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Characteristics

GENERAL
Type of entity
Limited Liability Company (SARL)
Joint-Stock Company (SA)
Type of law
Continental law
Shelf company availability
Yes
Our time to establish a new company
14 days
Migration of Domicile permitted
Yes
System of taxation
Territorial
Corporate taxation
15-33 %
Minimum government fees (excluding taxation)
Not applicable
Double taxation treaty access
More than 120 countries
SHARE CAPITAL OR EQUIVALENT
Standard currency
EUR
Permitted currencies
Any
Minimum paid up
SA
37000 EUR
SARL
1 EUR (but minimum capital
about 7500 EUR is still
generally recommended)
DIRECTORS OR MANAGERS
Minimum number
1 director
Local required
No
Corporate directors permitted
No
Publicly accessible records
Yes
Location of meetings
Anywhere
SHAREHOLDERS OR MEMBERS
Minimum number
SA
7 shareholders
SARL
2 members
Publicly accessible records
Yes
Location of meetings
Anywhere
COMPANY SECRETARY
Required
SA
Yes
SARL
No
Local or qualified
No
Accounts
Requirement to prepare
Yes
Audit requirements
SA
Required
SARL
If the balance-sheet total is
over EUR 1 550 000 or
the turnover is greater than
EUR 3 100 000 or the number
of employees is over 50
Requirement to file accounts
Yes
Publicly accessible accounts
Yes
Others
Language
French, English is not an official, but is often used
Thin capitalization Controlled foreign companies
Transfer pricing
Yes
Exchange control
No
Change in domicile permitted
Yes

INTEREST OF THE JURISDICTION

Advantages of a company in France

  • France is a prestigious European jurisdiction, and French companies have an excellent business reputation;
  • Stable currency and political situation;
  • Registration of a French company means liability of participants in the amount of their contributions;
  • France has signed double taxation treaties with more than 120 countries;
  • Country has a territorial principle of taxation.

Possible disadvantages of a company in France

  • A relatively high corporate tax;
  • As a rule, banks require a large amount for a minimum authorized capital, usually about 7,000 EUR (for SARL);
  • Audit of reporting is required (but this applies only to medium and large enterprises).

Main info

France, or the French Republic, is a Western European country, one of the founders of the EU, and one of its most significant members, which determines its policy. France is at the center of the world’s largest market, offering favorable economic conditions for business and investment.

France borders on many European countries, including Italy, Germany, Spain, Belgium, Luxembourg, Switzerland, Monaco and Andorra. The area of ​​France is about 675,000 km², and the population – 66.7 million people. The capital of France Paris is the most tourist city. The official language is French. The English language is used extensively in the business environment.

France is a presidential-parliamentary republic, the state system of which was established by the French Constitution of 1958. The President is the head of state and the executive branch of power, as well as a guarantor of the independence of the judiciary. The government is headed by the Prime Minister, which is appointed by the President. The Prime Minister ensures the implementation of laws and the implementation of the domestic policy of the country.

Legislative power is concentrated in the bicameral parliament, which consists of the Senate and the People’s Assembly.

French justice is based on the principles of collegiality, professionalism, independence, which are provided by a number of guarantees. The system of courts consists of courts of first instance, appellate and cassation courts. Also there are specialized courts, for example, in the field of criminal law, administrative, labor.

Types of companies and incorporation procedure

The most popular forms of business organisation in France are Joint-Stock Company – SA (Société Anonyme or its variety Simplified joint-stock company – SAS), Limited-Liability Company – SARL (société à responsabilité limitée) and Partnerships.

01. Limited Liability Company

Limited-Liability Company (SARL) is a very common type of business in France, as it is easy and fast to register and manage such a company. The main advantages of SARL are a small minimum capital and limited liability of the participants in the amount of their contribution. SARL is managed by one or more managing directors either appointed by the members or designated by statutory act.

02. Joint-Stock Company

In the Joint-Stock Company (SA) there must be at least 7 shareholders, individuals or legal entities, citizens of France or foreigners. The minimum authorized capital is 37,000 EUR. Capital is represented by shares that can be freely transferred, unless otherwise provided by the charter. The auditor is necessarily appointed at the time of registration.

The company is managed by the executive board, the general director or the directorate. Annual meetings of shareholders are held within 6 months after the end of the fiscal year.

A very common type of company is the simplified form of the Joint-Stock Sompany (SAS). Unlike SA, it offers considerable freedom in determining relations with shareholders, appointing management, determining the structure of the company. An audit is required only if the company’s balance sheet exceeds 1 million EUR, the company’s turnover exceeds 2 million EUR, or the number of employees exceeds 20 people.

03. Partnerships

The process of creating an enterprise in France has been greatly simplified due to the introduction of a one-stop service. Formation of a company may only take up to two weeks. This may take a little longer if the business is to be controlled by non-EU residents.

Taxation

  • Companies-taxpayers submit tax reports to the relevant tax authorities, which verify these reports. In France, the territorial principle of taxation is applied. This means that taxes are levied on income earned as a result of the company’s activities in France. Foreign activities of French companies are not taxed in France. At the same time, French companies are companies registered in France, regardless of the nationality of shareholders and companies that have effective management in France.

    Corporate tax is levied at a standard rate of 33.33%.

    For small and medium-sized enterprises, 75% of which belong to private individuals, with a turnover of less than 7,630,000 EUR and a profit of less than 38,120 EUR, the rate is 15% for the first 38,120 EUR of income, the remaining amount is taxed at a rate of 33.33%.

  • Taxable income is defined as the net profit derived from all transactions of each type carried out by the business, including capital gains from the transfer or sale of all types of assets. Small businesses can calculate their taxable income on the basis of simplified accounting rules. The enterprise is small if two of the three criteria are met: the balance is less than 4 million EUR; or turnover of less than 8 million EUR; or the average number of employees is less than 50 people.

  • Exempt income may include 95% of domestic and foreign dividends under the participation exemption (for dividends distributed by European subsidiaries); 88% of capital gains arising from the alienation of participations qualifying for the participation exemption.

    The majority of capital gains are accounted for in the same way as income and are subject to a standard rate of corporate income tax.

    All costs associated with the company’s activities are deemed to be deductible, taking into account the specific rules for avoiding double taxation.

  • As a general principle, dividends received by a resident company of France or a French subsidiary of a non-resident company are fully taxed by corporate income tax. However, if a company or branch elects to be exempted from participation, dividends received from an affiliated French company or EEA company, satisfy the conditions that are required of the resident company, can claim 99% exemption from the income tax.

    France’s double tax treaties treat lower retention rates for qualified recipients. In accordance with the EU Parents and Subsidiaries Directive, adopted in French law, dividends paid by a qualified French company to a company residing in another EU member state are exempt from withholding tax on the ownership of France. The minimum mandatory ownership of the receiving company of the French distribution company is 10%, and the minimum period for this holding company is two years.

    There is no withholding tax on interest and royalties paid to resident companies. A withholding tax of 33,33% is charged on royalties paid to non-resident companies. Royalties paid to qualifying associated companies according to the EU Interest and Royalties Directive are exempt from withholding tax. France’s double tax treaties generally provide for lower withholding rates on royalties.

  • The standard rate of value added tax (VAT) in France is 20%. For certain types of goods and services, reduced rates of 10%, 5.5%, 2.1% can be applied.

Banking system and economy overview

France is a highly developed European country with an industrial-agrarian type of economy, which is based on a strong private sector. France has a favorable geopolitical location, it is the largest country in Western Europe, which has an access to the main trade channels across the Mediterranean, the Atlantic Ocean and the English Channel.

In France, more than 20,000 subsidiaries of international holdings and companies operating in different business sectors are registered. Economic policy and reforms contribute to investment and increase the competitiveness of French companies. According to many ratings, France is among the top 20 places where to start a business. The government offers many investment and tax incentives, especially in underdeveloped areas, and it is also possible to benefit from EU subsidies.

The incentive options depend on the type of project and business area, and range from grants and loans with low interest rates to tax cuts.

The Central Bank of France is the head of the banking system of France (la Banque de France), it controls banking operations and regulates the money supply. The French banking system also includes other financial institutions that specialize in leasing contracts or in the management of securities.

The official currency in France is EUR. It should be noted that in recent years, the inflation rate is very low. In France, no exchange control exists, so capital can be repatriated without restrictions or approval.

HOW TO
PROCEED

To incorporate or purchase a company the following documentation should be provided:

01

A completed application form signed by the company or by the representative

03

A personal bill, which is less than 3 months old from the date of the application

02

Copy of valid passport

04

Payment of our fees

Note: additional documents may be required depending on the certain offshore bank.

Set-up time: From the moment, we are in possession of all required documents:

3 days

Incorporation of
a company or purchase
of an existing company

15 days

Delivery of the original
company documents

3 weeks

Offshore Bank: offshore
bank account opening