France -Next Global destination for your business
France is a business-friendly country, with one of the largest markets in Europe, and access to the European single market. Its capital, Paris, is an important financial center in the region and the European leader in venture capital.
France Economy
The economy of France is a highly developed social market economy with notable state participation in strategic sectors. It is the world's seventh-largest economy by nominal GDP and the tenth-largest economy by PPP. constituting around 4% of world GDP.
Foreign Direct Investments
France attracts bulk FDI amongst its European counterparts, being 13th largest recipient of FDI in the world as per UNCTAD. Luxembourg, Switzerland, Netherlands and the United Kingdom are the main investors in France and represent more than 50% of the stock of FDI.
Opportunity Mapping
France is an economically refined nation with a large, diverse, and sophisticated consumer base. There are opportunities for exporters with innovative products in various sectors, including aerospace, consulting business, food products, pharmaceuticals, renewable energy technologies.
India in France
The economic ties between India and France have flourished, paving the way for enhanced cooperation and mutual prosperity. Trade relations have witnessed steady growth, with bilateral trade reaching an impressive $13.4 Bn in 2022-23, marking a significant 7.72% increase from the previous year.
Indian companies having base in France are Infosys, Wipro, Bharat Forge, Muragappa, United Phosphorus, Crompton Greaves (Avantha Group), Titagarh, Air Works, Biological E, Transasia and Axis Aerospace.
Corporate Structure
Entrepreneurs must be aware of the laws, rules, and regulations of France in order to successfully incorporate and operate a business there. It also give investors the option to choose the corporate structure that best suits their needs.
Limited Liability Company (EURL)
This can be considered as a special category of limited liability company as the EURL has only one shareholder. Its operating rules are very similar to those of the SARL. At the time of the company's constitution, at least 20% of cash contributions must be made available.
Private Limited Company (SARL)
SARL is the most common form of company in France. This type of business can only be incorporated by at least two shareholders, and they can be natural or legal persons. This structure is usually recommended for small and medium-sized companies which are set up in France.
Public Limited Company (SA)
The SA is composed of at least two shareholders (and 7 if it is listed on the stock exchange) with a minimum share capital of 37 000 €. It is headed by a President and a Chief Executive Officer (who may be one and the same person) and by a Board of Directors composed of at least three people.
Foreign Entities in France
Certain formalities are imposed on different companies depending upon the type of business entity such as in the case of joint stock companies, at least 50% of the share capital must be deposited upon formation, the private company can have one or two directors, however, the minimum number is one and the public company must have a board of directors comprised of 3 to 18 members. French companies are also required to appoint auditors who will verify their accounts.
Taxation System
French investors benefit from a wide network of tax treaties with 122 nations, which helps them manage their businesses successfully and prevents double taxation on their income.
Corporate Tax
Large enterprises (annual turnover of EUR 250 million or more) are assessed to corporate tax at the unified standard rate of 25%. SMEs (turnover below EUR 10 million) are subject to a reduced corporate tax rate of 15% on profits up to EUR 42,500 and at standard rate on the excess over EUR 42,500.
Dividend Tax
Dividends paid to Investor are taxed at the rate of 21% on the gross amount of dividend received by Investors. The 12.8% withholding tax rate applies to foreign individuals in France, while the 28% tax rate applies to legal entities and private recipients.
VAT
The standard VAT rate in France is 20%. It applies to most goods and services. The two reduced VAT rates are 10% and 5.5%. The super-reduced rate is 2.1%. France also has some zero-rated goods, the sale of which must still be reported on your VAT return, even though no VAT is charged.
Taxation of Non Resident entities
Non-residents in France are only taxed on their French-sourced income. Non-resident taxes are typically collected by withholding at the source. These withholding taxes are applied at progressive rates of 0%, 12%, and 20%, depending on the total amount of taxable income. A non-resident company is subject to CIT in France on income attributable to French business activity or to a French PE, as well as on income from real estate located in France. Non-resident companies are not taxable in France regarding capital gains derived from the disposal of French assets unless these are part of a PE.
Foreign entity Options
The French economy remains diversified and relatively resilient. Entrepreneurship is made possible by institutional characteristics including robust property rights protection and a generally effective regulatory environment.
Branch Office
A branch is an office through which a foreign company engages in business in France. The branch has no independent legal personality although for tax and foreign financial relations purposes it is treated Independent. Foreign company is directly and fully responsible for all liabilities and undertakings of its French branch office.
Subsidiary Company
The subsidiary company is a separate legal entity created under and governed by French law. It is an independent entity from the foreign parent company shareholder and, in principle, shareholders have no liability for the debts or undertakings of the subsidiary, the recourse of the subsidiary's creditors or co-contracting parties being limited to the assets of the subsidiary.
Joint Venture
There are 2 types of JV's, First is Corporate JV which can take the legal form of a group or of a commercial company with or without limitation of liability. Second is Contractual JV, this must comply with the general rules of contract law. It has no separate corporate personality from the parties to it.
France Business
France is the second largest EU economy. Three sectors dominate its employment: health & social care, wholesale & retail trade and manufacturing. Some leading global companies have their headquarters in France. France has a stable business climate that attracts investors from around the world. The French government devotes significant resources to attracting foreign investment through policy incentives, marketing, overseas trade promotion offices, and investor support mechanisms.
