Doing Business in France

Country facts

Capital	Paris
Population	65.2 million
GDP	2465.5 billion USD
Language	French
Average Monthly Gross Salary in Euro	€2,998
Currency	Euro
World Bank Doing Business Ranking	31 (USA Ranking 6)

 

Most Common Form of Business Entity

A foreign business can establish their operations in Franceas companies, partnerships or branches. The most common form of legal entities are:

	Limited Liability Company – société à responsabilitélimitée(SARL)	Simplified joint stock company (société par actions simplifiée) (SAS)	Joint stock company (sociétéanonyme) (SA)
Capital Requirements	€1 minimum At least 20% to be paid when entity is formed and the balance over 5 years	€1 minimum At least 20% to be paid when entity is formed and the balance over 5 years	Minimum share capital of €37,000 At 50% to be paid when entity is formed and the balance over 5 years
Directors	One or more individuals may be appointed as managing directors (“Gerant”).	One President (“President”). The president may be an individual or a company	Either by a board of directors including 3 to 18 members. The Chairman of the board of directors is appointed by the board among its members, being specified that a General Manager may also be appointed (optional), or by a Supervisory board (composed from 3 to 18 members) and a Directorate,responsible for the Management.
Shareholders	1 or more individuals or legal entities	1 or more individuals or legal entities	At least two – individual or legal entity 7 Shareholders required as a minimum if company is to make a public offering

 

Corporate Taxation:

In 2018 the standard Corporate tax rate is 28% on tax income up to €500,000 and 33.33% over this threshold. For the tax year beginning on 1 Jan 2019 standard Corporate tax rate is 28% on tax income up to €500,000 and 31% over this threshold.

Employment / HR Requirements

Employment Contracts: An employment can be verbal but it is recommended to execute employment contracts in writing. A written contract is required in the case of specific types of employment, such as fixed term contracts or where there are non-competition or non-solicit covenants.

Employee Tax: Employees whose residence or usual place of abode is in France, are considered tax residents. The personal income tax rate ranges from 14% to 45% plus special social security surcharges for residents, amounting to 15.5%. The taxation is progressive and is applied in bands – the lowest band being 14% on the portion of income between €9,710 and €26,818, with the highest band being 45% on the portion of income exceeding €152,260. Social security contributions are mandatory and comprise several regimes covering health, retirement and family allowances. The contributions are paid by both employer and employee. Employee contributions are deducted at source from salary payments, with employee contributions being 22% to 27% of the gross salary.

 

Employers: Employers must withhold tax (income tax, solidarity surcharge and church tax) and social security contributions on behalf of their employees. In addition to the employee’s contributions, the employer must pay social security contributions of between 45% to 50% of the employee’s gross salary.

 

Valued Added Tax:

The standard rate of VAT is 20%; two reduced rates of 5.5% and 10% and one super reduced rate of 2.1% apply to some periodicals and medicines reimbursed by the state.

Valued Added Tax on Digital Services:

All Non-EU based businesses that provide electronic services or download to individuals or non-business consumers in France must register for VAT either in France or in another EU state.

Data Protection:

France adopted the EU General Data Protection Regulation in June 2018. The key variations from the GDPR Requirements are:

• Permits personal data processing relating to criminal convictions and offences under certain circumstances.
• Reduces the age of consent for minors to 15 years old. A legal guardian may also authorize a child under 15 to provide consent.
• Permits the data protection authority to impose additional sanctions.
• Introduces a class action available to any person suffering material or non-material damage because of an infringement of the GDPR.