Why invest in France, and which are the possibilities ?
a) A liaison office A liaison office allows a first approach to French market. It consists in to recruit or introduce an employee in France whose purpose will be the representation of your company via a liaison office or a representation office, without exercising a commercial activity.
Liaison Office Fonctions Only no commercial activities : -contacting -prospecting -promotion -advertising -storage -any other activity having a preparatory or auxiliary character
Attachment It’s not a legal entity : invoices and contracts must be signed by the parent company
Advantages Fiscal advantages: -neither corporate tax, nor value-added tax (VAT) -only subjected to certain local taxes (housing taxes) and to taxes based on salaries -it can recover VAT on expenditure it performs in France
No registration : registration is mandatory only if the office is a permanent office, and if it creates juridical links with third parties. However, this registration is recommended because it will provide access to K-bis (company registration certificate :official document certifying the legal existence of a business in France)
Formalities -This registration requires to appoint a legal representative of the office, employee or not. -If he is not a national of the European Union, of Swiss or of a country member state of the European Economic Area, he must either send a prior declaration to the office of the Préfêt, who is the local representative of national government in each French région/département, or obtain a residence permit. -The statutes of the foreign society translated into French must be deposited at a Centre de Formalité des Entreprises = CFE ; it’s a public and free service which helps, facilitates and accelerates “the administrative path” in the establishment of societies, by allowing to file in the same location, and on the same document, the statements that the entrepreneurs are required to subscribe. It is a major tool for administrative simplification.
Possible evolution – it can be converted into a branch, without juridical personality – it can be converted into a subsidiary company via transfer or contribution
b) Establish a sales force – a sale representative (VRP) : Intermediary of business, salaried, who visits the clientele of one or several companies in a definite geographical area, with big autonomy. His activity can generate a stable establishment for the foreign company if the representative signs contracts in the name and for the company
– a sales agent : The foreign company can turn to a sales agent (person or society) which, as an independent professional, will represent the company. It will be in charge of negotiating and concluding sale contracts or service offers, in the name and for the foreign company. The turn to a commercial agent is privilegied by Small and Medium Enterprises (SMEs), because it is a flexible and cheap way to make know their products on foreign markets.
2- CONTINUOUS SOLUTIONS
The creation of a branch or a subsidiary company is necessary for the exercise of an industrial and commercial activity in France from a permanent, main or secondary establishment.
a) The branch The branch can lead all the activities of an industrial and commercial company, but it has no legal autonomy and engages the responsibility of the head office in all its actions. Managed by a legal representative, it works as an agency, connected with the head office, without particular formalism in the decision-making.
The branch is subjected to the corporate tax and to the VAT. The registration of the branch is a compulsory formality.
The list of documents to be supplied for the recording is the following one : – M0 form : allows to declare the creation of a limited liability company (SARL, SELARL, SA..) – Two copies of the statutes of the parent company (two originals and two free translations in French certified shape by the legal representative) – A documentary evidence of address -The certification of inscription in the foreign public register – Documents relative to the person having the power to commit the company : ID card, affidavit of any condemnation, residence permit, or statement declaration in prefecture if necessary by the not European manager, -Documents giving evidence of necessary qualifications if the activity is regulated
b) The subsidiary company The creation of a subsidiary company of French law with legal personality is advantageous because its status does not oblige to make more commitments than for the others, and it presents the advantage to have its own autonomous entity, which does not commit the head office.
THE SUBSIDIARY COMPANY
Advantages – The separation of the assets of the subsidiary and the head office avoids the unlimited liability of the foreign company for the debts of the French structure. On the contrary, no compensation is possible between the profits of the head office and the losses of the subsidiary. – It mays possibly receive the attribution of public aids during her setting-up, and during her extension, according to the French agency for the international investments – It cans set up agreements of commercial or technical fee, commissionnement, etc.
Registration and taxes -The subsidiary company acquires the legal entity by its registration at the Registre du Commerce et des Sociétés- RCS (register of trade and companies). Attention : The legal commitments suscribted by the founders during the phase of constitution of the company fall to them personally. The new company consequently will have to take the responsibility for them. -The subsidiary company is subjected to the current taxes.
Main preliminary stages for creation The creation of the subsidiary company implies to make certain number of steps upstream of the recording of the company. The investor will have to anticipate the following stages : -The research for public or private financing -The research for business premises and an address of the company by the signature of a contract of address, a commercial lease or by the real estate acquisition .
-The choice of the legal shape of the structure (SAS, SA, SARL : see here below for more details) -Writing of the social statutes/signature (at the notary if the company owns buildings) – Managers naming project -Long stay visa and residence permit for the foreign manager or the preliminary declaration if the foreign manager will not live in France -Choice of the company name and address -Naming of one or several statutory auditors -If needed, evaluation of contributions in kind by a statutory auditor -Constitution of the share capital -Opening of a bank account in France and deposit of the society capital -Recording of the statutes at the tax department of the head office place (free formality) -Publication of the constitution in the gazette
DURATION Some of these stages implies steps in the country of origin and on the French territory and can set several weeks
SA (Société anonyme)
1 37.000 euros, and at least half must be paid from the beginning Limited to the shareholders contributions Executives are considered employees concerning taxation and social security
SARL (Société à responsabilité limitée
1 1,00 € Limited to the shareholders contributions Taxation and social security are more expensive for executives than in SA
SAS (Société par actions simplifiée
2 shareholders and 1 president 1,00 € Limited to the shareholders contributions A SAS is as a mean to create a joint-venture between a French company and a foreign partner. No board of directors needed.
II- FRENCH SOCIAL ASPECTS
Remark : It is essential to take legal advice before entering into any contract or offer work, because recruitment itself is relatively easy in France, but the labor law is very complex.
● different types of employment contract.. The « CDI » : undefined duration contract : for full or part time The « CDD » : defined duration contract : for temporary and precise task, and also when it’s provided by law A probation time period allows the employer to evaluate the salaried competences. During this period, the employer can break the contract without any explanation of the reasons, and without compensation. It must be inevitably mentioned in the employement contract or in the engagement letter. Its duration mays vary depending on the kind of employment contract and on the kind of position held :
Employment contract Duration of the probation time period
CDI – 2 mounths maximum for employees and workers, renewable once – 3 mounths maximum for technicians, renewable once – 4 mounths maximum for managerial staff, renewable once.
CDD -for a 6 mounths contract (or less): 1 day per week, in a 2 weeks limitation duration -for longer contract : 1 mounth maximum
● Working hours PRINCIPLE 35 hours legal weekly EXCEPTION A law dated on 20th Agust 2008 eased work time arrangements and the use of additional hours, allowing companies to negociate collective agreements in order to increase the work hours. In addition to this, a law dated on 1st October 2007 created a very incentive system for the work force : overtime are exempted of social security contributions, and tax free.
Any foreigner (non EU Nationals) who resides outside France and who wants to exercise in France a professional activity, as private capacity or as manager of a company, has to request to the diplomatic and consular competent authorities in his country of origin, in order to obtain a long stay visa.
Then he will have to request to obtain a temporary resident’s permit carrying the mention of the activity
The exercise of a commercial, artisanal or industrial activity in France by a foreigner not resident in France is subjected to a preliminary declaration to the Préfet of the department by which the applicant intends to practice for the first time his activity.
In France, certain occupations are regulated, and to exercise them it is necessary to be able to have a diploma recognized by the state or a professional ID card, a licence (Bachelor’s degree), an administrative approval or a particular work experience. Besides, certain activities can be exercised only by French people.