and aid in managing VAT returns and payrolls.

France Taxes

As of 2024, the corporate tax rate in France is 25% for resident companies. This rate applies to both domestic and foreign companies that are considered residents for tax purposes.

In general, residents are taxed on their worldwide income and assets. Non-resident corporations and foreign companies with permanent establishments in France are taxed only on their French-source income. The following are key points about French taxes for companies:

1. Tax Year. The tax year for corporations in France generally follows the calendar year, from January 1st to December 31st. The filing deadline for corporate tax returns in France is April 30th. 
2. Value Added Tax (VAT). France has a Value Added Tax (VAT) system. The standard VAT rate is 20%, but there are reduced rates for certain goods and services, such as 10% for certain food products and 5.5% for books and public transportation.
3. Withholding Tax on Dividends. Dividends distributed by French resident companies are generally subject to a withholding tax. The general withholding rate for dividend payments is 25%, but there are reduced rates under double taxation treaties entered into by France.
4. Capital Gains Tax. Capital gains from the sale of assets by companies are taxed at the standard corporate tax rate of 25%. For non-resident individuals and foreign corporations, capital gains tax rates can vary and may benefit from reduced rates under applicable double taxation treaties.
5. Social and Solidarity Contribution Taxes. Besides corporate tax, businesses in France are required to pay a social contribution tax of 0.16% on revenue exceeding €19 million, and a solidarity contribution tax of 0.13% on net turnover. Small businesses with a turnover less than €7.63 million are exempt from these taxes.
6. Withholding Tax on Royalties. Royalties paid to non-resident companies or individuals are generally subject to a withholding tax of 25%. However, royalties paid to a European company may be exempt under the European common system of taxation on royalty payments. For countries outside the EU, double taxation treaties may allow for a reduced withholding tax rate of 15%.
7. Personal Income Tax. France levies personal income tax on residents for their worldwide income, and on non-residents for their French-sourced income. The highest personal income tax rate in France is 45%.
8. Deductions and Credits. Corporations in France may be eligible for various deductions, allowances, and tax credits. These can include deductions for certain expenses, incentives for investment in research and development, and credits for taxes paid in foreign jurisdictions.
9. Double Taxation Treaties. France has tax treaties with over 40 countries to prevent double taxation and provide guidance on how certain types of income are taxed.
10. Real Estate Tax. All French and foreign legal entities owning real estate in France must pay an annual tax of 3% of the property's market value.

France Banking

Banking in France operates under the French Monetary and Financial Code (Code Monétaire et Financier), which governs banking activities. The country's central bank, known as Banque de France (BdF), acts as the regulatory body and supervisory authority. The Autorité de Contrôle Prudentiel et de Résolution (ACPR), which operates under the aegis of the Banque de France, also plays a key role in issuing standards, overseeing financial institutions, and defining authorized banking activities, permitted transactions, monetary controls, and other relevant aspects.

Foreign banks wishing to operate in France must register with the ACPR and obtain proper authorization before providing banking and financial services. There are also minimum capital requirements for foreign entities to conduct business in the country, which vary based on the type and scope of the banking activities intended. The French financial system exhibits various features and classifications, including:

1. Commercial Banks:

• Government-owned: (e.g. La Banque Postale).
• Private local banks with French capital:some text
  • Cooperative banks (e.g., Crédit Agricole, Crédit Mutuel).
  • Non-cooperative banks (e.g., Société Générale, BNP Paribas).
• Foreign banks:some text
  • Private local banks and local branches of foreign banks (e.g., HSBC France, Deutsche Bank France).

2. Investment Banks:

• Government-owned: (e.g. Bpifrance (Banque Publique d'Investissement)). 
• Private-owned: (e.g. Natixis).

3. Other Financial Institutions:

• Local banks with foreign capital: (e.g. ING France).
• Mortgage banks: (e.g. Crédit Foncier de France).
• Development banks: (e.g. Agence Française de Développement (AFD)).
• Savings banks: (e.g. Caisse d'Épargne).
• Finance companies: (e.g. Crédit Logement).
• Credit associations: (e.g. cooperative banks such as Crédit Coopératif).
• Representative offices.

Financial transactions in France are commonly conducted in Euros (EUR), with significant transactions also occurring in other major currencies like U.S. dollars (USD) and British pounds (GBP). The financial system consists of several segments, including local currency (Euro), foreign currency, and liquid assets managed by all banks.

As of recent years, there are over 300 banks operating in France, ranging from large international banks to small regional ones. The French banking sector is considered robust and resilient, with continuous improvements in financial health and stability. This resilience is bolstered by strong regulatory frameworks and a diversified economy. Banks in France today maintain high-quality client portfolios, leading to lower credit risk and improved credit accessibility. The sector is characterized by innovation and expansion, with many institutions focusing on digital banking and financial technology advancements.

Residency status for entrepreneurs in France

In France, several residency options are available for entrepreneurs who wish to run a company or start a business. Below are the key types of residence permits tailored for entrepreneurs, investors, and startup founders:

Note: Contrary to a common popular misconception, there is no investment residency or Golden Visa program in France. This means that individuals cannot obtain residency or citizenship in France simply by making a financial investment in the country. Unlike some other nations, France does not offer a direct pathway to residency or citizenship through investment in real estate, venture funds or other assets. Instead, France's immigration policies focus on other criteria such as employment, family reunification, and long-term residency (like a Visa for Financially Independent Persons). 

FAQ Company in France

How Hard Is It to Start a Business in France?

Starting a business in France involves several steps but is generally straightforward. The process includes registering the business with the Centre de Formalités des Entreprises (CFE), obtaining any necessary permits, and complying with French labor laws and tax regulations. While bureaucracy can be time-consuming, France offers various incentives for entrepreneurs, including financial support and business incubators.

What Is the Most Popular Type of Company Incorporation in France?

The most popular type of company incorporation in France is the Société par Actions Simplifiée (SAS). The SAS is favored due to its flexibility in governance, limited liability for shareholders, and relatively straightforward administrative requirements. It allows for a wide range of organizational structures and is suitable for both small and large businesses. 

What Is the Equivalent of an LLC in France?

The equivalent of a Limited Liability Company (LLC) in France is the Société à Responsabilité Limitée (SARL). Like an LLC, a SARL provides limited liability protection to its shareholders, meaning their personal assets are generally protected from business debts and liabilities. The SARL is a popular choice for small and medium-sized enterprises due to its relatively simple management structure and regulatory requirements.

What Is the Company Registration Fee in France?

The company registration fee in France varies depending on the type of business structure and the specific registration processes involved. On average, registering a company such as a Société à Responsabilité Limitée (SARL) or a Société par Actions Simplifiée (SAS) can cost between €200 and €250. This fee covers administrative costs, including registration with the Centre de Formalités des Entreprises (CFE) and the publication of a notice in a legal journal. Additional costs may apply for legal advice, drafting of documents, and other professional services.

Can a Non-EU Citizen Open a Company in France?

Yes, a non-EU citizen can open a company in France. However, they must meet certain requirements, including obtaining a long-stay visa or residence permit that allows them to engage in commercial activities. Additionally, they must provide proof of sufficient financial resources, a viable business plan, and compliance with French business regulations. 

How Long Does It Take to Open a Company in France?

Opening a company in France typically takes around 7 to 16 days, provided that all necessary documents are in order and the registration process goes smoothly. 

Can I Live in France if I Start a Business?

Yes, you can live in France if you start a business, but you will need to obtain the appropriate visa or residence permit. Non-EU citizens typically need a long-stay visa or a "Passeport Talent" residence permit, which is designed for entrepreneurs and investors. This permit requires proof of your business plan, sufficient financial resources, and compliance with French regulations. Once granted, it allows you to live and work in France while running your business.

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