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SETTING UP AND RUNNING A COMPANY IN FRANCE
You have made the decision to set up a company in France? Enter France’s team has helped hundreds of foreign companies establish in France.
Support include (i) choosing the legal form, (ii)
A GUIDE TO COMPANY FEATURES
Whether talking about taxes, restrictive financing or employment laws, the common assertion has long been that France could be a nightmare for business starters.
If globally, France is standing 32nd in the ranking of 189 countries regarding the ease of starting a business (Ernst & Young, 2003), consultants found that in some ways, France actually leads the world in making it simple and efficient for entrepreneurs to get a venture off the ground.
For example, France ranks above all other G20 countries when it comes to education and training’s contribution to businesses.
It’s actually far easier to start up a business in France than you may think, and in some ways, the French are leading the way for simplicity and efficiency.
More specifically, France has lately taken many steps, making it easier to start a business, using streamlining procedures such as a one-stop shop business registrar (Les Centre des formalités des entreprises). Thus, making procedures simpler, faster, and reducing, or in some cases, eliminating minimum capital requirements.
France has also undertaken a business registration reform, unfolding in many stages, which is part of a larger regulatory reform program. Benefits include greater firm satisfaction and extra savings, more registered businesses as well as more financial resources and job opportunities.
France strives to implement state-of-the art digital technology and get administrations online. It only takes around 15 minutes to fill in your taxes forms online in France and it is also free, unlike in the US where you have to pay for the services of a private company.
This is confirmed by Ernst & Young’s report, which found only five administrative steps needed to start a business in France, in comparison to an average of 7.6 among other G20 countries.
Aiming to stay on the right tracks by promoting a competitive investment environment, French laws provide a wide range of corporate vehicles, allowing each investor to pick and choose according to its needs and objectives. The incorporation process is quick and easy and rules for non-listed companies offer a high degree of freedom and flexibility.
The main types of Limited Liability Companies (LLCs) are detailed below. In addition, European law has introduced a new type of LLC, known as the Societas Europaea (European Company), which is specifically tailored for businesses operating in multiple EU Member States.
But first, the primary decision is to determine which legal vehicle will be the most suitable for your business. It could be a branch of a foreign company, which would then become the French arm of your existing company, or another option is the incorporation of a brand new private company.
Setting up a branch of a foreign company in France (succursale)
When looking to settle in France, a foreign company may choose to set up a branch. At first, it is noteworthy that this vehicle has no separate legal personality per se.
In short, using a branch involves conducting activities from an address in France through permanent representatives authorized by the foreign company to deal with third parties and legal proceedings.
In other words, the branch can have its own staff to manage its business in France.
You must bear in mind that a branch will not be a separate legal entity but rather an extension of the foreign company with a clear link to it. In that respect, if the branch encounters financial difficulties, the parent company bears unlimited liability for its debts.
Setting up a French company per se (filiale)
However, when considering business, legal or taxation strategies, you may wish to incorporate a fully independent corporate arm of your existing company. You can indeed choose to set up a whole new brand company.
There are a number of different limited company business structures which can be set up in France. But in any case, all French limited companies must be legally registered with the official Registrar of Companies (Registre du commerce et des sociétés).
The most common type of company in France is the Private Company Limited by Shares. This type of company is owned by shareholders, managed by directors and created with the intention of making a profit. These profits can then be reinvested in the company or distributed among the owners as dividend payments.
There are a number of benefits which make limited companies such a popular choice of business structure, most notably, the limited financial liability it provides for company shareholders. Indeed, their financial liability is limited to the value of their shares, which means that limited company owners are not personally liable for any business debt beyond the value of their shares.
The most popular categories are the following:
- Société Anonyme (SA)
- Société par Actions Simplifiée (SAS)
- Société à Responsabilité Limitée (SARL) : (Private Limited Liability Company)