France has the third largest economy in Europe, supported by a range of global industries including manufacturing, technology, agriculture and transport as well as tourism. The headquarters of 35 of the global Fortune 500 companies are located in France including major retailer Carrefour as well as BNP Pariba and AXA.
One of the key challenges of doing business in France is adapting to the culture, but if you welcome those changes, you may find that starting a business in France can pay dividends for your company’s success.
What are the major industries in France?
Energy is big business in France – Électricité de France (EDF) is the largest utility company in the world and another key player, Engie, is also based in France. Nuclear energy accounts for over three-quarters of the country’s power production, and there are many major players working on renewable energy, making France a low-carbon country despite extensive manufacturing and industrial plants in a range of specialised fields.
As well as automobile and aerospace manufacture, the technology park Sophia Antipolis is home to many well-respected European institutions leading the field including ETSI (European Telecommunications Standards Institute), Skema Business School and the ERCIM (European Research Consortium for Informatics and Mathematics).
Traditional industries also thrive in France; it is the second largest exporter of agricultural goods in the world and it remains a respected home of fashion and luxury goods and exports French taste and style across the globe.
What is the corporate tax rate in France?
The corporate tax rate is 28% for all income earning in France. Earnings from elsewhere are attributed to foreign business activity if no tax treaty applies between France and the source country and to a foreign PE if there is a treaty in place. For non-resident companies operating in France, a company is liable on income directly attributable to French business activity, a French PE or income from real estate in France. Reductions are available for income from patents and capital gains; social contribution tax is 0.16% on revenue excluding VAT.
There are no local or regional tax regimes, but there are different regimes depending on the nature of your business. These are as follows:
- Commercial, industrial or manual/trades/crafts businesses are taxed under the Bénéfices Industriels et Commerciaux (BIC) system;
- Professional businesses are taxed under the Bénéfices non Commerciaux (BNC) system;
- Agricultural businesses are taxed using the Bénéfices Agricole (BA) system.
Turnover below a certain rate is tax under a simplified system, régime du réel simplifié, which may be helpful for those just starting a business in France. Sole traders, or enterprise individuelle, are liable for personal income tax, Impôts sur le Revenu or as a micro-business which falls under the régime micro-entrepris or régime du reel.
Taxes are filed online and must be filed within three months of close of accounts or by 30th April. Payments on business tax in France are made quarterly on 15th March, June, September and December, with the exception of new companies and smaller companies owing less than €3,000 in the previous year that pay on an annual basis.
Challenges of doing business in France
France welcomes those starting a business and global companies looking to set up an office or headquarters in the country, but the expectation is that the company will adapt to French business culture.
Despite some very modern industries, doing business in France remains relatively formal and almost exclusively conducted in French. Those used to a faster-paced business world may feel frustrated with the focus on etiquette and particularly the enjoyment of a long meal with good wine. Business in France for foreigners may take a little patience. It’s worth taking the time to build productive and positive relationships and if you’re starting a business in France, you’ll find the time you invest early on will make a big difference to your success in the long term.
While the legal and financial infrastructure in France are modern and supportive of business, utilities can be another issue. The application for electricity takes 20 days, a compliance certificate requires a further 20 days and the whole process takes roughly 70 days. It takes a similar period of two months for a suitable internet connection such as ADSL or fibre connectivity – it can be faster for an individual requiring broadband as a sole trader, but takes longer in small and historic towns.
Brexit is likely to disrupt the export business in France, but in general the country is seeing the departure of the UK as an opportunity to attract global companies seeking a new base within the EU.
Registering a business in France
EU citizens do not require a visa to set up a business in France, but it’s worth noting that there are different types of personal visa for those who do need to apply and not all allow starting a business.
Tourism or student visas do not automatically allow for starting a business, but if you’re applying for a commercial visa or have personal ties to France then you can open a business. In addition, visas for people with specialist or in-demand skills may apply if you’re planning a venture which meets with these requirements. Residents of more than ten years can also start a business without the need for further paperwork.
You can’t apply to start a business without a visa, so it’s an important, though sometimes lengthy, step to take. If you’re planning on applying for a visa entrepreneur, you’ll also need a clear business plan that demonstrates that income will be at least €1500 a month to cover living expenses. Savings will be taken into account, but make sure your numbers are accurate or you may have future visa applications rejected. You’ll also need those business details when you register a business in France – you’ll need both a financial plan and a concise business plan as part of the application.
It’s important to note that post-Brexit, all these documents will need to be delivered in French, so it’s worth brushing up on your language skills and investing in a professional translation service to avoid any misunderstandings or delays.
There is a lot of opportunity in France; speaking the language will prove to be a big advantage, but if you can work through the notorious red tape, it’s a country where there are broad opportunities for businesses looking to succeed on the global stage. While you’re working through the process, a currency specialist can help you manage funds across borders. As well as great rates, expert guidance and a wealth of corporate FX solutions to support your business in France, an understanding of currency risk and costs can help you develop a strong business plan to support business registration requirements.