Investing In A French Business

There are several rules and regulations for investing and setting up a business in France. The first thing is to choose the right type of legal corporate structure for your business. The government has introduced a number of reforms that allow the easy set up or expansion of a business. The two legal structures available to business are the SARL and the SCI.

An SARL or Societe à Responsibilite Limitee is ideal for small and medium family-operated businesses. A SARL has a limited liability company status. Setting up an SARL is easy. All you need in one owner or shareholder to set up a company. In such a situation the entity is known as a EURL or Entreprise Unipersonnelle à Responsibilite Limitee. There is no minimum capital required to incorporate as a SARL. Shareholders are liable only up to the amount of their capital contribution. Standard rates of corporate tax are applicable to SARLs, which is 33.3% of the net profits. Qualifying SARLs may be eligible for corporate taxation of 15% for the first €38,120 if company's net annual profit increases that value. The shareholders of small SARLs have the option of personal income tax based on the individual earnings.

An SCI or Societe Civile Immobilière is meant for those engaged in non-commercial rather than commercial activities. Purchasing with the objective of selling is not permitted for this type of entity. Two shareholders of any nationality are required to be registered as an SCI. The company can appoint a director or gerant who does not require to be a shareholder. There is no minimum amount of capital required to set up a SCI. While income tax is mandatory, these companies are exempt from VAT since they do not conduct any commercial activities with the aim of making profits.

The Auto-Entrepreneur is a relatively new type of entity that has become increasingly popular in France. The objective is to promote self-employment and the opportunity to do business on a small scale. These businesses are exempt from VAT and corporation tax for a limited period. For the most part these are the main legal structures with a relatively straightforward procedure to set up a business in France. A simplified tax regime and modern company law, the country has great potential for investors in various sectors including hospitality, information technology, dairy products, steel, automobiles, and much more.

It would be prudent to learn more about the French language and culture to ensure that you conduct business smoothly. Most locals are conversant in English even though French is the official language. They also have a stress importance on building mutual trust and understanding in business relationships. The French are not very strict when it comes to deadlines and are willing to extend delays within reasonable limits. They are not generally in favor of taking risks with a traditional mindset towards business and profits. When doing business it is important to respect the levels of hierarchy where every executive has specific authority over the conduct of business.

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