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Guide to Company Incorporation in France

December 23, 2010, 2:49 pm
BridgeWest

1. What is the minimum share capital of a French S.A.R.L. (Limited Liability Company)?

In order to set up a French S.A.R.L. or French Limited Liability Company the law does not require a minimum capital, as this requirement has been removed since 2003. Before that, the minimum capital was 8000 EUR.

2. What is the minimum share capital for French S.A. (Joint Stock Company)?

The shareholders of a French Joint Stock Company need to provide a minimum capital of at least 37.000 EUR which should be paid in at registration at 50% of the face value of shares.

3. Are there any special requirements for establishing an S.A.R.L. in France?

A French S.A.R.L. is a company designed for small to medium-sized businesses, as it can be set up by at least 2 partners, and a maximum of 100. Their liability depends solely on the amount invested. Technically a French Limited Liability Company can be established with only 1 EUR and there is no limit as to the maximum amount. Usually the capital is decided in the articles of association. An important legal provision is that the companies have a legal address. This can be the manager's home, a rented address, or an address provided by a specialized company. The director of a French S.A.R.L. is not obliged to be French citizen, or have a residence in France. It is necessary, however for anyone who is a director of any business entity to obtain a Foreign Trader's Card. The legal representative of the company, or gérant, who is not a citizen/resident of an OECD or EU member state, must obtain a merchant's license, which can be obtained from the French consulate. A French S.A.R.L. must open a bank account through which future transactions will be operated. Even though all the procedures can be completed through a legal representative authorized with power of attorney, some banks may require the presence of the bank account titular in order to ensure of his or her existence.

4. How can I register for VAT in France?

VAT Registration is mandatory in France, only for some businesses, carrying out specific activities. Upon company incorporation the representative, or the person in charge with establishment of the company, must submit an application at the Centre de Formalités des Enterprises which issues the registration certificate for the French company. After issuance of the incorporation certificate the institution also informs the tax authorities of the formation of the new company submitting its information. Even though the procedure is completed automatically upon registration, a company may register for VAT by submitting an application at one of the offices of the Tax Authorities.

The standard VAT rate is 19.6% and can be reduced to 5.5% or 7% for food products. 2.1% are paid for some reimbursed and periodical medicine. The filling of VAT return is made quarterly or annually, unlike other countries was the returns are made every month. I a company is part of a group, that group can consolidate all the liabilities and pay a single VAT rate.

5. How can I open a bank account in France?

A French company that will engage in commercial activities is required to open a bank account through which future transactions will be operated, or where the initial capital deposited. However there are certain aspects in the procedure of setting up a bank account, that need to be kept in mind. The French bank needs to receive proof of address for the company and information on the bank account titular, like identity card, passport etc. Information on the company is also necessary, but the requests depend on the regulation of each bank. Usually the articles of association, lists with the directors and specimen signature of them are necessary.

Most of the French banks offer the possibility of internet banking, meaning the client can manage the company's bank account from anywhere. However some banks require the presence of the founder, and it is recommendable to obtain this information prior to commencing the procedures.

6. How can I recruit personnel in France?

A brand new company registered in France may come to the point where it needs employees. Even though the unemployment rate in France is quite low, the workforce is well qualified and trained in most business sectors. A company may browse through internet websites in search of employees, or may collaborate with a recruitment agency.

7. What is the average salary in France?

Being an employee in France is rewarding as there are many advantages, including social security and rather high salaries. However companies must keep in mind that the average salary of a French employee is over 2315 EUR.

8. What is the overall economic situation in France?

The state of France is a powerful country economically speaking, having a stable growth throughout the last decades. Most of the business sectors are continuously developing, and France ranks as one of the most desired states in which to invest. The French Law ensures a non-discriminatory treatment towards foreign investors, granting them most of the advantages as nationals of France. France is the fifth largest exporter of goods (mainly durables) in the world, the fourth regarding services and third in agriculture (cereals and food). France is the first European agricultural producer and exporter. The second largest in terms of area in the EU, the French forest has increased by 46% since 1945 and is growing every year about 74 000 hectares. It mainly consists of hardwood (2/3), conifers third.

In addition, France achieves 66% of its trade with its partners in the European Union (50% with the euro area).

France is the second largest host country for foreign direct investment from abroad. Indeed, investors appreciate the quality of the workforce French, the high level of research, mastery of high technology and good control of production costs. The state of France is one of the most industrialized countries in the world, where 40% of the population work in this business domain. However the unemployment rate can be considered high for such a thriving economy, mostly affecting the minorities of this country. France features a well-developed private sector, also controlling the state segment. Investing in France can be a wise decision for foreign investors, as the country is one of the largest recipients and the regulations encourage entrepreneurs to engage in business here.

France seems to settle permanently in a period of economic stagnation, with a series of unprecedented five consecutive quarters of zero growth and unemployment continues to soar, according to INSEE Thursday revised down its forecast for 2012 .

BridgeWest offers company formation services in France, including virtual office and other related services.




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