Company Registration in France
Healy Consultants Group PLC
13 November, 2014
There are several key advantages of registering a company in France. The registration of a company is a fast and simple process, the incorporation period is a short two weeks, and requires only one director and one shareholder, who can be of any nationality. There is also a required share capital of one euro that must be paid when registering the company. Investors do not need to travel to France in order to complete their company registration. Although tax is quite high in France, a companys sales income can also be large due to France being the second largest consumer market in Europe, the country has the worlds largest tourism industry which includes 83 million visitors annually to France, and along with this France has the European Unions second and fourth largest exports of food and beverage products. France is a great location for a manufacturing base. The country is a leader in Europe for product distribution. France has excellent roadways and railways, voted being the 2nd and 4th best in the world, making the country extremely efficient. There are strong and effective intellectual property laws present in France which foreign entrepreneurs can take advantage of. Currently, France is ranked an impressive 12th best country in the world for registering patents by the World Economic Forum. French registered companies also benefit from a unified patent registration procedure which provides legal protection in other European Union countries. This greatly reduces patent registration and translation costs.
There are several different French business entities, including: The French limited liability company, the simplified joint - stock company, the French publicly-limited company, the European stock corporation, the branch and the representative office. A limited liability company, the most commonly used all amongst entities, has the fastest company registration time. The average company set up time is two weeks, as opposed to three, four and five weeks. The average process time for opening a company bank account for all types of business entities is approximately three weeks. Clients do not need to travel to France in order to complete the company registration, and there is a requirement of only one director and one shareholder (any nationality) for each company.
There is a standard corporate tax rate of 33% in France. Although, small medium enterprises (SMEs) have a reduced tax rate of 15% for income of up to 38,120 euros. The SME also has to meet certain criteria, such as: have less than 250 employees, an annual revenue of less than 50 million euros, and assets worth less than 43 million euros. The standard value added tax (VAT) is 20%, these VAT filings must be submitted on a quarterly basis for companies which have an annual turnover of one million euros or below, and for those companies who have a monthly turnover of over one million, are required to submit their VAT on a monthly basis. Annual audits are mandatory for limited liability companies, and must possess at least two of the following: an annual turnover of 3.1 million, total assets of over 1.55 million or more, or have at 50 employees. A simplified joint stock company must possess at least two of the following: an annual turnover of over 3.1 million, total assets of 1 million or more, and more than 20 employees. Newly established companies which have less than 50 employees, have the option of paying income tax rather than corporate tax for the first five years. Annual losses can be out forward indefinitely, amounting to 1 million plus 50% of subsequent profits which exceed that amount. In addition to this, Franc has signed double taxation treaties with 123 countries, which include: Australia, China, Singapore, Canada, USA and Australia. This helps to reduce the withholding of tax on payments overseas.
There are also numerous legal and compliance issues which need to be looked over before incorporating a company in France. French companies have to complete reporting regulations, such as: providing adequate proof that they subscribe to civil liability insurance and vehicle insurance. French companies are prohibited by French law bars to collect and disclose personal information, without consent from: the individual, the Commission on Informatics and Liberty. Companies in violation of such law must: notify the respective authorities, may face a fine of up to 300,000 euros, and up to 5 years in prison. There are also a number of important staff regulations, including: a maximum probation period of 4 months for workmen, and 6 months for executives, employees who work overtime must receive an extra payment of at least 25% the usual rate of pay. It is illegal for employers to have their employees work more than 10 hours a day (48 hours per week). The law also prohibits employment discrimination on the grounds of gender, sexual preferences, ethnicity / race, religion and political or union affiliation.
There are some disadvantages in France company registration which could affect the way your business runs. France is one of the most expensive European Countries to do business, for a number of reasons: The cost of labor is the highest in Western Europe, with the average cost for labor being 32 euro per hour. Paris is ranked as the worlds 2nd more expensive city to hire expatriate staff. The price of office rentals is also expensive, with per square meter costing an average of 38 euros. There is also a large amount of taxes and levies involved in living and operating a business in France. In addition, there is a wealth tax of 1.5% for your total net worth, property tax of 13% for the land registrys rental value, fuel tax of 24%, and 6% tax on insurance products. Foreign employers may find communicating with employees challenging, this is because 50% of French people of nationals do not speak a foreign language. The proficiency rate is at 13%, Europes second lowest. Experiencing difficulty obtaining work permits for non-European Union nationals may be troublesome, due to the fact that there is currently an unemployment rate of 10.2%. Along with this, dismissing an employee may also be troublesome and costly, as the average severance pay is 3 months of salary.
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