Now that you’re here in Paris, perhaps you’ve been inspired to become an entrepreneur. That’s wonderful! However, there are quite a few things to consider before you can begin the process. Make sure you do your research on regulations and requirements for your business, and be prepared for lots of paperwork. Also, if you’re not from a country in the European Economic Area (EEA), there are things you have to do before you can even pursue that wonderful new venture of yours.
Please note: This information is provided for informational purposes only. Please consult a professional for advice in starting your business. French-Property.com inspired much of the information contained in this article.
Also, due to the technical nature of this information, a lot of time and effort was expended to make it as easy to read as possible. Please let us know if there is anything we missed or needs changing!
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To establish a business in France, EEA nationals don’t need a residence permit. But non-EEA nationals must have a residence permit—visa de long séjour—which will include the nature of business activity in which you’ll partake. You will need to go to your local OFII office to complete the paperwork for residency. Or, you may have to start with the French consulate in your home country, depending on your status and residency requirements.
You probably know this, but within the first three months of living in France (if you plan to stay longer than that), a resident must have a visa stamp. Now, if you already have a visa, but want to start a business, it will need to be updated to the kind of visa that allows you to open a business in France. Check out the OFII website for more information on visas. Also, once you do have your visa, you need to make sure you have your carte vitale (social security card for health insurance access), as that is required of all French residents, whether permanent or not if you plan to stay in the country for over three months. You can get it at your local CPAM office (which oversees French healthcare) and these locations can be found through the Ameli website.
Once you have the required visa, it’s time to register your business. You will need to go through the Centre des Formalités des Entreprises (CFE). This organization informs all the bodies that need to know of your new business, and will forward your application to the Greffe (French commercial court), which will check your criminal record. The entire process costs up to $250 euros. You will be given a receipt (Récépissé de Dépôt de Création d'Entreprise - RDCE) as proof that you’ve completed the process. Don’t lose it.
Bring your passport, birth and marriage certificates, utility bills (to prove residency), banking information and proof of your qualifications, as necessary. According to French-Property.com, if you’re married, your spouse is required to sign a declaration that s/he has been made aware of any debts being incurred against assets jointly held for this business.
Within two weeks, confirmation of your registration will be sent to you. It will be a document called an extrait K for sole trader (entrepreneur/self-employed) or a extrait Kbis for companies. Consider this your official business identity card.
Your business will have a registration number with fourteen digits, known as the SIRET. The first nine digits—the SIRENE—refer to your registration number on the national business register. The remaining five digits identify your business geographically. This is your NIC (Numéro Interne de Classement).
You will also receive a separate five-figure code to identify your business activity. This is the APE (Activité Principale Exercée), formerly known as the NAF (Nomenclature des Activités Françaises).
To register the domain name of an internet site you will develop, use AFNIC, the French domain name registration agency. There are many other domain name registrars out there. Expats Paris, for example was registered via OVH; a reseller and one of the largest web hosting providers worldwide. For a patent or something similar, use INPI, the French patents agency.
Image courtesy cfe.fr
In France, your business will likely fall into one of the categories below. If you have more than one business, chose the one that will be your principal activity when registering your company, and everything else will fall under it for tax purposes.
Trade (Artisan) - this includes mechanics, plumbers, hair stylists and food processing activities, for example.
Professional (Profession Libérale) - also known as “freelance” fall into four categories: legal, medical, technical, artistic/teaching. Occupations such as writers, teachers, lawyers, dance instructors, interpreters, accountants, artists would fall into this area.
Commercial and Industrial - restaurants, shops, hotels fall into this category, including renting furnished apartments.
Commercial Agent (L’agent commercial) - anyone who represents another in the negotiation of the sale or purchase of goods or services, falls here.
Agriculture - farming and any supporting activity.
Infographic courtesy of Lefigaro
Check out this Guide of the French Income Tax Return.
How your business is structured will be the basis of taxes you pay, for the most part. If you are a sole trader (Entreprise Individuelle (EI)), you will be taxed under the personal income tax system Impôts sur le Revenu. As a limited company in sole proprietorship (EURL) you can choose to be taxed under the personal income tax system or through the system of company taxation Impôts sur les Societiés. A private limited company in joint ownership (SARL) will be taxed mainly under company tax, with one or two exceptions.
The Contribution Economique Territoriale (CET) is a tax used to help fund local services and the Chambres de Commerce/Metiers.
The CET has two parts:
● The Cotisation Foncière des Entreprises (CFE), using the value of the property occupied by the business.
● The Cotisation sur la Valeur Ajoutée des Entreprises (CVAE), based on the ‘value added’ each year by the business—your profits—and is used to calculate liability to VAT.
Still, according to French-Property.com, the minimum rates for 2016, based on turnover and subject to council resolution, are:
● Between €212 and €505 where the turnover of the business is less than €10,000.
● Between €212 and €1,009 where the turnover of the business is between €10,000 and €32,600.
● Between €212 and €2,119 where the turnover of the business is between €32,600 and €100,000.
● Between €212 and €3,532 where the turnover of the business is between €100,000 and €250,000.
● Between €212 and €5,045 where the turnover of the business is between €250,000 and €500,000.
● Between €212 and €6,559 where the turnover of the business is greater than €500,000.
The reference year used for determining the turnover figure is two years prior to the year of tax levied. Thus, for rates payable in 2016, the reference year is 2014. Exemptions depend on location, the discretion of council, and so forth.
You can elect to do your own accounting, or hire a professional accountant, depending on how complex your business is. There is also the option to work with the Centre de Gestion Agréé (CGA), which are local accounting centers. The fee is around €250 depending on where you live to become affiliated with them. They give business and accounting advice and can give you some relief on your taxation liability.
Don’t forget to open a business banking account. Depending on how long you’ve been in business and the type of professional activity you’re engaged in, you may get a reduction in fees for a time.
If you’re self-employed, your social security contribution will be for health care, family allowances, pension and so forth. You won’t pay for unemployment insurance. Once your business is registered, you will be contacted by various agencies regarding your contributions, and how it all works.
The Régime Sociale des Travailleurs Indépendants (RSI) provides insurance coverage for, among other things, health, maternity, and pensions to the self-employed.
If your business falls into one of the professions libérales categories, you will get your coverage from the RSI, but you will also pay into another pension fund administered by the Caisse Nationale d'Assurance Vieillesse des Professions Libérales (CIPAV). The fund to which you contribute will depend on your business purpose. Artistic professions will contribute to La Maison Des Artistes, and authors, the AGESSA.
The Union de Recouvrement des Cotisations de Sécurité Sociale et d’Allocations Familiales (URSSAF) is the main social security collections agency. Contributions to this organization are for family benefits, a training levy, and the social charges CSG/CRDS.
There are two main types of business taxes: regime réel and micro-entrepreneur.
Under this tax status, you pay tax and social security on your actual net profits. What you pay also depends on whether you’re doing so under personal or company taxation, as mentioned above.
Table: Social Security Rates (TNS)
Family Benefits 5.25%
Sickness Benefit 0.7%
Pensions (Main + Complementary) 25%
Training Levy 0.25%
Total (say) 48%
Most social security contributions are deductible business costs with the regime réel.
Under this status, once you’ve created your business, you can choose to make your social security contributions monthly or quarterly, and it’s based on your turnover for the previous accounting period. You have a thirty-day grace period for payment at the end of each cycle (first payment is made after the first three months of business). If you’ve had no turnover, then you won’t be charged.
As for taxes, it depends on whether you use the régime de base (you’ll pay income tax as part of your annual tax filing), or micro-fiscal (you will pay each accounting period, together with your social insurance payments), the latter being the default.
There is so much more to consider when starting a business in France. Make sure you thoroughly investigate the regulations and requirements of your chosen enterprise—are there classes you have to take, for example—so you’ll be prepared for any eventuality. It might be expensive, but having an accountant to assist you in the process could be very helpful and save you time and headaches, especially if you’re new to the country.
Bonne chance in your new venture!
Thanks for reading! Please leave a comment below and tell us about your experience starting a business in France. Was it easy or complicated? Thoughts on the process? Tell us more!
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