In the article I’m going to tell you about Setting-up Business In France. Starting a business in France requires setting up your business according to the French legal structure. Deciding on a structure can be tricky. There have been a number of reforms in the way companies are set up in France. Foreign investors can opt for SARL or Société à Responsibilité Limitée, limited liability company, or a SCI or Société Civile Immobilière. Both structures are relevant for foreign investors. However, SARL is most suited for small businesses while SCI is intended for those holding property.
A SARL An SARL or Société à Responsibilité Limitée, is easy to set up. One director or gérant is required to be legally responsible and can perform managerial activities within the company. There is no stipulated minimum amount of capital required, nor the need for a statutory auditor. The shareholders are liable for company losses only up to their amount of capital contributions, which can be made in cash, kind or both.
Corporation tax is imposed on SARLs with a reduced rate of 15% for small and medium-sized businesses for the first €38,120 of the company’s net profit. Small businesses can opt for personal income tax where the directors and shareholders are liable for paying income tax based on their earnings.
An SCI or Société Civile Immobilière is for those businesses with a civil activity. The structure is designed to enable easy acquisition and management of property. All those in the property management business ought to adopt the SCI structure. Two shareholders are required for this type of setup. A gérant is required but is not required to be a shareholder. There is no minimum amount of capital or number of shares required for setup.
Successors can sell their share to another, without having other shareholders to sell their share of property. Rents collected are shared between shareholders after deducting costs. The profit is taxed as personal income tax. Income generated when the business is sold, will be put towards pension. SCIs are liable to pay corporation tax, but are exempt from VAT since the business is of a non-commercial nature.
The newly introduced l’auto-entrepreneur system has had over 300,000 people registering their businesses, thereby generating business worth over €380 million. The system is designed to promote self-employment with social security charges based on actual revenue earned. Small businesses are exempt from VAT and corporation tax for a fixed period.
There are many new business opportunities available in France. Foreign investments have increased due a relatively simple structure. Modernized French company law and a simplified tax regime have made the country an attractive place for investments in business and property, which is a vast difference from the strict tax laws of the past.
Hiring the services of a professional advisor such as a French-based accountant is advisable in order to determine the appropriate legal structure for your business. In addition, you ought to make sure that any sales brochures are printed in French, since the people are proud of their language and conduct most of their local business in French.