Entering the France Market 

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Entering France's Market

Foreign companies entering the French market are set to play in one of the major global economies, with nominal Gross Domestic Product of 2.93 trillion US dollars ranking the nation seventh in the world and third in Europe.

There are speedier and cost-effective alternatives, with Bradford Jacobs opening the door to a hassle-free route into the French economy for your company. Work alongside our Professional Employer Organization (PEO) recruitment specialists, then our Employer of Record (EOR) in-country experts to handle every aspect of compliance. Employers can depend on our in-depth knowledge of France, its work culture and business practices.

France has a widely diversified free market economy, with agriculture, chemicals, tourism, and the service industry among its leading sectors. France comprises around 30% of all the agricultural land among fellow European Union (EU) members, is the world’s sixth largest producer and second largest exporter of agricultural produce to the US.

Here we have set out some basic summaries of what you need to make the transition into the French market, whichever sector you operate in.

Starting a Business in France

Apart from its economic strength, France is a major player in world affairs. A founder member of the United Nations in 1945 and of the EU, France belongs to more governmental and non-governmental organizations than any other country. These include the Organization for Economic Development and Cooperation, the World Trade Organization, and the Council of Europe.

The highly developed road and rail system links with over 30 international airports. France has ports on its Atlantic, Mediterranean and North Sea coastlines and frontiers with major EU partners Germany, Belgium, Italy, and Spain – another aid to cross-border trading.

Foreign companies establishing an entity in France usually opt for either a limited liability company, Société a Responsabilité Limitée (SARL), or a private limited liability company, Société a Responsabilité Limitée (SELARL). Other less popular options are the branch (Branche) or representative office (Bureau de Liaison).

The subsidiary operates as a legal entity in France independently of the foreign parent company and incorporation follows the regulations of the French Companies Code.

  • The subsidiary is incorporated as a local company and its registration must be published in the Official Gazette with all necessary documents filed at the Centre de Formalités des Enterprises, (CFE)
  • Check company name is not already trademarked with the French Patent and Trademark Office, (Institut National de la Propriété Industrielle, INPI) or check on the website www.icimarques.com
  • Submit incorporation application to the Center for Administrative Procedures, (CFE), which then liaises with other relevant authorities and agencies and checks applications
  • Company documents must be stamped at the Commercial Court
  • Obtain Certificate of Incorporation, ‘extrait Kbis’
  • The subsidiary must have a resident registered agent and a registered address for official correspondence
  • Only one director is required and between one and 50 shareholders; fewer than 25 removes the need for annual general meetings
  • File all shareholders on the National Register (Institut National de la Propriété Industrielle, INPI)
  • Minimum share capital of one Euro must be deposited in a French corporate bank account
  • Register with the Ministry of Economy and Finance for taxation purposes
  • Register employees with their local tax office, Service des Impôts des Particuliers
  • Register with the Agence Centrale des Organismes de Sécurité Sociale, (ACOSS) so employees are covered by the social security system, and the Unions de Recouvrement des Cotisations de Sécurité Sociale et d’Allocations Familiales, (URSSAF), which oversees social security deductions
  • To be legally valid all documents must be in French

Expanding Business into France

Foreign companies moving into France enter one of the world’s strongest economies, ranked seventh globally on nominal Gross Domestic Product (GDP) of 2.712.93 trillion US dollars and third in Europe. France is a free market, multi-sector, advanced and industrialized economy, while still being one of the largest agricultural producers in the world.

The leading sectors also include energy, manufacturing, technology, transport infrastructure, banking, and finance - and of course a huge sector for tourists to enjoy mountains, beaches, the cuisine, and culture.

France welcomes foreign investment, but the employment market is complicated by a bureaucratic mix of laws and collective and trade union agreements affecting employee benefits and entitlements. There are other questions too: where will you find distributors, manufacturers, and offices? Before you make your move – speak to Bradford Jacobs.

France Business Facts

  • Capital city – Paris
  • Population – 67 million
  • Major cities – Marseille; Lyon; Toulouse; Nice; Nantes; Strasbourg; Montpellier; Bordeaux; Lille
  • Official language – French
  • Economy/GDP (2021) – $US2.93 trillion, world ranking 7th
  • World Ranking Ease of Doing Business – 32nd out of 190 countries (World Bank, 2020)
  • Leading sectors – service sector (60% GDP); industry sector (24.2% GDP); agriculture sector (2.3% GDP). 
  • Largest industries – car production; aircraft manufacturing, chemicals, machinery; electronics; metallurgy; tourism
  • Main exports – include aircraft; pharmaceuticals; vehicles; food and wine; hydrocarbon and electronic components
  • Main imports – include consumer goods, vehicles, hydrocarbons, and pharmaceutical products
  • Main trading partners – European Union (primarily Germany); United States; China; UK
  • Government – unitary state; semi -presidential system; constitutional republic
  • Currency – Euro

Advantages and Challenges of the France Market

Advantages of expanding into the French economy include:

  • Corporate Tax: The 2021 rate of 26.5% is due to be cut to 25% in 2022.
  • Politics: France is a politically stable, a semi-presidential constitutional republic.
  • Economic Attitude: Major global economic power that welcomes foreign investment to an open market with tax and incentive opportunities.
  • Logistics: Highly developed Road and rail system, over 30 international airports and coastlines on the Atlantic Ocean, the Mediterranean Sea and North Sea.
  • Trade Links: Direct trading access to Europe and its European Union fellow-members.
  • Ease of Business: The World Bank rated France 32nd out of 190 nations in 2020 in its ‘Ease of Doing Business’ report. France ranked 37th for ease of starting a business, first for trading across borders but only 99th for registering a property.

Challenges of operating in France:

  • Complex labor laws
  • High employment costs
  • Language barrier as French is generally expected to be used in business environment
  • Complex and time-consuming tax processing

Limited Company / Subsidiary or Branch in France

A subsidiary established in France is a separate legal entity from the parent company, with independent management and can have a different company name and follow its own business activities. The subsidiary can use this freedom to explore markets and build credibility throughout France and Europe.

A branch, however, is an extension of the parent company and is not considered a separate legal entity.

Main characteristics of a Subsidiary:

• It is a completely independent legal entity from the parent company

• The shareholders’ liability is only limited to the value of their investment in shares

• In France only one shareholder or director is required. Shareholders do not need to be French or reside in France

• There is a minimum requirement of one Euro in share capital

• Subsidiary must file annual tax and VAT returns and register its officers with the National Register

Main characteristics of a Branch:

• Branches are seen as a legal extension of the parent company

• Parent company is responsible for its activities, obligations, and liabilities

• Operates under the same name as the parent company and carries out same business activities

• Local officers and representatives can be jointly and severally liable for tax debts

• Parent company’s financial statements must be lodged with the Companies Registry, unlike a subsidiary

Legal Structures for France Market Entry

All companies in France are regulated by the Commercial Code, Civil Code, the Monetary and Financial Code and must register with the Registry of Commerce and Companies.

Legal structure for a limited liability company:

These are usually either a limited liability company, Société a Responsabilité Limitée (SARL), or a private limited liability company, Société a Responsabilité Limitée (SELARL). Shareholders need neither be French nor reside in France and the minimum share capital is one Euro. The subsidiary can have one director and between one and 50 shareholders. The subsidiary is considered a tax resident company in France and must file monthly or quarterly VAT returns and annual tax returns.

Legal structure for a branch:

Legally the branch must follow the same business structure and activities as the parent company and operate under the same name. Branches have no separate legal identity to the parent company, which is responsible for the debts, obligations, and liabilities of the branch.

Opening a Business Bank Account in France

Since introducing the Foreign Account Tax Compliance Act (FATCA) and Know Your Customer (KYC) policies, opening a corporate bank account in France is not as easy as previously and can be more complex than setting up a business. Due diligence is needed regarding:

  • Money laundering
  • Tax fraud and tax evasion
  • Companies concealing beneficiaries

A small or ‘microbusiness’ employing less than 10 people with a turnover of around €10,000 does not need a corporate account but must open a bank account dedicated to their activity, which could be a personal account. Business transactions and personal finances must be kept separate for tax purposes.

For incorporated businesses, a professional bank account is required, and the process is regulated by a separate committee. Get to know the banks, services and facilities that are available; fees can vary substantially compared to other EU countries – so shop around!

Banks prefer to meet company executives to assess requirements before registering. A responsible manager or owner will meet with a conseiller clientele professionnelle, which is an important step towards acceptance, so it’s best to prepare.

Take an abbreviated business plan to give them an idea of ‘who you are’. If you intend to take out a loan, you will need the full business, budget, and financial plan. Also, have any documents translated into French to make the process easier.

Basic documents include:

  1. Passport
  2. Proof of address and corresponding utility bill
  3. Certificate of Incorporation / ‘extrait Kbis’ – legal company ID in France

Other documents may be needed to trade, depending on required banking and services, such as loans, overdrafts, or favorable credit terms. These include:

  • History of parent company and business model
  • Planned company activities in France with financial projections
  • Procedures and regulations of company incorporated in France and parent company
  • Financial documents of parent company (if applicable)
  • Personal IDs of directors e.g., educational qualifications, CVs, passport copies
  • Beneficiaries from company’s activity

When all documentation has been pulled together, it must be submitted in person. With the approval comes the bank certificate and IBAN number. Also, signatories on the account need authority from owners/shareholders/directors and must be in France to give signatures.

Company Formation in France

The main company types in France are:

  • Limited Liability Company (Société a Responsabilité Limitée, SARL)
  • Private Limited Liability Company (Société d'exercice libéral à responsabilité limitée, SELARL)
  • Single Person Limited Liability Company (Enterprise Unipersonelle à Responsabilité Limitée, EURL)
  • Public Limited Company (Société Anonyme)
  • Simplified Joint Stock Corporation (Société par actions simplifiée)
  • French Sole Proprietorship (Enterprise Individuella)
  • Commercial Partnership (Société et norm collectif)

The two most common choices for foreign companies opening a subsidiary are the Limited Liability Company (Société a Responsabilité Limitée, SARL) and the Private Limited Liability Company (Société d'exercice libéral à responsabilité limitée, SELARL). Although registration procedures may vary, they generally include:

  • Check company name is unique and not already trademarked with the French Patent and Trademark Office, (Institut National de la Propriété Industrielle, INPI) or on the website www.icimarques.com
  • Liaise with the Center for Administrative Procedures, Centres de Formalités des Enterprises, (CFE), which checks applications
  • Register with the Ministry of Economy and Finance for taxation purposes
  • Register with the Agence Centrale des Organismes de Sécurité Sociale, (ACOSS) so employees are covered by the five funds of the social security system, and the Unions de Recouvrement des Cotisations de Sécurité Sociale et d’Allocations Familiales, (URSSAF), which oversees social security deductions
  • Draft and have notarized the Articles of Association giving information including reasons for setting up the company, manager’s responsibilities, and office address
  • Registration must be published in the Official Gazette with all necessary documents filed at the Centre de Formalités des Enterprises
  • Company documents must be stamped at the Commercial Court
  • The SARL must have a resident registered agent and a registered address for official correspondence
  • Only one director is required and between one and 50 shareholders; fewer than 25 removes the need for annual general meetings
  • File all shareholders on the National Register (Institut National de la Propriété Industrielle, INPI)
  • Minimum share capital of one Euro must be deposited in a French corporate bank account

Finding an Office in France

France has always offered a beautiful destination and easy lifestyle for people wanting to live and visit the country. However, since 2018, France has made strides in their business policies with a remarkable revolution in the technology sector as well as other areas. This comes hand in hand with a “raft of reforms” and benefits for businesses making France a desirable destination for go-getting enterprises; notwithstanding the pool of talent and trading possibilities within the EU ‘common market’ with its 450 million consumers.

When locating your office, it’s important to know that France boasts a first-class transportation system with an abundance of international airports and ports and expansive railway and road networks. This makes France ideal for shipping and distributing merchandise and networking with clients.

Tech growth areas: Paris, Bordeaux, Lille, Lyon, and Montpellier – five of the largest cities in France with business hubs spread throughout the country. Le French Tech initiative has powered up entrepreneurs and driven start-ups. Paris has been ranked third regarding Business Hubs in Europe with €2.3 million invested in new office space in 2021.

Growing market opportunities: Aeronautics, shipbuilding, renewable energy, manufacturing, agri-food, vehicular and mobility sector, electronics, and AI. Station F in Paris is viewed globally as one of the top ‘start-up’ campuses with flourishing agriculture and chemical sectors, manufacturing, and precision engineering. Paris has the highest research and development investment in Europe.

France’s major cities offer a range of physical and virtual offices, space-sharing rooms, office hotels and workspaces with shared facilities e.g., business centers, conference facilities, mail, and phone call handling. 

What to look for in ‘bricks and mortar’ facilities:

  • Where are business hubs or clusters located?
  • Demographics of potential employees, ease of travel and good transport links
  • Is it attractive and functional for a happy workforce - and is there room for expansion?
  • What local support, government grants or tax breaks are available in the area?

Finding a Manufacturer in France

Manufacturing has always been an important feature of the French economy and according to Trading Economics, production increased in April 2021 by 49.3% compared with the previous April and accounts for 86% of overall production. They are world leaders in the car, aerospace, and railroad production, not forgetting the luxury goods and cosmetics industries.

Whichever sector your merchandise falls into, you will be looking for a top-line manufacturer to boost your business in France. Now that you have spent time and money on your company, office, and product, you don’t want to fall down at the manufacturing hurdle. So, if you need professional help – it’s out there. Bradford Jacobs can provide a one-stop solution for all stages of this process.

Here are a few questions and links regarding manufacturers for those doing their own leg work.

  • Do they hold the relevant quality certificates?
  • Can they demonstrate a sound knowledge of your product type?
  • What businesses have they worked with - ask about current clients
  • Can they deliver direct to customers?
  • Can they keep up with demand? Or do they outsource?
  • Can they source basic materials?
  • Are they financially stable?
  • How will local customs and language impact productions
  • Do they have minimum order quantities, or can they produce in bulk?
  • Discuss possible compensation for poor quality or late deliveries
  • Payment options available

You may also want to consider:

  • Market research to avoid manufacturing a product in a saturated market
  • Licensing to a company that can handle manufacturing, marketing, and distribution
  • Can the manufacturer build and test a prototype?
  • Protecting your intellectual property

Finding a Distributor in France

France is one of the mainstay countries of the European Union, and companies in the country with access to the EU’s 450 million consumers need a comprehensive networking system to cover retail, hypermarkets, eCommerce, and high street stores, which is good news!

A keen eye needs to be kept on new trends and the changing face of the retail market affecting demand. A first-rate distributor is required who understands your distribution channels and who can help with your company goals, cultural differences, the language, and local practices to expand sales and foster growth.

If you do not have the contacts to access the best companies then check out social media, LinkedIn, networking business communities such as B2B groups, directories or search out any trade missions that your government has planned. Maybe they know about conferences, exhibitions, trade fairs or perhaps they can contact businesses on your behalf and arrange one-to-one meetings?

Some interesting sites to explore include GlobalTrade.net and Alliance Experts.

Enter New Markets with Bradford Jacobs

Bradford Jacobs opens the door for companies like yours seeking to explore new markets in your new territory. France offers expansion into a variety of markets, as well as support for growth and development with tax incentives for incoming companies.

Part of this exploration includes recruiting the right staff to assist with your expansion plans. Our Professional Employer Organization (PEO) specialist teams have in-depth global knowledge of how to expand into and recruit in new territories – and our Employer of Record (EOR) services will guarantee your company complies with local registration and recruitment law, taxation, and payroll. 

Bradford Jacobs also provides ongoing consultation on human resources based on our knowledge of individual cultures and customs of every country being targeted for global expansion. Work with Bradford Jacobs to expand your company and ensure the best people are on your team.