You are here
The Formalities and Different Ways of Investing in France
Investments in France do not require any autorisation.
- certain acquisitions in sectors considered to be “sensitive” require prior authorization (for instance equipments designed to intercept communications; gambling (excluding casinos); businesses certified for national defense; …) ;
- prior notification to competition authorities may be needed in France if the aggregate turnover of the companies exceeds a certain amount (specific tresholds have been set for the retail distribution sector) ;
- the construction and opening to public of a retail outlet or commercial premises with a selling surface area exceeding 1000 square meters requires a construction permit as well as an installation permit ;
In order to prevent pollution and environmental nuisances, preliminary administrative formalities are required before operating certain types of manufacturing plants. Activities concerned are listed in a nomenclature that can be downloaded.
The formalities for setting up businesses have been simplified.
- the Centre de formalités des entreprises (CFE) is the place where all administrative formalities and all the documents required to set up, change or close down companies are fullfilled.
- It takes a few days for a company or branch to be registered in the Registre du commerce et des sociétés (RCS). The cost of administrative formalities is cheap.
You can delegate powers to an attorney to help you and represent you.
Choosing a business structure in France depends on the investor’s strategy and the independence that will be given by the parent company.
- Prospecting in France : The « liaison Office ».
A foreign company wishing to prospect for business in France can start by opening a « liaison office ».
However, this office will not be entitled to develop a commercial activity.
Liaison offices conduct only very limited noncommercial operations, such as prospecting, advertising, providing information, storing merchandise, or other operations of a preparatory or auxiliary nature.
The said office is not a separate legal entity from the foreign company. It can not sign contracts or send invoices.
While liaison offices must pay certain local taxes and social security contributions, they are not subject to corporate tax or VAT since they are not considered to be permanent establishments.
It would be different if the office conducts commercial activities or develop a complete manufacturing cycle.
In those cases, it may be reclassified as a permanent establishment.
A liaison office does not have to be registered except if it has its own premises, employs several employees in France or conduct commercial activities which will lead the liaison office to be registered as a « branch » in the Registre du commerce et des sociétés.
Il the office has employees in France, it will have to fulfill returns to the Urssaf (french social security administration).
- Developping commercial operations in France: The « branch » or the subsidiary
- Branches may carry out commercial activities.
Branches have a legal representative.
However, they are not separate legal entities and parent companies are responsible for their debts.
Regarding taxes, branches are permanent establishments. They must pay corporate tax and VAT in France.
Registration is mandatory for branches. The registration application will need to fullfill a return at the CFE and give several documents such as a copy of the parent company’s articles, an original registration certificate issued by the foreign company register ….
- A subsidiary : a company incorporated under French law
Creating a subsidiary may offer several advantages:
- If the french subsidiairy is a « société anonyme » or a « société par actions simplifiée » or a « société à responsabilité limitée », foreign parent companies do not bear unlimited liability for the debts of their French subsidiaries. This affirmation has to be nuanced if the parent company is required to give any security to secure it’s subsidiary’s commitments.
However, losses of the subsidiaries cannot be deducted of the parent companies’ profits.
- Subsidiaries may be part of agreements on sales and technical royalties, commissions as far as it is a separate legal entity.
- Jean Claude Coulon et Associés may assist you in any operations concerning your french branch or subsidiary and in particular :
- notification to the competition authority ;
- private investment (relations with the banks – loans or investors - venture capital, business angels, ….) ;
- commercial lease (duration 9 years but tenants can terminate the lease at the end of the third or sixth years – protection of the tenants against non renewal - rent increases are caped) ;
- acquisition of real estate (by signing a property financial lease, the property being transfered to the tenant at the end of the term or by buying buildings from private or public owners) with the intervention of a notary;
- type of legal structure for the business (choosing the appropriate form of the company (for instance Société par actions simplifiée is adequate for foreign holding wishing to control the french subsidiary- a Société Européenne may be created for foreign investors present in at least two member states of the EU) – its name (verifications that it can be used at the patent and trademark Office and the registre du commerce et des sociétés) and writing the company articles ;
- Obtaining for foreign directors a long-stay visa and residence permit ;
- fulfilling all the formalities at the CFE in order to permit the company to be incorporated.
Since some of these steps involve procedures in both the country of origin and in France, they may take several weeks to complete ;
- Acquiring equity in a company ;
- make offers to a commercial court to buy companies being bankrupt.