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‘Starting a company in France is not that taxing’

The words "France" and "taxes" are as synonymous as "pain" and "chocolat" but when it comes to setting up a company in the country, guest blogger Katya Puyraud, from Euro Start Entreprises says things are not as bad as they seem at first. And the paperwork is a positive!

'Starting a company in France is not that taxing'
Setting up a company in France might not mean the tax burden that you had imagined. Photo: Shutterstock

With all the publicity surrounding President François Hollande’s disastrous term in office, France’s reputation as a country that supports hard work and entrepreneurial vision has been taking quite a hammering.

And it’s not hard to see why. France is fighting a battle of the taxes due to having one of the highest corporate tax rates in the EU – a whopping 33% compared to Britain’s 21% or Latvia’s 15%.

And this is not the only tax that companies have to fork out for – on top of corporate tax there is also the “Taxe Foncière” or “Taxe d’Habitation” (Housing Tax, payable if you are renting a place or own your place of business) and the Payroll Tax (national insurance and pensions) which is more than 45%. And with the myth of its notoriously slow administrative procedures it seems that ‘La Belle France’ always manages to stand in the way of entrepreneurs.

But is the situation that bad? And how on earth can such a difficult system produce one of the top five economies in the world? The reason is simple – foreign investment is still strong in France because, like most of the top entrepreneurs in France know already, if you are savvy enough you can get the sticky French system to work for you and perhaps even qualify to halve your tax rates or even reduce them to zero.

A new deal for France

It’s now been more than 10 years since France decided to modernize its administrative system. French company formation, even if it is forced to follow strict rules, can now be done within a week. Registered numbers are usually given by the French version of Companies House (Le Greffe) the same day of the incorporation. The VAT number is given within a week after registration and the VAT number is valid from the stamp date.

All French procedures for tax declarations, payroll declarations and French incorporation are now centralized and can be done on-line. This means that you can get your business up and running as soon as the French company formation process has been completed.

For 95% of businesses, French incorporation is very straight forward and speedy. And the administrative system – far from being a burden – is actually a blessing in disguise. The strict rules governing French businesses mean companies will always be supported. Banks are also highly regulated and therefore can be trusted even in the worst economic climates.

Past governments have always tried to improve this system whilst keeping the regulations in place which is perhaps why La Defense is the biggest business centre in Europe and still attracts hundreds of foreign companies every year.

Tax Breakdown

Officially corporate tax is 33.33% in France. That might seem a lot when you compare it to the average EU figure of 22.74% but if you look at some of the other big economic hitters in the world France doesn’t come out too badly compared to the United States at 40% and the United Arab Emirates at the eye-watering rate of 55%. Plus The French state have found some interesting ways to sweeten the bitter pill of corporate tax for those deciding to start up in France…

The ‘15 % rate’ sweetener

A company can have a 15% corporate tax rate on profit providing they comply with the following conditions:
– the company must be trading
– at least 75% of the capital must be owned by individuals
– share capital must be completely paid
– turnover must be less than €7.6 million 
– profit must be less than €38,120 

The ‘No Tax’ sweetener

Depending on where you set up your company and what type of business you have, you may be liable to pay no tax at all! This system, created in the 1990′s to help fight unemployment in urban areas, is called “Zone Franche Urbaine” (Urban Free Zone). In these tax-free zones, companies that are trading have no corporate tax and in some case no professional tax and reduced payroll taxes for the first five years. There are more than 60 zones like this in France. Plus, depending on the business, some regions in France are also giving incentives to new start-up companies. No tax and lots of incentives – what’s not to like?

Taxe Professionelle (1975-2010)

In 2010 the French government abolished the Professional Tax. It is costing the state €8 billion but the tax burden on French companies feels significantly lighter.

So all in all, the future is not quite as bleak as people like to make out – with the smooth admin systems and the government’s plans to attract more and more companies to France, there may be some nice surprises in store for companies that choose to incorporate in France.

Katya Puyraud, runs the Paris-based Euro Start Entreprises, which offers advice for setting up companies in France and in numerous other countries. Visit www.eurostartentreprises.com. You can also email [email protected]

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WORKING IN FRANCE

How to get a summer job in France

As the summer holidays approach in France, many employers are looking for seasonal workers - so if you're looking for a summer job, here's how to go about it.

How to get a summer job in France

There are thousands of employment offers in France – a simple internet search for jobs d’été came up with numerous jobs boards offering work in France, while the government-backed Centre d’Information et de Documentation pour la Jeunesse (CIDJ) offers advice and information on all aspects of life for young people in France, including finding seasonal work and summer placements.

Sectors including agriculture, hospitality and tourism are always recruiting in the summer, seeking fruit-pickers, holiday camp workers and serving/hotel staff.

But what are the rules for people seeking summer jobs?

READ ALSO Vendange: What you really sign up for when you agree to help with the French wine harvest

Age

Children from the age of 16 (under certain circumstances, the age limit drops to 14) who are legally resident in France can work as long as they have written authorisation from their parents or legal guardians. A model authorisation letter is available here

Those under the age of 18 cannot undertake certain jobs for health and safety reasons.

In the following circumstances, children as young as 14 or 15 can work during school holidays.

  • The holidays must last at least 14 days;
  • The child must work no more than half the days of the holiday – so, if a vacation period is two weeks, they can work for no more than one of those weeks;
  • The child is given ‘light duties’ that offer no risk to their safety, health, or development;
  • From the age of 15 and if the child has completed their troisieme education, a minor can register for an apprenticeship. 

Salary

Salary is usually paid monthly and will have a payslip. For those aged 18 and over, pay will be at least equal to the minimum wage.

 For those aged 14 to 17, who have less than six months’ professional experience, the minimum allowed rate is 80 percent of the minimum wage. For those aged 17 to 18, the rate rises to a minimum of 90 percent of France’s minimum wage.

  • The minimum wage in France is currently €10.85 gross per hour (€1,645.58 gross per month based on a 35-hour week);
  • the employment contract is fixed-term and can take different forms (fixed-term contract, seasonal employment contract, temporary employment contract, etc);
  • Seasonal employees are subject to the same obligations as the other employees of the company and have access to the same benefits (canteens, breaks, etc.).

Under 18s have certain additional protections:

  • between the ages of 14 and 16, during school holidays, employees on any contract cannot work more than 35 hours per week nor more than 7 hours per day;
  • They cannot work at night;
  • Those aged 14 to under 16 working during their school holidays can only be assigned to work which is not likely to harm their safety, their health or development.

Right to work in France

If you’re a French citizen or hold permanent residency in France then you have the right to work, but for foreigners there are extra restrictions.

Anyone who holds the passport of a EU/EEA country or Switzerland, is free to work in France or to travel to France seeking work without needing a visa or work permit.

Most other people will need permission to work in France – even if it’s only for a short period or for casual work such as grape-picking. Depending on your country of origin you may need a visa – everything you need to know about that is here.

In addition to the visa, you may also need a work permit, which is the responsibility of the employer.  To employ anyone in France for less than 90 days, an employer must get a temporary work permit – before the prospective employee applies for a short stay visa. This permit is then sent to the embassy at which the employee is applying for a visa.

If you come from countries including the UK, USA and Canada you can spend up to 90 days in France without a visa – but you may still need a work (convention d’accueil) if you want to work while you are here.

READ ALSO Six official websites to know if you’re planning to work in France

Certain countries have specific ‘seasonal worker’ visas on offer, for certain sectors which allows – for example – Canadians to come to France and work the ski season. 

Cash-in-hand jobs

Certain sectors which have a lot of casual workers – for example seasonal fruit-picking – do have cash-in-hand jobs, known in France as marché noir (black market) or simply travail au black (working on the black, or working illegally). 

This is of course illegal and working this way carries risks – as well as the possibility of losing your job if labour inspectors turn up you are also in a vulnerable position. If your employer suddenly decides not to pay you, or make unexpected deductions from your wages, there is very little you can do about it since you won’t have any kind of work contract. 

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