French accountant's advice
Any individual or company wishing to start a business in France must know the existing legal possibilities in this country, these are as follows:
- Individual business:
This is the easiest method for operating a very small business. The operator must apply for registration to the French company register, kept in the Registry of the Commercial Court in the area where s/he’ll operate. This legal regime gives the benefit of a micro enterprise tax regime and social regime of “auto entrepreneur”, but it does not ensure the security of personal property of the operator in the event of serious financial problems. To avoid this, simply constitute an E.I.R.L., this is an extremely simple operation.
- S.A.R.L Société à Responsabilité Limitée - E.U.R .L. Entreprise Unipersonnelle à Responsabilité Limitée :
This type of company is similar to the British “LIMITED COMPANY”. It may be constituted by two or more partners for an S.A.R.L., or only one partner for an E.U.R.L. It may also be a subsidiary of a British company. In this case, the French SARL will be able to pay dividends to the parent company. If the manager of the French company works mainly in England for the activity carried out in France, the French company will pay justified management fees to the parent company and deduct this from its profit.
The procedure of formation and registration to the French company register is more complex for an S.A.R.L. than an individual business, but an English speaking accountant in France can help set this up within a short period of time for his client.
- S.A. Société Anonyme- S.A.S. Société par Actions Simplifiée :
The constitution diagram and opportunities to link the company to a foreign company are identical to what has been developed in the chapter on S.A.R.L. The legal structure of these two types of companies is slightly more complex than an S.A.R.L., but an investor in France may have interest in adopting this structure particularly in order to strengthen its legal or social protection.
- French Establishment of a legal English company:
The registration in the commercial register and societies of a French establishment of an English company is a very simple and inexpensive operation. It is necessary to appoint an individual who will represent the company in France and provide the registry of the commercial court a copy of the statutes of the company and the lease of the premises where the activity will be carried out. It will be necessary to provide a new copy of the statutes after any statutory modification.
The main advantages of this legal arrangement are the speed and the lack of legal operations during the period of activity (no general meetings and no publication of accounts).
In this situation, the activity that is carried out in France will pay tax in France as if it were an independent company, but the British company will integrate into its accounts the revenues and expenses of its French establishment. The tax paid in France will of course be deducted from the total payable to the tax authorities in England. Headquarter may charge justified management fees that will be deductible in France.
The choice of legal structure will depend on both the investor and the business, it is of course necessary to take advice from a chartered accountant in France before starting a business, as this will ensure that you fulfil all your legal obligations and result in long-term savings.