How to set up a Company in France

Welcome to the guide on how to set up a company in France! With its rich history and status as a significant economic power, France offers an ideal environment for entrepreneurs looking to establish their businesses in Europe.

As the largest country in the European Union and with Paris as its bustling capital, it’s no wonder that foreign investors from all around the world are drawn to France’s diverse business opportunities. 

To start your business venture, it’s essential to understand the requirements involved in setting up a company in France. Depending on the type of business entity you choose, specific documents need to be prepared. Furthermore, understanding the local laws, tax regulations, and labor requirements is vital to ensure smooth operations and compliance with French business practices. 

In the upcoming sections, we will provide you with a step-by-step guide to help you successfully establish your business in France. 

Who Can You Start A Business In France?

You’ll need a residence permit or an EU citizen to start a business in France. You should also have a social security number and a French address. It’s essential to be at least 18 years old. Depending on your chosen field, you might require qualifications or diplomas recognized by French authorities.

Getting advice from a French accountant or financial expert when starting your business is a good idea. The Ministry of Economy’s website also provides guidelines for foreigners looking to open a business in France and links to the relevant forms.

Start Your Company in France in Simple Steps

Great news! According to the World Bank, starting a business in France will only take four days if you legally live there. However, you’ll need to research the market, make budget forecasts and financial plans, and, if needed, seek funding. You’ll also have to choose your legal status and register your business.

Let’s begin with essential company formation steps: 

Select Your Business Structure

Choosing the right business structure is really important because it determines what your business does and how much freedom it has from the parent company. In France, you can pick from three types of business structures based on what you want to achieve and what limitations you might have:

Liaison Office:

A liaison office offers a temporary solution by acting on behalf of the main company. However, it has limited functions and cannot conduct business activities.

Pros:

• Exempt from French accounting rules, corporate income tax, VAT, and territorial economic contribution (TEC).

Cons:

• Limited in conducting commercial operations.
• Lacks legal entity status, preventing it from entering agreements.

Branch:

A branch is a straightforward and long-lasting solution. It’s a separate business that operates on its own while representing the foreign company’s main office.

Pros 

• Parent company support during financial issues.
• Ability to offset subsidiary’s losses against parent company’s profits.

Cons 

• Lack of separate legal entity.
• Limited freedom in conducting commercial activities

Subsidiary:

A subsidiary company (“filiale“) is a separate legal entity created under French laws. It can have its own rules (bylaws) and is usually owned by a foreign company. However, the foreign parent company is not responsible for its debts and obligations. Many foreign investors prefer this option when investing in France for a long time. A subsidiary can be established as a simplified joint stock company (SAS), a limited liability company (SARL), or a corporation (SA).

Pros 

• A separate legal entity shields the parent company from subsidiary debts.
• French tax system advantages grant tax exemptions, especially for EU countries with at least 10% subsidiary ownership.

Choose Your Legal Status

Picking the right legal status is really important for companies that want to do business in another country, like France. There are different choices you can make to find the best way for your business to work there. To make the smartest choice, think about things like the type of project you’re doing, how big it is, and the taxes you’ll have to pay with each status.

Three Common Legal Status Options:

Limited Liability Company (SARL)

It is ideal for new businesses, including family enterprises or those with 2 or 3 shareholders.

Simplified Limited Company (SAS)

The SAS is a flexible choice, well-suited for bigger projects involving investors and dividend distribution.

Corporation (SA)

An SA is a good fit for ambitious, big-scale start-up ventures.

You may also want to explore these alternatives for your move:

General Partnerships (SNC) or Economic Interest Groups (GIE

Societas Europaea (SE)

Confirm Your Essential Company Details:

Company Name:

Selecting a company name for a France-based company requires careful consideration. While uniqueness is not mandatory, verifying the availability of the desired name for future trademarking is essential. The chosen name should align with the company’s vision, values, and target audience. 

Avoid using generic or misleading terms to prevent confusion. Researching existing business names, domain availability, and social media handles is crucial to maintain consistency across platforms. A distinctive and memorable name can enhance brand recognition and customer recall. Ensure the name is culturally sensitive and appealing to the French market, reflecting professionalism and credibility to establish a solid corporate identity.

Directors:

Choose the people who will be in charge of your company, known as Directors. In French Company Law, there are no limitations based on where they come from or where they live. So, you can appoint Directors who are not from France or don’t have French citizenship.

Company Address:

The commercial courts need evidence of your company’s address in France. This can be shown through documents like an office lease or a business address contract signed by your company.

Set & Transfer Your Company Capital:

To begin your company, you need to know who owns it (individuals or companies) and how much of it they own, along with the value of their investments. You need at least one shareholder, and there’s no specific minimum amount of shares or money required, but you should have enough funds to cover your startup costs and early investments.

Every shareholder needs to put their capital into a Share Capital Account. The commercial courts require proof of this account and a certificate before they can officially register the French company. You can deposit the money using a check, transfer, or cash, and in exchange, you’ll get shares in the company. The money will be kept on hold until the company’s registration is approved, and then it will be available for use.

The capital requirements will vary according to the legal structure you choose:

Preparing Your Company Documents:

You’ll need a lawyer to help create different company papers, like Memorandum & Articles of Association, Minutes of the First Board Meeting, Directors Nomination, and Ultimate Beneficiary Owners Declaration. Shareholders and directors will then have to sign the documents according to the given instructions; usually, electronic signatures are fine.

Registering Your Company:

Registering a company in France has become more straightforward and can be done either:

• Online 
• At the relevant commercial court registry. 

Suppose you choose the commercial court registry option. In that case, you’ll need to register with the Centre de Formalités des Entreprises (CFE) in France, which handles statistics, taxes, social security, labor, and health insurance for all business entities there.

To register with the CFE, the entity representative must submit a registration request along with the articles of association, a bank certificate confirming the capital deposit, proof of notifying the Gazette about the company, and the company’s and directors’ addresses on the managing board. The CFE will then share the necessary information with relevant offices and authorities to complete the registration and include the company in the Register Nationale des Entreprise.

Alternatively, you can set up your business online through the government website “Formalités d’entreprises” (business formalities).

After completing all the necessary steps, the company manager will get a certificate called an “extrait Kbis.” This certificate officially confirms the company’s existence.

VAT Registration

Registering a company in France involves a few critical steps, and one of the final ones is getting a tax registration number and signing up for social security. If your company trades, you must register for VAT (20%) once your annual income reaches 35,000 euros. If you hire employees, you must register as an employer with the social security system. Companies engaged in trading can also register with Customs and obtain an EORI number.

Regarding taxes, companies in France typically pay a corporate tax rate of 33%. However, micro-enterprises enjoy a lower rate. France has also signed various double tax treaties offering deductions and exemptions.

Obtain Special Permits

You must obtain special licenses and permits to conduct business activities in France. The municipality issues general licenses, while specific authorities handle other special licenses. The type of license you need depends on the nature of your business:

• For commercial activities, register with the Chamber of Commerce and Industry.
• For specific trades or crafts, register with the Chamber of Craftsmen.
• Sole traders in liberal professions should register with URSSAF.
• Agricultural businesses must register with the Chamber of Agriculture.
• Financial companies must register with the Central Bank and the Financial Supervisory Authority.

Some other activities may require additional licenses or specific inspections.