Setting up a company in France: peculiarities of running business in 2024

Buying or starting business in France, one of the most economically developed and stable countries of the EU, involves obtaining a visa equivalent to a residence permit (VLS-TS). After confirming the entry permit, the foreigner has the right to request a residence permit for 1 year or 4 years at a time. Upon arrival in France, it will be mandatory to collect the necessary documents to register a company in the jurisdiction of the state and submit them to the relevant authorities.

A foreign businessman with a French residence permit can develop a company in the European market. The company can count on financing, benefits, reduced tax rates and state support programs. French residents have the right to avoid double taxation if there is a relevant international agreement. After 5 years, the entrepreneur has the opportunity to obtain the status of permanent resident or citizen of the European Union.

Forms of business in France

In France there are various forms of business, which differ in the required number of partners, taxation, size of authorized capital, type of activity and other nuances. There are a total of eight basic legal forms available for entrepreneurs:

• EI — individual entrepreneurship;
• EURL — individual entrepreneurship with limited liability;
• SASU — simplified joint-stock company (JSC) with a single shareholder;
• SARL — limited liability company (LLC);
• SAS — simplified JSC;
• SNC — general partnership:
• SA — public LLC;
• SCA — limited partnership.

To choose the form of business in France that is the most appropriate for a particular activity, a foreigner needs to take into account a number of criteria:

• number of partners;
• scale of the business;
• size of contributions and/or authorized capital;
• type of activity;
• taxation system.

Almost all forms of business are suitable for the freelancers (work not by hire, but for a fee), craftsmen, merchants, and farmers. All types of business are available to micro-organizations except agriculture.

Let’s take a closer look at the types of business, each of which has its own features, advantages, and disadvantages:

• Individual Entrepreneurship (EI). An entrepreneur can carry out activities without registering as a legal entity. The main advantage of the sole proprietorship is the ease of creation and management. There are no limits on the authorized capital and the number of partners. Individual entrepreneurs pay income tax (IR), in some cases — corporate tax (IS).
• Limited Liability Company with a single shareholder (EURL). To open a company of EURL type, one person is enough, and the minimum authorized capital is 1 EUR. The assets of the firm and the owner are protected and separated. For example, if the share capital is 1 000 EUR, creditors can demand payment only of this amount, without affecting the property of the owner. In comparison with companies, where the turnover is accounted for, in EURL only profits are taxed. You can choose one of the taxation options (IR or IS), but if you choose corporate you cannot change the tax system in the future. The main advantage of this option is the easy transition of the company to a multi-user form of LLC, if there is a desire to attract companions.
• Limited Liability Company (SARL). The main advantage is the small authorized capital; in order to establish a limited liability company, it is enough to pay 1 EUR. There can be a minimum of two partners and a maximum of 100. LLC also has the advantage of a clear and transparent legal framework, which guarantees stability in the management of the company. For example, the law implies the use of the majority rule for voting at general meetings. The disadvantage of an LLC is that it is more complicated to start a company and set up a structure than a sole proprietorship. LLC is taxed by corporate tax (IS) at a fixed rate on annual profits of 25%. Taxation for SARLs is flexible, so there is an option to switch to income tax for companies that have been operating for less than five years. There are also other requirements for those who qualify for the reduced rate: annual turnover of less than 10 million EUR, the company has no more than 50 employees and at least 50% of the LLC belongs to individuals.
• Public LLC (SA). SA is suitable for a large-scale project, because it allows you to engage in industry and to enter the securities market. The number of partners, regardless of the type of company is at least two, and if the shares are listed on the stock exchange, then — seven or more. The minimum authorized capital is 37 000 EUR. Profit of SA is taxed by corporate tax, but there is an opportunity to switch to IR, if the company was established less than five years ago and is owned by individuals at least 50% of it, and managers — from 34%. Also, the company must have no more than 50 employees, and the amount of capital or annual turnover is limited to 10 million EUR.
• Simplified joint-stock company (SAS). The minimum number of partners is one and the maximum is not established. The amount of the authorized capital is regulated by the shareholders. An important advantage is that the president can be an individual or a legal entity, for example, another company or association. With regard to taxation, SAS is under the IS system. The company pays tax, the basis of which is the net profit. SAS can choose the IR regime, but only for the first five years after the opening. In this case the partners declare in the tax report the profit corresponding to their shares in the company. The disadvantages include the complicated procedure of developing the Articles of Association of a joint stock company. The document should clearly establish the rules of appointment of management and control bodies, definition of their areas of responsibility and methods of making decisions at general meetings.
• Simplified joint-stock company with a single shareholder (SASU). The appeal of this legal status lies in its simplicity and flexibility due to the choice of taxation. The only obligation of SASU concerns management — it is necessary to appoint a president, who can be an individual or a legal entity. There is no minimum limit for the share capital. SASU is taxed with corporate tax (IS), but one can choose IR within five years after the creation of the joint-stock company. The main disadvantage is the need to pay a lot of attention to setting up articles of association, where it is important to anticipate different scenarios. Otherwise, one can face conflicts between partners if SASU turns into SAS.
• General partnership (SNC). In an SNC, partners are liable jointly and severally. The shares of the partnership are not intended to be freely available to any member, they are distributed according to a collective decision. The amount of the authorized capital is approved by the partners, of which there must be at least two. In SNC all partners are managers by default, but a separate act may appoint one or more persons to carry out the day-to-day operations of the company. It is important to choose a trustworthy and competent person to carry the obligations of the company to third parties. There is no taxation of the partnership. Each partner pays an income tax on their share of the profits. If desired, the company can choose corporate tax. The main disadvantage of the SNC is joint and several liability for the debts of all members of the partnership. That is, if the company is indebted to a creditor, he can sue any partner for all the debts of the company, even if the partner is not responsible for the actions committed by the organization.
• Limited partnership (SCA). SCA must have at least four shareholders (principal one and three partners). The required authorized capital is from 37,000 EUR or 225,000 EUR, if the partnership is engaged in the sale of securities. Management of the company must be provided by a supervisory board, which is appointed by the shareholders at a general meeting. The profit of the company is subject to corporate tax (IS). The disadvantages of the SCA are that the general partners must take all risks, without limit. Also, this form of business is cumbersome and multi-layered.

Requirements for investors and conditions for company registration by foreigners

The opportunity for third-country nationals to engage in business activities on the territory of the state is controlled by the law «On the rights of foreigners in France» and by the Commercial Code. The steps to be taken depend on the status of the foreign businessman, the country of origin and the place of residence. For EU and EEA citizens it is enough to register a company according to the standard procedure. If a European entrepreneurs plan to live and run business in France, they need to notify the authorized body of their place of residence within three months after their arrival in the country.

For foreigners who want to do business and reside in France, the following algorithm is valid:

1. To enter the country, the foreigner must apply for a national long-term visa, equivalent to a residence permit, to the French consulate at the place of residence.
2. Upon arrival in the country, the immigrant is required to obtain a residence permit marked «entrepreneur / freelancer» or «passeport talent».
3. The businessman must set up a company and obtain a Kbis certificate, which confirms that the company is registered in accordance with the law.

The conditions for a foreigner applying for an entrepreneurial residence permit:

• proposed activity must be the main one;
• enterprise must be economically profitable and provide sufficient income for the applicant’s living;
• activity must correspond to the applicant’s experience and qualification.

Requirements for a foreign entrepreneur applying for a passeport talent:

• promising and economically viable business project in France;
• investment in your business project worth 30 000 EUR or more;
• submission of a diploma not lower than a master’s degree or a document which proves at least five years of work experience at a level comparable to this degree.

Requirements for opening a passport of talent when founding a startup:

• approval from the Ministry of Economy and recognition of the project as innovative;
• resources corresponding to or exceeding the minimum salary in France;
• cooperation with a local business incubator, research center, laboratory or other authorized organization.

Options for registering business in France

Foreign businessmen can transfer a ready-made business to France, open a new company and/or buy an existing one. In each case, a specific legal procedure and nuances will have to be taken into account: the requirements for registration, the activity of the company and the form of the business.

Relocation of an existing company

It is possible to relocate a foreign company to France by registering business in the country. The advantages of this option are that the owner already has a ready-made company with a charter, financial history, logistics and employees. There is also no need to prepare a business plan and development strategies, which are required when opening a company from scratch.

You can move all movable property of the enterprise, if it is justified by the cost of services of a transport company. It is usually more profitable to sell existing equipment and buy new equipment after the transfer of the company to another country.

Employees of the organization after its relocation to France, if they wish, can keep their previous place of work and relocate, but this will require a business invitation from the employer. First the migrant worker needs to open a visa, and then to obtain a residence permit. In addition to submission of standard documents, foreign workers need to prove sufficient income to live in the country and their qualification.

The procedure of business relocation to France for a foreign entrepreneur consists of the following steps:

1. Company registration with preservation or adaptation of the name, if necessary.
2. Opening of bank accounts for the transfer of assets and capital.
3. Registration in the national registry of companies (RNE), trade and enterprises (RCS), for commercial agents — in the RSAC registry, as well as the tax office, pension fund and health insurance.
4. Publication of a legal announcement in a national newspaper.
5. Registering with the business registration office (CFE).
6. Obtaining the company identification codes.
7. Liquidation of the company in its country of origin.

Purchase of a ready-made business

The procedure of purchasing a French company by a foreign businessman involves five steps:

1. Drawing up a contract of purchase and sale. The document must specify the cost of the company, mortgage encumbrances (if there are any), the financial report for the last three years. Also, in the contract must be written the name of the former owner, and information about the commercial lease.
2. Registration at the tax office. Businessman needs to choose a system of taxation, as well as to register the purchase and sale agreement at the authorized body.
3. Publication of a legal announcement. This is for all forms of business, except for individual entrepreneurs and LLCs. It is placed in a newspaper that is authorized to publish legal announcements and is located in the same region as the company’s office.
4. Registering a business on the National Institute of Industrial Property (INPI) website. It is necessary to protect your brand name as well as your intellectual property.
5. Publication in BODACC. This is the official bulletin of civil and commercial announcements. From the time the notice is posted, creditors of the former business owner have 10 days to collect debts through deductions from the sale price of the company.

The advantages of buying a ready-made business:

• economic benefit due to the customers and logistics;
• income from the activities of a purchased company immediately (with a new company, it will take time for the owner to begin to make a profit);
• access to the financial history of the company to make projections and build a new strategy;
• more chances for credit and financing due to the availability of reports on the activities of the company, its profits and losses;
• saving time when buying a business with employees, otherwise you need to spend time building a staff.

You can search for companies for sale on the French specialized websites cessionpme.com, cession-commerce.com, cession-entreprise.com. A large number of companies are sold through notaries and real estate agents (agents immobiliers). It is also possible to go to the commercial court (Tribunal du Commerce), where bankrupt companies are put up for sale at low cost.

Independent information about the company can be viewed on the site of the official register of French companies Infogreffe, which lists more than 3 million organizations. In the process of searching for options for buying a business in France, it is worth seeking help from specialists who will check the company and advise the applicant on legal matters.

Opening a new enterprise

The main advantage of this option is that the entrepreneur can build the process from scratch the way they want, rather than relying on what is already there. To open a company in France, a foreigner has to go through eight stages:

1. Selection of the form of business, choosing the name, checking its uniqueness and registration in the authorized body — INPI.
2. Preparation of a business plan and development strategy.
3. Development and signature of the company’s charter.
4. Opening a corporate account at a French bank.
5. Purchase or lease of real estate for an office and/or other premises necessary for the company.
6. Request for registration in Sirene (free business directory), trade and commercial register (RCS, for commercial companies), directory of professions (RM, for craftsmen), as well as pension fund and health insurance, tax service.
7. Publication of a legal announcement is mandatory for everyone except individual entrepreneurs and micro-organizations.
8. Obtaining APE, SIREN and SIRET company identification codes.

Business ideas for implementation in France

France is one of the most attractive countries for running business, so private entrepreneurs and large companies from all over the world come to the local market. There are many reasons for this popularity, including:

• economic stability and constant growth of indicators (GDP, national product and income);
• high living standards, the solvency of the population;
• legal and social protection of companies;
• absence of strict limitations for foreign enterprises;
• right for benefits from the government (reimbursement of fuel costs, programs to overcome the energy crisis);
• advantageous geographic location with well-developed logistics;
• a lot of free trade zones.

According to statistics that was compiled before the COVID-19 pandemic, the greatest number of foreign companies operating in France comes from the United States, Germany, Sweden, the Netherlands, Great Britain and Belgium. There are also many companies in the French market from Italy, Luxembourg, Spain, Denmark, Ireland, Canada and China.

There are many exciting ideas for creating a startup, but you can select the best business options in France that are easier to implement and at the same time make a good profit:

• Tourism. France is located on the coast of the North Sea and the Mediterranean Sea, and is washed by the Atlantic Ocean, so in the summer there are always a lot of tourists. The country has a high concentration of world-famous attractions. About 7 million foreign tourists come every year to the Eiffel Tower. You can open your own travel agency or buy a franchise of an existing company.
• Trucking. A thriving and profitable business that pays off quickly. Services of companies engaged in trucking, are in demand both among large businesses, and among the locals. It is sufficient to obtain a license to transport goods for commercial purposes, to form a fleet of trucks and work to expand the customer base.
• Restaurant and bar business. The French are famous gourmands, so any cuisine of the world in this country will find its admirers. Also, there are favorable conditions for opening catering establishments because of the large number of tourists. Each year up to 100 million foreigners visit France, so restaurants, cafes and bars quickly pay off and generate good profit.
• Car rental. Many guests of the country prefer to move around its territory by renting a car – it is easier for them to pave routes to the places they plan to visit without being tied to a tour operator. To make a good profit, you will need a large fleet of cars, taking into account that a day’s rent of a premium car costs 60-70 EUR, economy class — 25-30 EUR.
• Hotel business. Small furnished rooms, hostels, and luxury apartments are in equal demand in France. Due to a large inflow of foreign visitors and active domestic tourism, the hotel industry is one of the most profitable.

How much does it cost to open a company in France?

The cost of opening a company in France depends on its form, according to which the price of publication in the newspaper, registration in the RCS and the amount of the authorized capital vary. Registration in the directory of professions (RM) for companies that are engaged in craft activities, is 45 EUR.

Peculiarities of doing business

It is worth studying the information on various peculiarities of doing business for foreign entrepreneurs who have decided to develop a company in France — taxation systems, the nuances of cooperation with banks and auditing. It is also useful to get acquainted with the state programs to support entrepreneurs, schools for business training and the French business ethic.

Opening a bank account

The French banking system consists of different types of institutions: central, commercial, investment banks, insurance, leasing companies, brokers and traders, stock exchanges and trading platforms. Features of the French financial system:

• interest rates on deposits are on average 4-6% per year;
• you can take a loan for a period of 6 months to 10 years at 0.2-21% per year, depending on the amount;
• mortgages are issued for 7-25 years at 2-3% per year;
• guaranteed protection of deposits in case of bankruptcy or liquidation of the institution;
• free closing of accounts is available.

International banking services offer great flexibility. Foreign entrepreneurs who need constant access to funds or financing can open an account at a French bank and get a convenient tool for conducting mutual transactions.

There are three steps to opening an account:

1. Choosing a financial institution and making an appointment with a consultant, during which you can learn the list of necessary documents and other nuances.
2. Visiting the institution at the appointed time and submitting a package of documents.
3. Obtaining permission to open an account and signing an agreement (if required by the rules of the bank, replenish the balance).

In France, there are about 270 banks with many branches throughout the country. Among the most popular, highly reputable and reliable financial institutions are BNP Paribas, Credit Agricole, Societe Generale, Groupe BPCE, Credit Mutuel Alliance Federale.

Business taxation

Non-residents pay a 20% or 30% tax on income they earn in the state, depending on the profit. According to the legal status of the business, residents pay the following types of taxes:

• Income (IR). For income less than 10,777 EUR — 0%; 10,778 to 27,478 EUR — 11%; 27,479 to 78,570 EUR — 30%; 78,571 to 168,994 EUR — 41%; over 168,995 EUR — 45%.
• Corporate (IS). For the financial period beginning on or after 01.01.2022, the normal rate is 25% on all taxable income. For non-profit organizations there is a 24% rate on profits from assets and 10% for movable profits. The reduced tax of 15% applies to companies with an annual turnover of less than 10 million EUR where 75% and more of the capital belong to individuals. A 15% tax rate also applies if small and medium-sized businesses have an annual income of less than 42,500 EUR.
• VAT. The basic rate is 20%. Reduced rates, depending on the type of services and goods, can be 0%, 2.1%, 5.5% and 10%.

Accounting

All commercial and industrial companies must keep accounting records. According to the provisions of the Commercial Code, any individual or legal entity having the status of a merchant is obliged to keep accounting records of the movements of the company’s financial assets. For this reason, virtually all businesses, regardless of their size and scope of activity, cannot work without professional accountants.

 Government support

The French government helps entrepreneurs overcome various difficulties by introducing support programs. Companies that find themselves in difficulty can apply for various types of assistance:

• guaranteed government loan;
• financial support to overcome the energy crisis;
• deferred rent and utility payments;
• Nacre, Acre, and Cape programs for starting or buying business.

New programs to support French entrepreneurs regularly appear. The list and details are published on the official website of the Ministry of Economy and Finance.

Business Schools

Enrolling in a business school in France is one way to get a student visa, a European education, startup support, or simply to improve your business skills. Since almost all educational institutions are private, the state controls their quality. In order for a school to be recognized at the state level and be able to issue a diploma, it must meet a number of requirements, such as having a full-time teaching staff.

The average cost of tuition in such schools is 40,000 EUR for three years. The amount may be higher in the most prestigious business schools: HEC, ESSEC, ESCP BS, EDHEC BS, Edhec, Ieseg, Excelia, Neoma and others. It is also worth considering the costs associated with staying abroad, as many schools send students for internships in other countries.

Business etiquette

Basic rules of French business etiquette:

• when introducing yourself, you must give your first name, last name, and job title;
• men are greeted with a light handshake, looking each other in the eyes;
• address colleagues by their last name or « monsieur» and «madame»;
• it is recommended to be on time for meetings;
• it is necessary to have a business card;
• the style of clothing for office work is businesslike;
• in the conversation you should not touch upon personal, political or religious topics; it is better to talk about art, sports, cinema, and other general topics.

Residence permit and French citizenship by starting business

The procedure for obtaining a residence permit in France for foreign businessmen includes the following steps:

1. Opening a long-term VLS-TS visa at the consulate, embassy or visa center at your place of residence.
2. Registration at residence address with OFII (Office of Immigration and Integration) after arrival in France, collecting necessary documents, filling in and printing application form.
3. Application for a residence permit marked «entrepreneur/freelancer» or «passeport talent» should be submitted 2-4 months before the expiry of the visa to the prefecture of your place of residence.
4. 225 EUR payment (state duty and stamp duty).
5. Waiting time is about 4-6 months.
6. Obtaining a residence permit from the prefecture marked «entrepreneur/freelancer» with a validity of one year or «passeport talent» for four years.

After living in the country with such a permit for five years, a foreigner can apply to the French consulate abroad, the prefecture or online (for some regions) for French citizenship. The algorithm for obtaining the status of a French citizen is as follows:

1. Collecting a package of documents and filling out Cerfa form No. 12753.
2. Making an appointment at the chosen French authority.
3. Visiting the institution at the appointed time, submitting documents and application.
4. Payment of a fee of 55 EUR and waiting for an invitation to an interview.
5. Interview, signing of French Declaration of Rights and Duties of Man and Citizen.
6. Waiting for application review and written confirmation of applicant’s registration in naturalization decree (12-18 months).
7. Receiving the documents of French citizenship at a ceremony in the prefecture; the invitation comes within six months after the registration in the naturalization decree.

Assistance in translation and starting business in France

To start from scratch or transfer a business to France, a foreigner needs to go through a considerable number of steps associated with legal procedures and careful preparation of documents. To simplify the process, the entrepreneur should seek help from lawyers who specialize in international law. Specialists monitor changes in the law, help with the choice of legal form, drawing up a charter and a business plan, and opening bank accounts. Also, lawyers analyze the probability and reasons of refusal at different stages, from registration of visa and residence permit to company registration in France, which allows to pass the procedure competently.