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The Ultimate Guide To
Employment in France

France Facts

Population size: 64,668,129
Currency: Euro (EUR)
Capital city: Paris
Languages spoken: French
Ease of Doing Business: 29

Employing in France: What You Need to Know

French employment law may appear complex and confusing. However, in some ways there are many similarities to other countries. As the following only aim to act as a guide in the broadest sense, it is still recommended that professional legal advice be sought when employing in France.

Key Factors to Consider When Employing in France

There are several key areas to be aware of within France’s employment regulatory framework, especially for companies that plan to initiate a full local office and human resources department.  These challenges can be mitigated by use of a locally sourced payroll provider who is familiar with all of the local laws and rules for both local employees as well as foreign nationals.

Employee Entitlements

Information Explanation
Working on Sundays ?

Sunday working is not allowed by law but there are some exceptions: for example, where there is a
need for production to fulfill the demands of the public (e.g. in food manufacturing, entertainment,
restaurants, etc.)

There are also some situations in which it is possible for businesses to gain a temporary exemption, such as:

  • if the outlet is in a tourist area;
  • if the outlet is located within an ‘area of exceptional consumption’;
  • if the Prefect of the region authorises the opening on economic grounds
Time Off Work ?

Employee annual leave is calculated from 1st June of the previous year until 31st May of the current year. All employees are entitled to two and a half days of paid leave per month worked. This gives basically 5 full weeks of vacation a year (because Saturdays are considered in the calculation as ‘working days’. Sundays and public holidays are not included. Employees in France will begin earning their annual leave from the moment they start working. Traditionally, holidays are taken in August. In France this month is ‘sacred’ and the country practically comes to a halt. Some companies officially close and many small shops, restaurants and local service providers shut.

Medical Leave ?

There are two categories of sick leave: work related sick leave and non-work related sick leave. Work related sick leave is defined as any injury or illness that occurs either within the work place, travelling to or from work
and professional illnesses.

Employees are not usually paid for taking sick leave, however in certain circumstances regarding a collective agreement or law, employees may be entitled to receive payment for part of or all of the leave taken.

The French Labour Code provides that an employee shall be paid for sick leave, whether work related or not, if the following conditions are satisfied:

  • The employee has at least one year of service on the first day of his/her sick leave;
  • Justification of the sick leave is given within 48 hours and supported by a medical certificate and, if necessary, by another medical certificate issued from a second medical exam requested by the employer;
  • The illness is covered by French social security; and
  • Medical care was provided in France or another country of the European Union or the European Community.

If all of these conditions are met, the employee’s salary for sick leave taken is paid by the French social security.

Employment Termination in France

Information Explanation
Termination of Employment ?

When an employee’s employment contract is terminated and they leave the business, there are no documents given.

Using Shield GEO EOR Services: How We Can Help You

Compliance with local employment requirements is just one of the issues foreign companies face when employing staff in France. For companies which intend to employ their staff directly through their incorporated France entity, professional legal advice is recommended. Shield GEO provides an alternative path for companies to outsource the employment of their staff in France.

As a Global Employer Organization (GEO), Shield GEO acts as the Employer of Record and ensures the employment is compliant with host country regulations regarding employment. In addition Shield GEO will handle payroll processing, tax and immigration. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into France.

The Shield GEO solution is an attractive alternative where

– the company is looking to employ staff quickly

– the company doesn’t have an appropriately incorporated entity in France

– the company wants to work within a defined budget

– the company wants to limit its initial commitment in France

– the company needs help with tax, employment, immigration and payroll compliance in France

Shield GEO can contract directly with the company to employ and payroll their staff in France. Shield GEO supplies local employment contracts for the staff, which ensure that local statutory requirements are met covering issues such as termination, probation periods, leave entitlements and statutory benefits.  Shield GEO is able to advise companies how to cover local employment regulations whilst still providing consistent global employment policies. Understand more about outsourced employment through Shield GEO.

A GEO EOR Solution vs DIY Employment in France

Companies entering France must make a decision whether to use their own resources for a Do-It-Yourself (DIY) approach, or to use a Global Employment Organization to handle payroll and employment responsibilities.  A GEO or France Employer of Record solution makes it faster, easier and cheaper to deploy staff if they don’t have a French entity established that can run payroll.

A DIY approach will typically be delayed until there is a properly incorporated entity ready to run payroll and can be a costly option if registered capital is required. Shield GEO can deploy foreign staff in 4-6 weeks and local staff in 48 hours. Additionally Shield GEO is responsible for all compliance issues related to the employment.

Using Shield GEO Employer of Record Services in France

Payroll

Payroll France
Management Fee for Employer of Record Services / Monthly Payroll Costs

Please contact us for a quote

Notes

Shield GEO pays the employee on a monthly basis, typically on the last working day of the month although we can adapt to your preferred schedule. Income tax and social security (where applicable) are deducted at source and paid to the local tax authorities.

Currency ?

Euro (EUR)

Tax Amount
Grossed income Tax Rate (%)
€0 - €9,690 0%
€9,690 - €26,764 14%
€26,764 - €71,754 30%
€71,754 - €151,956 41%
over €151,956 45%

An extra contribution applies to income that exceeds €250,000 for single individuals and €500,000 for married couples. This contribution is extra 3% on income between €250,000 and €500,000 for single individuals (€500,000 – €1,000,000 for married couples) and 4% for income exceeding €500,000 for single individuals (€1,000,000 for married couples).

Tax Returns Supplied

Yes

Corporate Tax Requirements

The tax year is generally corresponds with the calendar year (there is a possibility to choose a different year-end date).  A self-assessment regime applies to companies operating in France. Corporate tax returns are normally have to be lodged by 30th of April of the year following the calendar year (or within three months of the year end for a non-calendar financial year). There is a 10% penalty for late payments and late filing. Special penalties can apply in the case of bad faith or abuse of law.

Employers Social Security and statutory contributions

France’s mandatory national social insurance system covers health (maternity, disability and death), family allowances, retirement,  housing benefits, and occupational accidents (including illness).

Social security contributions that are payable by the employer could vary depending on the type, size and location of the business, and generally amount to approximately 50% of gross pay.

Employees Social Security and statutory contributions

The employee also must pay social security contributions and surcharges, which are deducted at source from their salary payments. Their contributions amount to approximately 20% of salary.

Can supply private health care

N/A

Can assist opening bank accounts

N/A

Work Permits

Work Permits
Can Sponsor Work Permit

Shield GEO does not provide sponsored work permits in France at this moment.

Work Permit cost

Shield GEO does not provide sponsored work permits in France at this moment.

Work Permit process

Shield GEO does not provide sponsored work permits in France at this moment.

Business Visas

Business Visas
Can do Business Visa

N/A

Business Visa Cost

Shield GEO does not sponsor business visas in France at this moment.

Payroll and Tax in France

There are specific rules for payroll and taxation in France, depending upon the type of business structure used.  The primary concerns for a foreign company that needs to comply with tax laws in France are individual income tax for employees, social security costs, health insurance contributions, payroll tax, sales tax, withholding tax, business tax and permanent establishment concerns.

Your Payroll Options in France

Information Explanation
Remote Payroll ?

A remote payroll in France is where a foreign company, i.e. a non-resident company, payrolls a resident employee in France. Under French law only incorporated entities are allowed to have employees based in France. This applies to both local and foreign employees. One option for a non-resident company to payroll its employees (local and foreign) in France is to use a fully outsourced service like a GEO or FESCO which will employ and payroll the staff on their behalf.

Local Payroll Administration ?

In some cases, a company will register their business in France under one of the forms available, but prefer to have another company administer its payroll.  This can be accomplished through a payroll provider. It is important to note that the company, as the Employer of Record, is still fully responsible for compliance with employment, immigration, tax and payroll regulations. But the payroll calculations, payments and filings can all be outsourced to the payroll provider.

Internal Payroll ?

Larger companies with a commitment to France may wish to run their own local payroll for all employees, foreign and local.  In order to accomplish this, they will have to complete incorporation, register the business and then hire the necessary staff.  There will be a need for in country human resources personnel who have the background needed to manage a French payroll, and can fulfill all tax, withholding, and payroll requirements.

This approach carries significant cost and requires some knowledge of local employment and payroll regulations.  The company will need a local accounting firm and potentially legal counsel to ensure full compliance with French employment laws.

Fully Outsourced Payroll & Employment ?

Companies can outsource the employment and payroll of their staff in France to a GEO, like Shield GEO. This is possible for both foreign workers and France nationals. This is the easiest, fastest and safest way to payroll staff in France.

Shield GEO manages all aspects of payroll for workers in France, including taxes, withholding, social security payments and other statutory requirements. Shield GEO becomes the Employer of Record and employs the staff on behalf of the client.

Staff are paid monthly with tax and social security deducted at source and paid to local authorities. Shield GEO will invoice the client monthly in advance of the payroll date. The invoice consists of the Total Cost of Employment (Base salary + Employers Statutory Contributions + Additional statutory contributions) and a Management Fee. Shield GEO provides the employees with payslips.

Read more about outsourced payroll and employment through Shield GEO.

Jump to...

Setting up payroll in France

Information Explanation
National Currency ?

Euro (EUR)

Employee Information Required ?

The following information are needed:

  • Full Name (Title, First, Middle, Last)
  • Address/ Postal address
  • Telephone number
  • INSEE code (National identification number/ Social security number)
  • Any pension details (if applicable)
  • Any disabilities that’s relevant to work
  • Various businesses may require further details
Tax Registration Requirements ?

Employees are required to maintain their own taxes and file a tax return each year.

Social Security Registration ?

Employees are required to register for social security. When employing staff, employers are required to register themselves with the URSSAF (Unions de Recouvrement des Cotisations de Sécurité Sociale et d’Allocations Familiales, meaning the Organizations for the payment of social security and family benefit contributions). Employers will have to make contributions towards their employees social
security

Documentation Required for New Employees ?

New employees must be provided with an employment contract which is a written statement of all the terms included in the agreement of the job role. A French employment contract must include the following:

  • Employee’s job title and professional qualification
  • Salary and bonus
  • Convention Collective, relative to the employment (an agreement between employers’ associations and
    trades unions regarding work conditions and agreements)
  • Notice period in case of resignation
  • Place of work
  • Duration of the contract
  • Trial period
  • Notice period

Some contracts may also include either a Clause de mobilite or a clause de non-concurrence. A Clause
de mobilite states that an employee agrees to accept any future job transfers which may be requested. If
the employee does not agree then it may result in the employees contact being terminated. A Clause de
nonconcurrence states that an employee will not work for either a fellow competitor or an other company in the
same sector for a set period of time after the termination of the employment contract.

Tax Figures

Information Explanation
Corporate Income Tax ?

A company that is incorporated in France is deemed to be tax resident. A foreign company could be French resident if it is controlled and managed in the country.

The standard corporate income tax rate is 33,33%. Small or new businesses may be subject to lower rates. A 3.3% social surcharge applies to the mentioned rate when tax liability exceeds  €763,000.

Income Tax Rate ?
Grossed income Tax Rate (%)
€0 - €9,690 0%
€9,690 - €26,764 14%
€26,764 - €71,754 30%
€71,754 - €151,956 41%
over €151,956 45%

An extra contribution applies to income that exceeds €250,000 for single individuals and €500,000 for married couples. This contribution is extra 3% on income between €250,000 and €500,000 for single individuals (€500,000 – €1,000,000 for married couples) and 4% for income exceeding €500,000 for single individuals (€1,000,000 for married couples).

Payroll Tax ?

Payroll tax is levied on entities that collect revenue not subject to VAT. This mostly applies to banks and financial institutions.

The rates:

  • 4.25% on individual salaries up to €7,705;
  • 8.5% on the portion of the salary in €7,705 -€15,385 bracket;
  • 13.6% in €15,385 – €151,965 bracket;
  • 20% on the excess over €151,965.
Sales Tax ?

Value Added Tax (VAT) is imposed on the sale of goods and the provision of services.

The standard VAT rate is 20%. Reduced rates of 5.5% or 10% apply to most food products and some other items. There is also a preferential rate of 2.1%, which is payable on some periodicals and medicines reimbursed by the social security system. Certain transactions could be exempt from VAT.

Withholding Tax ?

There is a 30% withholding tax on dividends that are paid to a nonresident shareholder by a French corporation, unless some treaty rules apply.

Interest paid to a nonresident lender by a French company is generally not subject to withholding tax.

A 33,33% withholding tax is imposed on royalties paid to a nonresident entity by a French company. Fees paid for commissions, consultancy and services performed or consumed in France are also subject to this rate. The rate may be reduced or eliminated under a tax treaty or under a EU interest and royalties directive.

Other Tax ?

Resident and nonresident companies operating in French must pay the CET (“contribution economique territoriale”). The CET consists of a real property tax and a tax calculated on adjusted gross receipts of the French business.

The sale of real property is subject to a transfer tax at a maximum rate of 5.8%. The sale of shares of a limited liability company (SARL) or commercial partnership (SNC) is subject to a transfer tax equal to 3% of the sale price, minus a sum equal to the number of units sold x EUR 23,000/total number of the company units.

A number of minor taxes also apply to corporations in France to fund specific social purposes.

Time to prepare and Pay Taxes ?

139 hours

Time required to start a Business ?

3.5 days

Payments

Information Explanation
Payment Mode ?

Small, independent business owners may feel that they want to pay their employees by using cash or a cheque. However large companies with a large quantity of employees will find the method of Electronic Payment much easier and quicker to work with.

Frequency of Salary Payment ?

Most employers choose to pay their employee’s once a month, as a salary. However other frequencies include:

  • Daily
  • Weekly
  • Bi-weekly
  • Quarterly
  • Annual
Invoice / Payslips required ?

Yes, employees are required to receive an itemised payslip from their employers. The payslip must include the employee’s gross salary, net salary, social security contributions, complementary pensions, unemployment insurance.

Minimum Wage ?

1,445.38 Euros per month (2014)

France Immigration and Work Permits

Foreign workers are required to have the proper visas and work permits in France, as established by immigration laws.  Work permits must be secured for employees, and sponsored by a locally licensed and incorporated entity, which can be a problem for companies just entering the French market.  If you have yet to complete the incorporation process you can use an outsourced management company or GEO Employer of Record to sponsor the employee for the necessary permits.

 

Your Options

Have your own Company?

Citizens of the 28 European Union countries or countries that form European Economic Area (i.e., Norway, Liechtenstein and Iceland) are not required to obtain work permits or visa to visit or work in France.

For citizens of other countries, arranging a long-stay work permit (for more than 90 days), also known as “visa de long sejour”, to work in France is a complicated process. There is a number of procedures set by various authorities that must be strictly complied with, including different bureaucratic obstacles. In general, the application can only be made by an established French company, except if foreign company (Detache) is transferring its employees (“salaries en mission”) inside the group of companies (intra-company transfer).

Process

1. A contract must be signed between the French sponsoring company and the employer.

2. French employer should first file an application with the Labor Department (“Direction Regionale des Entreprises, de la Concurrence, de la Consommation, du Travail et de l’Emploi” or “DIRECCTE”).

3. When this application is approved, it is then processed by the National Agency for the Reception of Foreign Nationals and Migration (“Office Francais de l’Immigration et de l’Integration” or “OFII”).

4. Once approved by OFII, it will inform the employer and forward the approval to the French Consulate in the employee’s country of residence.

5. The employee will then be contacted by email and asked to take an appointment on line to apply for its visa.

After that, the employee and their family members will be able to collect their long stay visas from the French Consulate. The average duration of this process is about six weeks (however, processing times will vary according to the nationality of the applicant and local conditions of the issuing authority). For the sponsored employee this visa acts as both a residence and work permit.

Generally, spouse of the employee is not allowed to work in France, unless certain circumstances (e.g. intra-company transfer) applies. Long stay visa holders must register with OFII during the first three months of their stay.

Duration: 1 year (can be extended in certain circumstances)

Documents

List of documents may vary depending on the employee’s country of residence. Here is a general list for Australian and American citizens:

  • Application form (for each visa applicant);
  • Identity photographs;
  • Tickets or detailed flight booking information (prepared by the travel agency);
  • Original passport or travel document (For US citizens, must have been issued less than 10 years ago, be valid for at least three months after your return to the US and have at least 2 blank visas pages left);
  • Processing fee;
  • Residence form;

For Australian citizens there are also some additional documents required:

  • Police certificates for countries where the applicant stayed for more than 1 year;
  • 1 «Demande d’attestation OFII» with the first part (« RUBRIQUES A REMPLIR LORS DE LA DEMANDE DE VISA ») duly completed;

Some other documents that might be required:

  • Supporting evidence of residence in France;
  • Documents proving medical coverage;
  • Documentary evidence of means of livelihood for the period of stay;
  • Supporting evidence of  socio-professional situation (letters of reference, CV, academic transcripts, etc);

Cost

The application fee for this visa is EUR 99 (except for certain countries and in certain circumstances)

Use the Shield GEO Employer of Record Solution?

Shield GEO does not provide sponsored work permits in France at this moment.

Types of visas in France

Category Description of Visa
Short-Term Visas (less than three months) (also known as “visa de court sejour”)

To visit France for a period of time of up to 90 days, Schengen visa must be obtained from the French Consulate. The visa is granted for a maximum period of 90 days in any 180 day period with single or multiple entries allowed.

The applicant must provide a passport valid for at least three months after the date of return to the country of origin, a return ticket, evidence of sufficient financial resources, evidence of accommodation for the stay in France, and travel insurance with a minimum coverage of up to EUR 30,000 covering the whole period of stay in France.

The Short-stay Visa can authorise training assignments of up to 90 days. No extension of stay is possible.

Cost = EUR 60

Long-stay Visa (“visa de long sejour”) (more than three months)

This visa authorises foreign nationals to stay in France for periods of longer than three months. It is necessary to register either with the OFII or at the prefecture upon arrival.

This visa is usually valid for one year but can be issued for a shorter period. To extend it a residence permit application must be filed at the foreign national’s local prefecture at least two months before the expiration of the visa.

Cost = EUR 99

Corporate Executive Visa

Corporate executives include the Managing Director (“Gerant”) of a French limited liability company (“Societe a Responsabilite Limitee” or SARL) or the Managing Director (“Responsable en France”) of a branch or a liaison office, the President and/or Managing Director of a French corporation (“Societe Anonyme” or SA), the President and/or the Managing Director of a simplified corporation (“Societe par Actions Simplifiee” or SAS). These corporate executives must obtain this type of visa to stay and work in France.

The sponsoring employer must apply for a work permit to the OFII, the Ministry of the Interior and the DIRECCTE. The basic requirements for the applicant is that the employee has been employed by an international company for more than six months and earns a gross monthly salary of at least EUR 5,000.

Intra-group transferee card

Employees in this category (“salaries en mission”) are those who are working in a group of companies and who are assigned to a French subsidiary or the company in this group. To meet the basic requirements the employee has to be working for the group for at least three months before the assignment in France, and their expected monthly gross salary while working in France must exceed 1.5 times the legal minimum salary (known as the SMIC), which is EUR 2,186 gross in 2015.

The intra-group transferee card is now only issued to employees with significant experience in the area in which they are employed. There are two types of employees in this category: those who become employees of the French company, and those who, while working in France, remain employees of the overseas entity (“detaches”).

Duration: three years (with ability to extend).

EU Blue Card

This visa’s purpose is to facilitate entry, residence and working in France for highly qualified workers from third countries. To meet the requirements of this visa class applicants must present an employment contract in France (must be valid for at least one year), have a gross annual salary equivalent to at least 1.5 times the average gross annual salary (EUR 52,750 since 2014), and prove that the applicant has a diploma equivalent to at least three years of higher education, or provide documents which demonstrate that they have at least five years of professional experience at an equivalent level.

The Prefect’s decision to issue a EU Blue Card must be notified in writing to the applicant within 90 days of the application. If notification of approval is not received within 90 days, the application is automatically deemed refused.

Duration: this card is valid for 3 years (with ability to renew).

Setting up a company in France

When setting up a company you may want to consider these factors:

  1. The industry and type of business

  2. Nationality of the headquarters/individual(s)

  3. Presence of existing trade agreements or relationships

Your Options

France is a large economic center in Western Europe, and according to Company Formation France is one of the most powerful economies due to its size, location, and membership in many European organizations. It is the world’s fifth largest economy.

Population                    66,000,000

Capital                           Paris

National Language    French

Time zone                     UTC+1 (summer: UTC+2)

Calling code                +33

Currency                      Euro (EUR) :: USD$1 = approximately 0.90EUR

Nominal GDP             $2.470 trillion ($38,458 per capita)

Domain                        .fr

The government is considered to be generally supportive of entrepreneurs coming to France to open companies. According to the US site, Export.gov, France is considered to have a stable and reliably safe business climate, with its government devoting significant resources to attracting foreign investment, through policy incentives, marketing, its overseas trade promotion offices, and investor support mechanisms. The country has a modern business culture, sophisticated financial markets, strong intellectual property protections, and innovative business leaders.

Subsidiary Company (filiale)

A subsidiary is an local independent legal entity formed under French laws, which can be governed by its own bylaws, and although it can be owned by a foreign parent company, it does not hold the parent liable for its debts and obligations.

A subsidiary is the most common company form used by foreign investors wishing to invest in France on a long-term basis.

A.  Requirements/Restrictions

Like with most countries, incorporating a subsidiary company in France provides its own legal entity status, meaning the foreign company is not responsible for the French subsidiary’s debts or liabilities.

According to incorporation service Company Formation France, the most common form of subsidiary is the private limited liability company, known as the French SARL (societe a responsabilite limitee) and must be formed by at least two individuals or corporate bodies, with at least 1 euro as minimum share capital. The maximum number of shareholder cannot exceed 100, and their liability is limited to their amount contributed to the capital. The manager must be a French resident, or from the EEA, otherwise they will require a residence permit (skills, expertise and business activity) and a long stay visa.

B.  Advantages/Disadvantages

The Practical Law guide cites the main advantages of a subsidiary as its as a separate legal entity allowed to conduct full commercial operations, where the parent company will not be held liable for the debts of the subsidiary. Meanwhile according to Company Formation France, the French tax system is advantageous for subsidiaries as due to the many treaties signed by France, many tax exemptions can be granted. Withholding taxes for dividends paid to a company situated in an EU country are also exempt: if the company owns at least 10% of the subsidiary’s capital.

The Practical Law guide notes that a disadvantage of the subsidiary is that it is subject to French accounting requirements and tax, and being a separate legal entity means any losses cannot be offset against the parent company’s profits. Also, Company Formation France notes that if the company is located outside the EU, the withholding tax on dividends is 25%.  Exemptions or lower taxes may be granted however, due to the double tax treaties signed by France.

C.  Registration Steps

1.  Check Availability of Name

According to the Doing Business Project, it is not legally mandatory to check a proposed company name before registering a company. However it is recommended as legal problems may occur if the name conflicts with an existing company or trademark. The name can be checked online for free. More detailed searches can optionally be submitted, but these incur fees (EUR 40 for three classes and EUR 400 for all classes).

The name can be checked at the Institut National de la Propriété Industrielle (INPI) website. If the name is unique, a certificate of reservation will be issued and the entity can proceed with the rest of the operations.

Time: instant (online)

Cost: no charge (unless conducting the more detailed searches)

2.  Open Commercial Bank Account

A bank account must be opened and the minimum share capital must be deposited (37,000 EUR in case of a joint stock company, or any amount for a limited liability company).

The bank must issue a certificate stating the amount that was received, as it will be necessary for the following registration steps.

Time: 1-8 days

Cost: no charge (aside from requiring a minimal deposit)

3. Establish an Office

The QuickGuides series by Ashurst reports that a company is required to establish its own or a serviced office in France.

The guide also reports that commercial leases generally have a minimum duration of nine years though the usual length is 12 years. As tenant you get a right to break every three years. Usual three months’ rent deposit is required, and/or a bank or parent company guarantee.

Time: no registration procedure (but paperwork for lease, etc may take several weeks)

Cost: no registration cost (deposit and agent fees etc will however apply)

4.  Appoint an Auditor

Hiring an accountant may be required before establishing a company in France. The Ashurst QuickGuide states that this is done by choosing a statutory auditor, and receiving a receipt of the letter of acceptance of duties. A guide on auditor appointment by Action Expertise states that the auditor should be named in the articles of association upon the foundation of the company.

The company must appoint both a statutory auditor and an alternate auditor, who would replace the statutory auditor if it is unable to finish its tenure. The statutory auditor has to be registered with the Institute of French Auditors (“Compagnie régionale des commissaires aux comptes”).

Statutory auditors may be optional in certain SARL or SAS depending on the size of the business or whether the company is part of a consolidated group of companies.

Time: n/a

Cost: n/a

5.  Publication of Incorporation in Official Journal

The next step is the publication of the French subsidiary’s incorporation in the official journal.

The Institute of Chartered Accountants in England and Wales (ICAEW) identifies the Bulletin Officiel D’Annonces Civiles et Commerciales (BODACC) as the official bulletin of civil and commercial notices for the filing of accounts and other statutory information to be published in.

Time: 1 day (can be done at same time as previous step)

Cost: EUR 5.49 per line of 40 characters (e.g. around EUR 165 for 30 lines)

6.  Register Company and Register for Tax, Social Security and Insurances

The Centre de Formalités des Entreprises (CFE) in France is a single body that deals with registration for tax authorities, social security, labor and health insurance, which is mandatory for all entities that will perform business in France.

Prior to registering, the appropriate company formation documents such as articles of association must be drafted and notarized by a notary from the foreign parent country. The articles must state the reason of opening a subsidiary, the manager’s responsibilities, the name and the address of the subsidiary and other provisions.

According to Company Formation France, the company must then file a request for registration and submit necessary documents (including articles of association, a letter from the bank confirming the opening of an account, the decision of opening a subsidiary and a proof that the specific Gazette has received a notification regarding the establishment of the new company, the structure of the entity and its purposes, the addresses of the managing board and the chosen address of the company). The CFE sends the necessary information to every office and authority in order to be registered.

AngloInfo Paris also specifies that the CFE covers the following registrations:

1. INSEE, which registers the company with the Répertoire National des Entreprises (RNE) and allocates a SIREN number (business reference number used by French administrative offices) and a SIRET number (quoted in dealings with local social services, tax offices and unemployment office) and the NAF code (an activity code that classifies the type of business in France – also called APE number) .

2. Tax services incl. VAT registration.

3. Social security services (URSSAF, Régime Social des Indépendants (RSI), professionals’ pension scheme).

4. Registration with the Registre du Commerce et des Sociétés (RCS).

5. The Caisses Socials and Inspection du Travail if there are to be employees at the start of trade.

As a result, the newly formed business will receive the SIRENE (Systéme Informatique pour le Répertoire des Entreprises), SIRET (Systéme Informatique pour le Répertoire des Etablissements) and NAF (Nomenclature des Activitees Francaises) numbers. The Trade Register (Registre du Commerce et des Sociétés) issues the “K-bis extract” (Extrait Kbis) which is the certification and identification document of a French company.

Time: 10-15 days

Cost: EUR 84.24

7.  Stamp Company Books at Commercial Court

The last step of setting up a subsidiary in France is buying the company books and stamp them at the clerk of the Commercial Court. These are specialized accounting books that must be purchased at the Commercial Court or authorized stores.

Time: 1 day

Cost: around 45 EUR

Branch Office (succursale)

The Practical Law guide describes a branch as falling between a subsidiary and a liaison office, as it is a permanent establishment that can conduct commercial activities and deal with third parties, but is not separate from its parent company.  A local branch is most commonly used by foreign investors wishing to invest in France on a long-term basis and keep an eye on day-to-day management, since the branch has no independent legal personality.

A.  Requirements/Restrictions

A foreign branch office is an extension entity of the foreign parent-company. Like in many countries, a branch office in France does not have an independent legal status, and is considered under the direct control of the foreign company headquarters. This means that the parent company is liable for any debts and liabilities obtained by the branch.

The name of the branch must be identical to the foreign company’s name. However, its trading name may be different. For instance, the term “France” may be added to the branch name.

The branch will have to indicate on its invoices, orders, price lists, advertising documents, correspondence and receipts the name of the foreign company, its corporate form, its registered address and its registration number and place of registration in France, and VAT tax registration number.

B.  Advantages/Disadvantages

According to Company Formation France, a primary advantage for branches is that the parent company can support the branch more easily if the branch encounters financial issues. The Practical Law guide states that, aside from the freedom to conduct commercial activities, the primary advantage of a branch is that, not being a separate legal entity, means the subsidiary’s losses can be offset against the parent company’s profits.

The Practical Law guide reports that disadvantages of a branch include being subject to French accounting requirements and French tax law, and that by not being a separate legal entity, it means that the parent company can be held liable for the debts of the subsidiary.

C.  Registration Steps

1.  Appoint a Representative

The branch must have a person entitled to act on behalf of the company.

The representative does not need to be separately registered, but needs to be reported with filing company documents at the trade register in the next step. Thus, it should be formally decided upon within the company before registering the branch, with appropriate company declarations being made and signed.

If the representative of the branch is not an EU or EEA citizen they will also require a temporary resident permit (carte de séjour temporaire) authorizing the manager to exercise a professional activity in France or a French resident permit (carte de résident).

Time: n/a

Cost: n/a

2.  Establish an Office

The branch must have an office arranged before it can register with the trade and companies register. According to the French Commercial Court, examples of suitable evidence include copy of the commercial lease, the contract with a company, recent electric bill (EDF) or telephone receipts, etc. These documents should be included when registering in the next step.

Time: no separate registration procedure (but paperwork for lease, etc may take several weeks)

Cost: no registration cost (deposit and agent fees etc will however apply)

3.  Register the Branch

A foreign company must register its branch in the Trade and Companies Register (Registre de Commerce et des Sociétés), within 15 days of its opening. The French Commercial Court website specifies that it can be done either at a centre for administrative formalities (“Centre de Formalités des Entreprises”) or directly at the registry office (“le greffe”) of the commercial court.

In order to set up a branch of a foreign company, the following documents must be submitted (translated into French by an authorized translator):

  • Constitution and the certificate of incorporation of foreign company,
  • Registered office (e.g. lease agreement, registered office agreement, etc),
  • Appointment of an individual as representative of the branch in France.
  • Minutes of the board meeting of the foreign company, deciding upon:
    • Establishment of the branch;
    • Activities to be carried out by the branch;
    • The date of commencement of these activities;
    • The business name of the branch;
    • The location of the branch

Time: 10-20 days

Cost: 40 EUR

4.  Register the Company and for Tax, Social Security and Insurances

The Centre de Formalités des Entreprises (CFE) in France is a single body that deals with registration for tax authorities, social security, labour and health insurance, which is mandatory for all entities that will perform business in France.

Prior to registering, the appropriate company formation documents, such as articles of association, must be drafted and notarized by a notary from the foreign parent country. The articles must state the reason of opening a subsidiary, the manager’s responsibilities, the name and the address of the subsidiary and other provisions.

The company must then file a request for registration and submit necessary documents (including articles of association, a letter from the bank confirming the opening of an account, the decision of opening a subsidiary and a proof that the specific Gazette has received a notification regarding the establishment of the new company, the structure of the entity and its purposes, the addresses of the managing board and the chosen address of the company). The CFE sends the necessary information to every office and authority in order to be registered.

AngloInfo Paris also specifies that the CFE covers the following registrations:

  • INSEE, which registers the company with the Répertoire National des Entreprises (RNE) and allocates a SIREN number (business reference number used by French administrative offices) and a SIRET number (quoted in dealings with local social services, tax offices and unemployment office) and the NAF code (an activity code that classifies the type of business in France – also called APE number) .
  • Tax services incl. VAT registration.
  • Social security services (URSSAF, Régime Social des Indépendants (RSI), professionals’ pension scheme).
  • Registration with the Registre du Commerce et des Sociétés (RCS).
  • The Caisses Socials and Inspection du Travail if there are to be employees at the start of trade.

As a result, the newly formed business will receive the SIRENE (Systéme Informatique pour le Répertoire des Entreprises), SIRET (Systéme Informatique pour le Répertoire des Etablissements) and NAF (Nomenclature des Activitees Francaises) numbers. The Trade Register (Registre du Commerce et des Sociétés) issues the “K-bis extract” (Extrait Kbis) which is the certification and identification document of a French company.

Time: 10-15 days

Cost: EUR 85

5.  Open a Commercial Bank Account

A French bank account is not required for Branch Offices, but is still recommended. A branch is not a French company so is not subject to minimum capital deposits, although the bank may still require a minimum deposit to open an account. SEDI Group advises that the bank will want to see a certificate of domiciliation or lease, and a corporate profile concerning the Branch’s activity in France.

Time: 15 days

Cost: no charge (aside from requiring a minimal deposit)

6.  Stamp Company Books at Commercial Court

As a branch office is subject to French tax and accounting laws, it must by company books and stamp them at the clerk of the Commercial Court. According to Company Formation France, these are specialised accounting books that must be purchased at the Commercial Court or authorized stores.

Time: 1 day

Cost: 45 EUR

Liaison Office (bureau de liaison)

A.  Requirements/Restrictions

According to the Practical Law guide, a liaison office is an establishment located in France, for a purpose limited to promotion, advertising and seeking out business opportunities for the foreign parent company. Just Landed describes it as “essentially a ‘shop window’ set up by a foreign company.” A liaison office is not a separate entity from its parent company. Generally, a liaison office is used most commonly when foreign investors are only engaging with France on a short-term basis.

B.  Advantages/Disadvantages

The Practical Law guide reports that the advantages of a liaison office is that it is not subject to French accounting requirements, corporate income tax, VAT and territorial economic contribution (TEC).

The main disadvantages include the limit that restricts liaison offices from conducting commercial operations, and that it does not have status as a legal entity, which means that it cannot enter into agreements.

C.  Registration Steps

1.  Appoint a Representative

The branch generally will need a person entitled to act on behalf of the company. However, this is only if legal acts are performed such as signing lease agreements, etc, otherwise a representative need not be appointed.

The representative does not need to be separately ‘registered’, but needs to be formally decided upon within the company before registering the branch, with appropriate company declarations being made and signed.

For liaison offices the representative must be a resident of France.

Time: n/a

Cost: n/a

2.  Declaration of Existence

A declaration of existence should be made to the National Institute of Statistics and Economic Studies (INSEE), who will assign SIRET and SIREN numbers for the Liaison Office. The SIREN number, SIRET number and APE Code will allow a liaison office to recruit employees in France and sign agreements for utilities & telephone companies, as well as for registering a French Website address. The company will not need to register for VAT, however, council tax must be paid if the liaison office leases a premises in France, and social security contributions are required to be paid if employees are working for the liaison office.

The SEDI Group reports that, like a subsidiary or branch, the registration can be done at the CFE.  However, they note that if by error a tax code is allocated to the new representative office, it may be qualified as a Branch by default and become a taxable office. If such a case occurs it is necessary to contact the Tax Office & CFE to correct the mistake.

AngloInfo Paris also specifies that the CFE covers the following registrations:

  • INSEE, which registers the company with the Répertoire National des Entreprises (RNE) and allocates a SIREN number (business reference number used by French administrative offices) and a SIRET number (quoted in dealings with local social services, tax offices and unemployment office) and the NAF code (an activity code that classifies the type of business in France – also called APE number)
  • Tax services eg. payroll
  • Social security services (URSSAF, Régime Social des Indépendants (RSI), professionals’ pension scheme).
  • The Caisses Socials and Inspection du Travail if there are to be employees at the start of trade.

Time: 10-15 days

Cost: EUR 84.24

3.  Establish an Office

The branch must have an office arranged before it can register with the trade and companies register. According to the French Commercial Court, examples of suitable evidence include copy of the commercial lease, the contract with a company, recent electric bill (EDF) or telephone receipts, etc. These documents should be included when registering in the next step.

Time: no separate registration procedure (but paperwork for lease, etc may take several weeks)

Cost: no registration cost (deposit and agent fees etc will however apply)

4.  Open a Commercial Bank Account

A French bank account is not required for representative office, but still recommended. Even though a representative office is not a registered separate legal entity, if there is any trouble opening it under the liaison office itself, accounts can also be opened by non-residents.

Time: 1-8 days

Cost: no charge (aside from requiring a minimal deposit)

Outsourcing Employment Through a GEO Employer of Record Service

Outsourcing Employment Through Shield GEO

Whether to incorporate in France, and what sort of entity to setup are just two of the many choices companies must make when expanding into a new market.

If the company intends to have staff in France they must also decide whether they will administer that employment internally or use a Global Employment Organization to handle payroll and Employer of Record responsibilities.  A GEO Employer of Record solution is an attractive alternative where

– the company is looking to setup an office quickly

– the company wants to work within a defined budget

– the company wants to limit its initial commitment in France

– the company needs help with tax, employment, immigration and payroll compliance in France

The complexity of employment regulations in France makes the use of a GEO advisable coupled with local legal counsel to ensure full compliance with employment laws, for example the drafting of local contracts for workers.

Shield GEO provides a comprehensive service in France allowing companies to deploy their staff quickly with reasonable, clearly stated costs and timeframes. The company contracts directly with Shield to employ and payroll their staff on their behalf in France.

Shield GEO then becomes the Employer of Record. Shield GEO assumes the legal responsibility for these employees, sponsoring them on work permits, complying with local employment law and running their monthly payroll. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into France. Read more about outsourced employment through Shield GEO.

Summary of Set Up Steps

  Comp Branch Liaison Time Cost (EUR)
Appoint a Representative No Yes Yes
Check Name Availability Yes No No instant 0
Commercial Bank Account Yes Yes Yes 1-8 days 0
Establish an Office Yes Yes Yes 0
Register the Branch No Yes No 10-20 days 40
Declaration of Existence No No Yes 10-15 days 85
Appoint an Auditor Yes No No n/a n/a
Publication in Official Journal Yes No No 1 day 165
Register for Tax & Social Security Yes Yes No 10-15 days 85
Stamp Company Books Yes Yes No 1 day 45

TOTALS:

*applications and processing times, not including internal document preparation, lawyer fees, etc

 

Comp.

13-26 days

295EUR

Branch

14-31 days

170EUR

Liaison

10-15
days

85EUR

   

Conclusion

According to the Practical Law guide, locally incorporated subsidiary company is the most common company form used by foreign investors wishing to invest in France on a long-term basis. A branch is most commonly used when wishing to invest in France on a long-term basis and also keep a close eye on day-to-day management, since the branch has no independent legal personality. A liaison office is used when foreign investors are only engaging with France on a short-term basis.

APPENDIX (TERMINOLOGY)

English French
Activity code that classifies type of business (also called APE number) NAF (Nomenclature des Activitees Francaises)
Articles of association statuts
Branch office succursale
Center for tax, social security and labour insurances Centre de Formalités des Entreprises
Commercial Trade Register Registre de Commerce et des Sociétés
Company registration certification documents Extrait Kbis (K-bis)
Intellectual Property body Institut National de la Propriété Industrielle
Liaison Office (representative office) bureau de liaison
Limited liability single shareholder corporation Entreprise Unipersonelle à Responsibilité Limitée (EURL)
number is quoted in dealings with local social services, tax offices and ASSEDIC (state unemployment) SIRET (Systéme Informatique pour le Répertoire des Etablissements)
official journal of civil and commercial notices Bulletin Officiel D’Annonces Civiles et Commerciales
Private limited liability company societe a responsabilite limitee
private limited liability company societe a responsabilite limitee (SARL)
professionals’ pension scheme Régime Social des Indépendants (RSI)
Self-employed/sole trader Entreprise Individuelle (EI).
simplified joint-stock company société par actions simplifiée (SAS)
Subsidiary company Filiale
the business reference number used by French administrative offices. Systéme Informatique pour le Répertoire des Entreprises (SIRENE)
trademark épôt de marque
VAT number numéro de TVA intracommunautaire
  • Tax Compliance : What is FATCA and who is affected?

Tax Compliance : What is FATCA and who is affected?

  • Tax Compliance : What is FATCA and who is affected?

France

France

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