France

Company Formation
Setting Up in France

France has been slower than many of its EU counterparts to embrace a truly liberal business culture. At the same time, it has aggressively sought to attract foreign investment – and with considerable success. One result is that it is now very simple and straightforward to open a company in France, although local advice is essential in order to ensure compliance with legal and financial regulations.

In principle, there are no administrative restrictions on foreign investment in France. International companies may open locations in France under a variety of forms, depending on investors’ development strategies. Short-term and long-term options can all be implemented with absolutely no legal risks and investors are free to amend their plans once they have been submitted, subject to some simple and inexpensive procedures.

France has a well-developed legal and regulatory system broadly similar to that in other EU member states. There are few restrictions on setting up companies, except in certain areas such as banking and insurance and there is no restriction on imports or capital from abroad. However state ownership is still a significant feature of the French economy, particularly in infrastructure industries and some restrictions still apply. Furthermore, the French legal system is slow and expensive, which underlines the importance of securing good legal advice from the outset. Our team of French legal specialists can help, so please contact us for more details.

France has a world-class international banking network, and there is a wide range of financial institutions with expertise in arranging financial transactions and transfers. The first step in opening a French company should be to establish a local bank account – we can arrange this for you.

In addition to commercial bank loans, various types of assistance to new businesses may be available. These grants and loans from local authorities help with finding sites, shared cost access to support services, tax incentives and grants for innovative new companies.

Types of Corporate Entities

There are two principal types of commercial limited liability companies:
(a) SARL (Société à Responsabilité Limitée)
(b) EURL (Entité Unipersonnelle de Responsabilité Limitée)
(c) SA (Société Anonyme)
(d) SAS (Societé Par Actions Simplifieé)
(e) SCI (Société Civile Immobilière)

SARL – Société à Responsabilité Limitée

The characteristics of the SÀRL are:
No capital requirement
Minimum of one shareholder
Only 1 director required
No statutory audit needed
No annual general meeting of shareholders, if less than 25 shareholders

Requirements:
Requested information and documents for incorporating a SÀRL in France:

Company name
Place where the company will be domiciled
Business activity (regardless of whether the company trades)
Shareholders: first name(s), surname, address, date and place of birth as well as the first name(s) and the surname of his wife (or her husband), in order to provide a renouncement by her/him of any right to the shares
Manager: first name(s), surname, address, date and place of birth; first name(s) (and surname of his/her father and mother); copy of his/her passport (assuming the Manager is a E.C resident)
Amount of the capital (a one € capital is now possible)
Percentage of the shares belonging to each shareholder (if more than one)
“Récépissé de dépôt des fonds du capital social” : proof of the deposit of the paid-in capital deposited in a blocked bank account opened in the name of the company-in-formation by the investor(s) (even for one €!).
Date on which the financial statements will be closed (June 30 and for the first time June 30, 2006 for example)
Lease for the premises or “contrat de domicialiation”
Any possible specific provision to be included in the articles of incorporation

EURL – Enterprise Unipersonnelle à Responsabilité Limitée

Characteristics of a EURL:
Only a nominal capital requirement – minimum capital of 1 euro
One shareholder – can be a company or an individual
Up to 50 partners are allowed
For small enterprises based on one person
Simple to set up and operate for a closed structure – less formal procedures
Transfer of the shareholdings to family members is usual
Fiscal transparency is usual although company tax can also be levied, depending on the facts and agreements with the French fiscal authorities.
Subject to transfer tax in the event of sale of shares

An Entreprise Unipersonnelle à Responsabilité Limitée – EURL, is a private limited company with one shareholder.

There is a minimum capital of 1 euro which may be paid in cash or by assets brought into the company (the value of these assets must be certified by an independent accountant).

The EURL is run by a manager who may be either the sole partner, or a third party. The manager’s appointment and powers are detailed in the Articles of Incorporation.
The sole shareholder/manager is responsible for unpaid company debts only up to the amount of share capital still unpaid.

SA – Société Anonye

The characteristics of the SA are:
– capital of €37000
– minimum of 7 shareholders
– 3 directors minimum
– an independent auditor is required
– an annual general meeting of shareholders is necessary

SAS – Société Par Actions Simplifiée

The Societé Par Actions Simplifieé (Simplified Stock Company) is a relatively new type of entity in France. It is a vehicle for creating a joint venture between a French company and a foreign partner. Previously, French companies had found it difficult to enter into joint-venture relationships with foreign companies because of the rigidity of French corporate law. However SAS companies are increasingly finding favor with foreign investors, particularly in the USA, who wish to set up subsidiaries in France.

Requirements:
Requested information for incorporating a SAS in France:

The minimum share capital is €37,000 of which half must be paid up
The company must have at least two shareholders and a chairman
Shareholders are liable up to the limit of their capital contribution
There is no need for a board of directors

Société Civile Immobilière (SCI)

A common way of buying a property in France

Please read our article inside our link for France;

Company Formation in France
What is Needed to Het Started

To start the process we need the following information:

– A brief description of the activities of your company
– Proposed company name
– Name Check with the “Institut National de la Propriété Industrielle”
– A sole director for a SARL and a one shareholder
– Three directors for a S.A. (we can assist you appointing nominee directors) and seven – shareholders
– The necessary funds to deposit the capital of the company (€1 as minimum for a SARL or 50% of €37000 for a SA, €18500)
– A copy of the passports of the directors

In order to fully incorporate a company under French law the following have to take place:
– Deposit of funds representing the company’s capital with a French Bank – the bank will then issue a certificate
– The By-Laws and articles of incorporation (statutes) must be drafted and approved by shareholders
– The By-Laws and articles of incorporation must then be filed with the commercial registry
– Notice of the incorporation must be advertised in the official journal

Table of Types of Structure

	Limited Liability Company (SARL)	Limited Liability Unipersonal Company (EURL)	Stock Company (SA)
Key assets	Simple to set up and operate for a closed structure	– Simple (1 partner) and limited costs – Tax transparency possible	– Structured for “monitored delegation” – Organization of the capital (5)
Managers	1 or several partners	1 manager who is a partner	– 3 directors minimum including the Chairman, or – 1 board of directors (3) and 1 supervisory board (4)
Partners / shareholders	2 to 50	1	7 minimum
Specifics	Registration fees in case of transfer (6)	Registration fees in case of transfer (6)	Auditor mandatory
Capital Requirements	No capital requirement (min €1)	No capital requirement (min €1)	Min. 50% of €37000 (€18500)
Tax regime	Corporate tax	Corporate tax or income tax	Corporate tax

(1) possibility to pay only half upon setting up the business for contributions in cash and the remainder over 5 years
(2) possibility to have variable capital
(3) 1 to 5 members who can be shareholders or not
(4) 3 to 5 shareholder members
(5) resort to third party capital and issue of more sophisticated securities
(6) 4.80% of the selling price paid by the buyer
(7) relationships between shareholders, management, organization, and capital transfer
(8) public issues forbidden.

Timings for Incorporation

Step-by-step Incorporation timing for a SARL “Société À Responsibilité Limitée” with nominal share capital (there is no minimum share capital.)

	How long (days)
Name check	1
Open a bank account and deposit start-up capital	1-5
Publish a notice of incorporation of the company in a newspaper	1-5
Register the company statutes at the local tax office	1
File the company registration	5-10
Have company books stamped	1
Inform the post office of the new enterprise	1
Total:	Abt 15 working days

Taxation in France
General Overview

The Corporate Tax Rate in France stands at 33.30 percent. Corporate Tax Rate in France averaged 38.68 percent from 1981 until 2015, reaching an all-time high of 50 percent in 1982 and a record low of 33.30 percent in 1993. Corporate Tax Rate in France is reported by the Direction Générale des Finances Publiques.

VAT – Value Added Tax in France

Understand how VAT consumption tax is calculated and paid in France, and which goods and services it applies to…

VAT (Taxe sur la valeur ajoutée – TVA) is a consumption tax paid on certain goods and services purchased in France and is included in the sale price of these goods and services.

There are four rates of VAT in France (2013):

20 percent: This is the standard rate
10 percent: This applies to restaurants, transport, renovation/improvement works and certain medical drugs
5.5 percent: This applies to food, water and non-alcoholic beverages, books, special equipment for the disabled and school canteens
2.1 percent: Special rate – applies to medical drugs reimbursed by the French social security