The company formation procedure in France is usually based on document gathering and other procedures such as drafting the articles of association, the specimen signatures, affidavits, and other special forms, as well as performing public notary procedures and certified translations. Usually, aFrench registered office is also required for starting a company in France in order to have a mailing address to communicate with the partners and French authorities. Opening a bank account and hiring a local accountant is also required for setting up a company in France.
Types of business entities in France
A businessman interested in company formation in France should know the main types of entities that can be used for incorporation:
- The private limited liability is the most common business form in France and it requires at least one shareholder and a minimum capital of 1 euro. The initial capital is decided in the articles of association by each legal entity. The liability of the entity’s members is limited in extent to their contribution to the capital. The management is assured by individuals appointed by the general meeting of the shareholders and they are called directors. An auditor is necessary to be appointed if the company meets two of the following conditions: it has more than 50 employees, a net turnover over 3.1 million EUR or a total balance sheet over 1.55 million EUR.
- A SA (societe anonime) is a form of business established for major businesses and must be formed by at least seven members, corporate bodies or individuals. It is mandatory that at least one member is an individual. The minimum share capital of this business is 37,000 EUR (from which at least half must be deposited at registration and the other half in maximum five years). The management is assured by a board of directors with three to 18 members appointed by the highest instance in the company, the general meeting of the shareholders. Unlike the private limited liability companies, the appointment of a statutory auditor is mandatory.
- Another form of business is the French SAS (societe par actions simplifiees) formed by at least one member. There is a minimum share capital of 37,000 EUR. The management of such company is assured by at least one director and the appointment of an auditor is mandatory only if one of the following conditions is met: the company has more than 20 employees, the pre-tax turnover exceeds two million euros or the total balance sheet exceeds one million EUR.
- The SNC (societe en nom collectif) is a form of business formed by at least two partners with no minimum share capital. The particularity of this type of business is that the partners are liable in extent of their personal assets for the entity’s liabilities.
- The SCS (société en commandite simple) is formed by a general partner and a silent partner. The silent partner is providing capital and it is considered liable only in extension of that capital, while the general partner doesn’t provide any capital and he is considered liable even with its own assets for the entity’s liabilities. The major decisions are taken by the general partner, while the silent partner cannot take part in the management.
- The SEL (société d'exercice libéral) is a rare form of business established by professionals in order to allow those to exercise their professional activity in the form of companies.
- The EURL (entreprise unipersonnelle a responsabilité limitée) is a hybrid between a limited liability company and a partnership which doesn’t require a minimum share capital and with the personal assets of the owners not protected in case the company has outstanding debts.
Incorporation procedure in France
At the beginning of the incorporation, the company name must be checked on the Institute National de la Propriété Industrielle (INPI) website. If the name is unique, a certificate of the reservation will be issued, and the entity can proceed with the rest of the operations.
The minimum share capital has to be deposited in a bank account and a certificate stating the amount must be received so this is the following action an entity must take.
The registration at the Centre de Formalités des Entreprises (CFE) in France which is a single body for statistics, tax authorities, social security, labor, and health insurance is mandatory for all the entities which will perform business in France.
In order to do that, the entity representative must file a request for registration, followed by submitting the articles of association, the bank certificate stating the capital deposit, proof showing the Gazette was notified about the company to be registered, the addresses of the company and directors who form the managing board.
The CFE sends the necessary information to every office and authority in order to be registered and enters the company in the Registre Nationale des Entreprise.
The last step of the company incorporation in France consists of buying the special accounting book from Commercial Court or authorized stores. The cost of books was around 40 EUR in 2012.
Registering a branch office in France
Foreign companies are also allowed to operate in France through branch offices and subsidiaries. The branch office various advantages to the parent company registering it with the authorities in France.
- finding a suitable place which will be the branch office’s legal address in France;
- the parent company must appoint a representative who will oversee the branch office’s activities and keep in touch with the French authorities;
- he branch office will be registered with the Trade Register as well as with the tax authorities;
- if the parent company is registered in a country outside the EU, it must appoint a French resident as a representative.
The foreign company must prepare the following documents upon the incorporation of a French branch office:
- the parent company’s memorandum and articles of association which must be translated;
- a certificate of good standing issued by the Trade Register in the parent company’s home country;
- the contract showing the legal address of the branch office in France;
- information about the French branch office’s appointed representative.
The registration procedure of a French branch office is not complicated, however, the process related to the opening of the company’s bank account takes longer than in the case of a limited liability company, for example.
Our French company formation consultants can offer more information on how to open a branch office. If you need to open a company in another country, such as USA, we can put you in touch with our local partners.
The French company formation process of a subsidiary
Compared to the branch office, the subsidiary will usually take the form of a limited liability company in France. Also, a subsidiary company will be an independent entity and will bear full liability on its obligations, compared to the branch office.
You can also read in the scheme below about the reasons for opening a company in France:
Company registration steps in France
When registering a company in France, foreign investors should respect the following steps:
choosing a business form - there are several types of companies which can be registered, however, the limited liability company is often selected;
the reservation of the company's trade name must be completed after the company type is chosen;
the drafting, notarization, and translation of the documents to be filed with the Trade Register must then be completed;
the documents mentioned above will then be filed with the Companies Register based on which the company will be issued the Certificate of Registration;
the company must also be registered with the tax authorities, which will issue the tax identification and the VAT numbers;
the company must also register as an employer, for social security, and with the pension fund.
Taxation of companies in France
One of the most common aspects of starting a business in France is related to the taxation the company will be subject to. From this point of view, a French company must pay:
- the corporate tax which is levied at a rate of 33.3% on the world income of the business;
- the social contribution which is applied at a rate of 3.3% for a corporate tax of more than 763,000 euros;
- a special tax applied at a rate of 10.7% if the turnover of the company is above 250 million euros;
- the value added tax which is levied at a standard rate of 20%, however, reduced rates apply to certain products;
- withholding taxes which apply to dividend, interest and royalties payments which are levied at different tax rates depending on the double tax treaties signed by France.
It should be noted that starting with 2020, France will lower the corporate tax rate to 28%.
Company formation costs in France
The following costs need to be considered upon the incorporation of a company in France:
the company registration fee imposed by the French Trade Register is of approximately 65 EUR;
the virtual office cost is approximately 30 EUR per month - we remind foreign investors that the virtual office can be used as a registered address for the company;
minimum share capital requirements: there are no such requirements for opening a limited liability company in France;
the company formation fee: our fee starts at approximately 1,000 EUR, and our services can be personalized in accordance with the clients' requests;
accounting services: you can benefit from such services for your company in France at prices starting at around 90 EUR per month.
Frequently asked questions on company incorporation in France
Those who want to open companies in France usually have many questions, however, the most frequent are:
How long does the company registration in France take?
There isn’t a standard timeframe for the registration process of a company, however, our agents move as fast as possible in order to ensure our clients benefit from a swift procedure.
Is it hard to open a company in France as a foreigner?
It is not. As a matter of fact, France is one of the friendliest European countries when it comes to openness towards foreign investors.
Do I need a local director for my company?
There are no specific requirements related to the nationality or residency of company directors in France.
Can I open a bank account remotely for my company in France?
The bank opening process in France requires the presence of a company representative, so your presence will be required.
Can I benefit from France’s double tax agreements in order to reduce my taxes?
You can benefit from these agreements as long as France has signed such a treaty with your home country; however, France offers many tax deductions and exemptions to foreign investors.
We invite you to watch a video about how you can set up a company in France:
Economy overview in France
France is one of the most powerful countries in terms of economy, especially due to its size and location, as well as the membership in many European organizations, which make it a key jurisdiction for starting companies. Besides, it is one of the most industrialized countries in the world. Anyhow, the French economy is characterized by a large industrial base, important agricultural resources, and a highly trained workforce.
Foreign investments in France are very popular and the government encourages entrepreneurs to come and open companies in France. As a matter of fact, there are over 20,000 foreign companies in France at the moment, considering that many statistics situated France as the first destination for foreign investment in many classifications.
The main industries in France are aerospace, tourism, industrial machinery, automotive, pharmaceuticals, food and beverages, printing. The private sector is well-developed in France.
A recent report issued by Ernst Young places Paris in the first position as the most appealing city in Europe for doing business. The consultancy company gathered data from 502 international business owners who came to the conclusion that Paris is more attractive than Londonin terms of doing business. London was until this year the favorite European capital of foreign investors.
This is the first time when Paris is voted as the most attractive city and capital in Europe for companies and businessmen to invest in, until now, London being an all-time favorite. This year, however, France’s overall economic performanceand attractiveness levelswent up and this triggered the change in foreign investors’ preferences.
EY paneled the opinions of 502 international companies and businessleaders who preferred Paris as a city to invest in. It should also be noted that Paris is currently home to the largest number of startups in Europe and one of the most appealing cities at the global level when it comes to innovation.
The World Bank announces France is one of the easiest countries in Europe to do business in thanks to the fast business incorporation procedure through the one-stop shop, how the Center of Formalities for Companies (CFE) is known.
CompanyFormationFrance.com is a part of Bridgewest.eu, an international network which has affiliated partners throughout the world, including our partner Belgian law firm, our agents in company incorporation in Gibraltar and our company incorporation consultants in Norway who can provide local legal assistance to foreign investors. If you are interested in starting a business in the Netherlands, we can put you in touch with our local partners.
Our company formation agents will provide you with more details about how you can set up a company in France. The local and foreign entrepreneurs may contact us for information and legal assistance for company incorporation in France.
Call us now at +33 9 73 22 01 51 toset up an appointment with our lawyers in Paris, France. Alternatively you can incorporate your company without traveling to France.
As a BridgeWest client, you will beneficiate from the joint expertize of local lawyers and international consultants. Together we will be able to offer you the specialized help you require for your business start-up in France.