The article touches upon the issue of Understanding Business Categories In France. The French economy and the industrial sector in particular, have witnessed increased specialization in industrial production due to competition from the Far East. Foreign investments by non residents are encouraged and have been free of exchange control since 1996. However, foreign investors need to be aware that the French Exchange Control can exercise their authority over direct investments.
Loans and financial guarantees may be subject to exchange control. Direct investments by a foreign investor are deemed only on acquisition of at least 20% capital of a French company. Investments in sensitive sectors such as public health, security, manufacture of weapons or military equipment, are subject to authorization.
Business entities in France comprise of Sole traders, EURL (Entreprise Unipersonnelle à Responsabilité Limitée) Private Limited Company with only one partner, Common French Limited Companies, Public Limited Companies, General Partnerships, Limited Partnerships, Intercompany Partnerships, Joint Venture, and Branch of Foreign Enterprise (“Succursale”).
Foreign investors prefer Branches (“Succursales”) as the legal requirements are minimal and include no minimum capital, no articles of incorporation, and only one manager. The procedures involved the same as a limited liability company. However, a branch is subject to laws that are applicable to foreign companies.
To open a branch, a foreign company needs to file two, French-translated certified copies of its articles of incorporation with the Commercial Court. Registration with the Trade Register is also essential. Yearly accounts need to be submitted to the Commercial Court and certified by a representative and translated in French.
Several business incentives in the form of financial assistance are given to foreign companies as an incentive to encourage regional development. For those looking to start a business in France, choosing the appropriate location is essential. Grants and subsidies are available for starting a company, and for job creation, with a number of loans and advances offered at reduced interest rates in various regions.
Corporate tax incentives are available in the form of tax exemptions, tax breaks such as reduced rates of transfer duties, exemption from business tax, and tax credits. There is a system of classification for every type of business. Business activities are classified into five main professions for the purpose of registration and taxation.
Trade – Artisan
Builders, plumbers, electricians, mechanics, hairdressers, among others, fall in this group that includes a variety of other manual based professions.
Professional – Profession Liberale
These include professional freelance occupations such as legal, medical, paramedical, technical, and artistic/teaching. All legal professionals, surveyors, health professionals, architects, and insurance agents are included in this category. Independent occupations such as journalists, writers, musicians, dance instructors, and painters, among others, are also included in this group.
Commercial and Industrial
Activities of a commercial or industrial nature such as running a hotel, café, restaurant, shop, and factory fall within this category. Leasing out furbished accommodation has also been included in this category.
Commercial Agent – L’agent commercial
Those who act as representatives for other companies in negotiating the purchase, sale, or letting of contracts for goods or services are included in this category.
Agriculture Farming related occupations are classified in a separate category.
It is important to note that certain business activities are regulated in France such as lawyers and architects.