Company Formation in France
Why choose france for Company Registration
Forms of business registration in France
Individual Entrepreneur
(EI)
(EI)
Single Member Company with limited liability
(EURL)
(EURL)
General Partnership
(SNC)
(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)
(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)
(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)
(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)
A foreign legal entity wishing to set up in France can establish:
A Liaison Office
A Branch
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
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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