Company Formation in France

Why choose france for Company Registration

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Fostering a pro-business environment, a sophisticated market and a highly educated workforce, France is an attractive place for Company Formation.

And no wonder why! Located at the heart of Europe, France offers easy access to the rest of the continent while also within reach of Africa & the Middle East.

France is the third-largest economy in the European Union, the 6th largest exporter of goods, and the 4th largest exporter of services.

Forms of business registration in France

Individual Entrepreneur
(EI)

This form allows you to carry out your activity without going through the creation of a legal person. Even though the entity does not have any separate legal entity, the entrepreneur’s personal assets and professional assets are separate limiting recovery of company’s debt from professional assets only.
There is no prescribed contribution as there is no notion of capital. Also, as an individual entrepreneur, you are subject to the regime for self-employed workers.

Single Member Company with limited liability
(EURL)

This form of a company can be established with a single shareholder, who can either be a natural person or a legal entity. It requires minimum share capital of € 1 where, 20% of the cash contribution should compulsorily be brought at the time of incorporation.
The main difference concerns its tax system: its profits are automatically taxed on income tax in the shareholder’s name, although an option to corporation tax is possible.

General Partnership
(SNC)

This form of company is rarely used because it has the disadvantage of not protecting its shareholders’ assets: they are in fact indefinitely and jointly and severally liable for the company’s debts on their personal property.
It is constituted without minimum capital, by at least two partners, all of whom are merchants. As such, a minor cannot be associated with it.
It is managed by one or more managers.
The SNC’s results are taxed at the level of its shareholders for income tax purposes unless the company opts for corporation tax.

The Limited Liability Company in France
(SARL)

The SARL, the type of company most commonly used in the context of Company Formation in France, it offers the advantage of a simple structure in which the liability of the partners is limited to the amount of their contributions.
It can have minimum 2 and maximum 100 members (natural or legal) though only type of stock is allowed to be issued. Its capital does not have legal compulsion and can be started with Є1. It is managed by one or more managers, partners or not.

The Private Limited Liability company
(SELARL)

The rules governing it are very similar to those of the SARL, but they take into account the particularities and ethics of the professions for which they were created i.e. for self-employed professionals (lawyers, physicians, etc.).
The SELARL is represented by one or more managing directors, who must also pursue a self-employed profession.

The 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. 50% cash contributions must be paid when the company is established, with the money to be paid within 5 years.
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.
It is subject to the obligation to appoint an auditor.
The public limited company, because of the cumbersome nature of its operating rules, should be reserved for projects of a certain size.

The Simplified Joint Stock Company (SAS)

As a general rule, SAS is not suitable for a business creation by a natural person. Indeed, the rules governing it are similar to those of the SA. However, some measures make it simpler. Thus, no minimum amount for share capital is required. In addition, the appointment of an auditor is reserved for SAS of a certain size or with capital ties to other companies

The SAS can be constituted with only 1 partner(SASU).

Compared to SA, it offers the advantage of flexibility: the law allows shareholders the possibility of freely organising its operation in the articles of association. This flexibility requires the informed advice of a qualified professional because it can lead to the development of rules that would be difficult to apply later.

A foreign legal entity wishing to set up in France can establish:

A Liaison Office

If the foreign company simply conducts market research on French territory, it can simply open a representative or liaison office whose activity is limited, in principle, to the simple search or supply of technical information. and tariffs.
The liaison office has no commercial activity and no separate legal entity and are not allowed to independently enter into contract.
For the Business which are in for a test run to explore French markets it is a good option.

A Branch

The Branch office is a dependent entity registered by a foreign company in another country. The Branch registered in France has autonomy though it doesn’t own legal personality, so the liability for its actions falls upon its parent company and its field of activity cannot be different from the one of the parent company.
The income by a Branch though not by a separate legal entity can be taxable as per French jurisdiction.

A subsidiary

A subsidiary established in France has its own legal personality and a big part of the capital owned by the foreign company. Because of the independent legal structure, foreign company cannot be considered responsible for the French subsidiary’s actions and its assets are fully protected in case of liquidation of the subsidiary.

Taxation

All companies that are registered in France have to pay corporate tax. The following taxes would be applicable:
Corporate Tax payable in France is 33.33%. This would apply to all businesses which are established in France. Hence an applicant wanting to go for company registration in France would have to pay this percentage of corporate tax.

There is 20% VAT levied in France. VAT is an indirect tax which is charged to all businesses in France. Withholding Tax is charged on all dividends in France. 25% withholding tax is charged on all businesses that distribute dividends.

Companies must file corporate tax returns by 30th April. Companies that invest in priority sectors are exempted from corporate tax payments. This exemption would be applicable for seven years.

Distinction between Branch and subsidiary companies:

Basis

Branch Companies

Subsidiary Companies
Meaning
The subsidiary is a real company under French law, endowed with legal personality.
The branch manages a separate business from the main establishment by its installation and its own material organization.
Legal nature
The branch has no independent legal personality.
The subsidiary company is a separate legal entity created under and governed by French law.
Corporate tax rate
26.5%
26.5%
Management
Local, but not mandatory

Local

Best used for

- banking,

- financial operations,

- insurance

- banking,

- insurance,

- automotive,

- trading
Applicable legislation
For foreign countries

French Commercial Law

Minimum share capital
No

Yes

Independence from the parent company
Dependent on the parent company

No, the subsidiary is fully liable

FAQs

Qu. Is there a need of residential director in France?

Ans – No, company director in France is not required to have French nationality or residence.

Qu. How many Directors and Shareholders are required for SARL in France?

Ans – At least 1 Director and 1 Shareholder are required to register a SARL in France.

Qu. Do one need a local address for Registered office of the Subsidiaries in France?

Ans – Yes, though subsidiaries can be incorporated with virtual office through a registered domiciliating company.

Qu. What is the minimum capital requirement for incorporating a Subsidiary in France?

Ans – Minimum capital by any type of entity except SA is in general €1.

Qu. Which is the most efficient type of business model to pick in France?

The most efficient business model in France often depends on the specific needs and goals of the company. However, the most common business structures in France are SARL (Société à Responsabilité Limitée) for small to medium-sized enterprises and SAS (Société par Actions Simplifiée) for larger companies or those seeking more flexibility. SARL offers limited liability protection and is ideal for startups, while SAS provides greater flexibility in governance and shareholding.

Qu. What is the time frame to establish a business in France?

The time frame to establish a business in France varies depending on factors such as the chosen business structure, complexity of the registration process, and completion of necessary paperwork. Typically, it can take anywhere from a few weeks to a few months to complete all the formalities and register a business in France.

Qu. Do French companies require a director who is a resident?

No, French companies do not necessarily require a director who is a resident of France. However, at least one director, whether a resident or non-resident, must be appointed to oversee the company's operations and fulfill legal obligations.

Qu. Do you need to go to the French Companies registry to incorporate your company?

No, physical presence at the French Companies registry is not required to incorporate a company in France. The registration process can usually be completed online or through authorized representatives, facilitating ease of incorporation for both domestic and foreign entrepreneurs.

Qu. Number of directors and shareholders in a French Public Limited Company (SA)?

In a French Public Limited Company (SA), there must be at least three directors appointed to manage the company's affairs. Additionally, SA companies must have a minimum of seven shareholders, although this number can vary depending on the company's articles of association.

Qu. Is there a minimum capital requirement for business formation in France?

A Simplified Joint Stock Company (SAS) or a French Limited Liability Company (LLC) can be formed with an initial capitalization of just 1 EUR. However, a minimum capital of 37,000 euros is required to establish a French Public Limited Company (SA).

Qu. Are foreign national statesmen permitted to work for French companies?

Yes, foreign nationals are permitted to work for French companies, provided they meet the necessary visa and work permit requirements. The French government offers various visa options for individuals seeking employment opportunities in France, including skilled workers, entrepreneurs, and investors.

Qu. Which tax rate is the highest in France?

The highest tax rate in France applies to individuals with high incomes. The highest marginal income tax rate for individuals in France is 45%, applicable to annual incomes exceeding a certain threshold. Additionally, France imposes various other taxes, such as corporate tax, value-added tax (VAT), and social security contributions.

Qu. Eligibility Criteria for French Company Formation

The eligibility criteria for French company formation typically include:

  • Minimum age requirement for directors and shareholders
  • Compliance with legal and regulatory requirements
  • Sufficient funds to support business operations
  • Clear understanding of the chosen business structure and industry regulations
Qu. Procedure for Company Registration in France

The procedure for company registration in France generally involves the following steps:

  • Choose a business structure
  • Reserve a company name
  • Prepare articles of association
  • Open a business bank account
  • Complete registration formalities with the French Companies registry
  • Obtain necessary licenses and permits
  • Register for taxes and social security contributions

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