France draws plenty of Brits to its shores not only as a holiday destination but as somewhere to live and work. But does that it make a good location for your business venture? Given that bureaucracy is as French as bouillabaise, conventional wisdom says not, but the climate for entrepreneurs has improved rapidly in recent years. So here’s our ‘let’s-do-it’ guide to building your own empire in France.
Is France the right home for your business? The pros and cons
Excessive intervention by the state meant France was long derided as a country where free enterprise went to die. However, it has become increasingly hospitable to entrepreneurs thanks to a series of reforms to the regulatory framework. The third largest economy in the EU has also become more agile with lowers costs for transport, wages and fuel. President Emmanuel Macron has vowed to make France a ‘start-up nation’ and now the taxes imposed on small businesses are not only favourable compared to the UK, but there are bountiful tax credit schemes and government subsidies too. More venture capital, particularly in tech, is also available.
The system for starting a business is not as fist-bitingly bureaucratic as you might fear. Since 2015, France has been removing many of the hurdles that foreign residents have to jump to set up a business there.
However, it’s not all plain sailing. For entrepreneurs in the luxury or artisanal sectors in particular, French consumers are far less likely to wave their credit cards around when the economy takes a dip (although that will be less of a problem in the tourist hotspots). What’s more, unionised workers can be stuck in their ways, so an awareness of the employment culture is indispensable if you’re going to be taking on staff.
If French employment law scares you, it’s worth weighing up whether you really need a physical French base in order to access the French market. Could you run an online business instead? Then you can base your employees somewhere less challenging. You’ll still need to meet the legal requirements for trading in France, but a company formation agent can provide you with everything you need, including a physical address with a mail-forwarding service for official correspondence.
Location, location, location: the best places to set up business in France
No capital city is more glamorous and heady than Paris, but its desirability is reflected in the costs of doing business there. Its allure is obvious but does your business actually need to be there? If you can find a big enough client base in a cheaper location, there are regional cities with good infrastructure that may make more economic sense. For example:
- Marseilles. The buzzy, multicultural port city on the Riviera has undergone rapid gentrification in recent years. Once famous for its factories, Marseilles is now transforming itself into a hive of activity for the high-tech services industry
- Picturesque Lyon is rated highly as a business-friendly digital hub and nearby Grenoble is the French equivalent of Silicon Valley
- Nantes is a genteel, mid-sized city boasting a vast acreage of green spaces that make it a welcoming hub for eco-friendly businesses
So you’ve picked France, now what?
Assuming you’ve got a legal right to work in France as a resident/EU citizen and have scouted business premises, completed a watertight business plan and have the necessary professional qualifications or meet whatever regulatory requirements are necessary to work in your sector (check here), let’s get cracking with the five key steps to setting up your new business.
1. What type of company are you anyway?
What kind of corporate structure will suit your new French venture? If you are a sole trader (enterprise individuelle), the process is relatively simple because as a micro-enterprise, you only have to pay personal tax (up to a turnover limit of €33,000). But if you’re thinking bigger, different types of company (société) have different tax and legal requirements.
Here are the three most common types of corporate entity:
- Limited liability company (société à responsabilité limitée – SARL)
- French joint stock company (société anonyme – SA)
- Simplified stock corporation (société par actions simplifiée – SAS)
If you’re unclear which type of corporate structure will suit your new French business, a legal advisor, accountant or business advisory service can help.
2. Crying all the way to the bank
Opening a business bank account is another complicated step, but better to get the ball rolling sooner rather than later. The paperwork requirements are onerous – including an array of corporate and personal documents – and French bank officers will brook no truck with slapdash form-filling. Even if your application and documentation are impeccably prepared, it can still take months to process an application.
One further word of advice: dress to impress. In contrast to other countries where banks compete to offer credit, the onus in France is upon you to convince the bank managers you are made of the right stuff.
You’ll also need to have the necessary funds to deposit the legal minimum for share capital for your type of business. For example, a SARL requires a legal minimum of €1, but in reality few banks will give you the green light with less than €4,000. An SA company needs at least €37,000 of initial capital.
3. Become a publicity-seeker
French law requires you to publish a notice about starting your business in an authorised publication. Either make your splash in a renowned national newspaper such as Le Figaro or Le Monde or choose from a range of business publications. It may feel a touch archaic but you might as well take pride in how far you’ve come already.
4. Incorporation – climbing the paperwork mountain
Incorporation is the process by which your company becomes formally recognized by the relevant French offices of state.
Pay a visit to the relevant business registration centre or CFE (Centres de Formalités des Enterprises). Each department in France has a CFE office for each of the five main business categories: commercial or industrial, trades/artisan, independent or freelance professional, service providers and agricultural workers. Find the right CFE for your type of business here. Registering face-to-face is easier if you have passable French, but you can also register online. Either way, you will need proof of business address and ID.
The CFE will require you to complete form M0 which enables the creation of a company. Most importantly, you must define the rules and scope of your business, the products or services you wish to sell, in the company ‘by-laws’. Don’t paint yourself into a corner with these. Think about how you might diversify within the next five to 10 years to ensure those areas of business activity are also included from the outset.
Once that form is submitted, the CFE will forward your information onto the authorities relevant to your business activity, including tax offices, social security and labour inspection agencies, the national statistics bureau and regulatory authorities. The list may go on depending on the size and type of business, but the upshot is that your application must receive all the official stamps.
Upon registering your business, the National Institute of Statistics and Economic Studies (INSEE) will issue you with a 9-digit identification SIREN number. This number is all you need to prove that your business is properly registered and will be cited on all government and official forms. Handy tip: get the financial lowdown on your competitors by inputting their SIREN numbers here.
Within about two weeks of registration, you’ll be sent an ‘Extrait Kbis’ certificate. Then you are almost good to go. With your Kbis in hand, you can finally activate your business bank account and unblock your share capital. Your tax office can then provide you with a VAT number for sales tax.
5.Don’t forget your numbers guy/girl
Time to call in an ‘expert comptable’. Unless you’re on intimate terms with French tax law you cannot do without a professional accountant. The profession is well-regulated and your accountant is obliged to inform you about all the tax laws pertinent to your business as well as keeping your accounts in immaculate order. VAT returns and payroll also fall under their remit.
Does that all sound daunting? Maybe at first, but the system for starting a business in France is also reassuringly logical. Once you’ve finally got all the legalities in order, it’s time to pop open a bottle of finest French champagne and toast your new life as a – what’s French for ‘entrepreneur’?