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 business creation 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.
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