France is the third-largest economy in Europe and the seventh-largest in the world. The three most significant components of the country’s economy are tourism, pharmaceuticals, and manufacturing. It’s home to some of the largest automobile manufacturers, the second-largest aerospace manufacturer (Airbus), and one of the largest pharmaceutical companies in the world (Sanofi).

From a population perspective, it’s the fourth-largest country in Europe and among the 25 most populous nations in the world. Around four out of five people have at least a secondary diploma, so you might not have difficulty finding an educated workforce.

Starting A Business in France

In the global expansion landscape, France is known for havingone of the toughest payrolls. But that one complication aside, it’s quite easy to set up a business in France as a foreigner or expand to the country if you are already established elsewhere.

If you are an EU-national, you don’t need a special permit or license to start a business in France. But if you aren’t, you need to get a residence permit.

Obtaining A French Residence Permit for Business

If you want to obtain a residence permit for the sole purpose of starting a business in France, there are a few ways you can do it.

Establishing a new business: Requirements include an equivalent of a French master’s degree or five-year corresponding professional experience, a viable business plan, at least a €30,000 investment, financial standing at least equal to annual minimum wage, and no criminal history.
French Tech Visa: It’s aimed at startups. You need an innovative plan, recognition from a French public-sector entity, and sufficient funds to maintain the annual minimum wage.

There is another visa for investors, which requires at least €300,000 in assets (both tangible and intangible).

You might consider obtaining a residency permit as an individual. You will still be eligible to start a business in France.

Business Categories and Business Structures in France

In France, you don’t just have to choose a business structure; you also have to determine a specific category in which your business falls. And once you’ve chosen the right category, you need to register with the right Centres de Formalités des Entreprises (CFE) or Enterprise Formalities Centre. As per the government definitions, different CFEs are essentially one-stop “counters” that deal with all business formalities and regulations.

There are seven networks of CFEs:

Chambers of Commerce and Industry (CCI)
Chambers of Trades and Crafts (CMA)
National Chamber of Craft Skippers (CNBA)
Chambers of Craft
Registrar of Commercial Courts
URSSAF
Business Tax Services (SIE) – This one is rarely used

Once you’ve determined which CFE to register with, you also have to determine the legal entity you want your business to register as.

1. Sole Proprietorship or Entreprise Individuelle (EI) in French. You don’t need to show any capital, and you’ll assume liability.
2. Sole Proprietorship with Limited Liability or Entreprise Individuelle à Responsabilité Limitée (EIRL) is a way to shield entrepreneurs from full liability of their company’s financial losses i.e., a partial corporate veil without actually forming a corporation.
3. One-Person Limited Liability Company or Enterprise Unipersonelle à Responsibilité Limitée (EURL) is an entity separate from the individual (unlike sole proprietorship) with a full corporate veil in between. It only has one partner, i.e., the business owner.
4. Limited Liability Company or Société à Responsibilité Limitée or (SARL) is akin to LLCs elsewhere in the world.

It’s important to note that there are several other business structures beyond these four, designated for partnerships, investment firms, and other limited liability companies, each with a different set of rules.

Steps to Starting A Business in France

The steps to open a company in France are quite similar to those in most other EU countries.

  1. Create a business plan. You will have to prepare it in both English and in French (even if it’s not the official requirement). Adhering to the official language would be courteous and will offer you more exposure.
  2. Decide on the category and the business structure. Even if you are starting your business as a single individual, it might be a good idea to consider options other than being a sole trader. It might require more capital and a more official procedure, but it will also keep you safe from financial and legal liabilities.
  3. Take care of the financial aspects of the business, i.e., open a bank account (in your name and your business), and deposit the amount you need. Even if you don’t have a lot of capital, you might still need an amount equivalent to a year’s minimum wage in the country. You will need your business plan here as well. There might be a minimum share amount requirement.
  4. There is a legal requirement to announce your business to the public. You can do that by publishing the news of your business opening in one of the authorized newspapers.
  5. Even though all your corporate formalities will be handledby the CFE you work with, you need to make sure you are registered with all the right entities. Like the NationalInstitute of Statistics and Economic Studies (INSEE) so you are present in the national directory or the social security office if you are planning on adding staff to your business.
  6. After incorporation is complete and you receive your certificate (Extrait Kbis), you will receive a company ID number and the VAT number.

The corporate tax rate in France is 26.5%, which is a significant step down from its former 33%.

Conclusion

If you are establishing a business in France or expanding there, one thing you should focus on is the language. Even though around two-fifths of the population understands English well enough, more people don’t. And even the ones that do would be more amiable towards your business if your communication and marketing are all in French. It’s a good idea to look into local customs and market trends no matter the country you are expanding to, but the French are more receptive to foreign businesses if they make an attempt to communicate and operate in their culture.