Doing Business And Trading in France

Doing Business in France

France is one of Europe’s largest and most financially powerful nations. Once a historic empire, France’s political and economic presence on the world stage has endured for centuries: modern France is a founding member of the European Union and is also a member of the G7, the Organisation for Economic Cooperation and the World Trade Organisation. France ranks as the fifth-largest economy in the world, and is also one of the largest global importers and exporters. The French business landscape is built on a strong national economy, and the government has been taking steps since the 1980s to decrease the dominance of state infrastructure in favour of the private sector. Important sectors in the business landscape include transportation, electronics, textiles, and tourism but France also has a reputation for innovation and technological development: the nuclear energy industry in particular has seen significant growth thanks to a lack of domestic oil production. Incentives for business set-up in France include a lack of administrative restrictions, and strong government support for innovative commercial projects. In 2018, France ranked 31 on the World Bank’s Ease of Doing business Survey.

Why invest in France?

There are a plenty of reasons to choose France as an investment destination:

  • FDI incentives: The French government is working to encourage foreign direct investment with specific incentives. These include a variety of support agencies, such as the Invest In France Agency (IFA), which link businesses with relevant government departments and funding bodies, provide advice, and promote the investment process.
  • Reforms: As part of a major effort to enhance the domestic business environment, major tax reforms have been introduced in France, including tax cuts for productive investments, and a more effective system of tax credits. Labour laws have also been made more flexible, while corporate law has been streamlined.
  • Export hub: According to the WTO, France is the second-largest exporting country in the EU, offering access to lucrative markets across Europe and the world. To facilitate its export volume, France has developed over 11,000km of motorway, high-speed rail connections to numerous European business centres, and some of Europe’s best sea and air links, including the ports of Marseilles and Le Havre, and Charles De Gaulle Airport.
  • Research & development: The French government places particular value on the R&D sector, and especially ventures in the engineering, pharmaceutical, and telecommunication industries. The government incentivises R&D with tax credits and infrastructure development - key targets include the automotive, biotechnology, software, and computer hardware industries.
  • Set-up costs: France’s business set-up costs are lower than the United States, Japan, and other European competitor countries, while office space in Paris is around 50% cheaper than London. The cost of setting up a business amounts to less than 1% of per capita income - as opposed to around 9% in other G20 countries.
  • Business culture: French business culture values directness and focus - a trait which encourages efficiency and diligence. Long term business relationships are valued along with respect for intellectual property and the exchange of information.

Foreign Direct Investment in France

The French Government welcomes inward investment in France, with various incentives particularly in markets that have been subject to hardship during the global recession. State and local Governments encourage economic development. Foreign and local investors are treated equally, and are both eligible for investment incentives.

Starting a Company in France

A company is not required to have a legal entity established in order to process payroll. Some conditions however may be required when processing payroll; the main condition is the “Unions de Recouvrement des Cotisations de Sécurité Sociale et d'Allocations Familiales” (URSSAF) registration, which handles social security deductions.
The timescale for completion of this process is four weeks.

Business Banking In France

It is not mandatory to make payments to employees or French authorities from an in-country bank account. Generally banks are open from Monday to Friday 09.00AM to 6.00PM. Some banks are open from Tuesday to Saturday 09.00AM to 5.00PM.

Working Days and Working Hours in France

The working days in France are Monday to Friday. The legal duration of work is 35 hours per week. The duration can be annualised to 1607 hours or 218 days. In that case, time at work can be modulated depending on high or low seasons.
As a counterpart to these annual rules, employees are granted RTT (working time reduction days), extra hours are paid, or “Recovery days” are granted. These working hours may depend on a collective agreement or a corporate agreement.

Basic Facts about France

General information

France lies at the western edge of continental Europe, on the shores of the Atlantic ocean. Annexed by Rome in 51 BC, France grew to become the dominant European power, with a monarchy which lasted until the French Revolution of the 18th century. Under its famous leader, Napoleon, France established a powerful empire, and in the 21st century its global influence endures, with overseas territories in locations across the world. Long considered an epicentre of philosophy, art and science, France ranks consistently high in global standards of education, life expectancy, and healthcare, and, as a member of the European Union and the United Nations Security Council, is also a significant political power. France shares land borders with numerous of European countries, including Belgium, Germany, Switzerland, Italy, and Spain, while its topography includes alpine mountain ranges, fertile valleys, Mediterranean beaches, and deep forests. France’s climate varies from wet and cool in the north, to hot and dry in its southern regions.

Full name: French Republic
Population: 67 million (estimated for 2017)
Capital: Paris
Major language: French
Major religion: Christianity
Monetary unit: 1 euro = 100 cents
Main exports: Machinery and transport equipment, agricultural products, including wine
GNI per capita: US $41,680 (World Bank, 2015)
Internet domain: .fr
International dialling code: +33

Hello Bonjour

Good morning Bonjour

Good evening Bonsoir

Do you speak English? Parlez-vous anglais

Good bye Au revoir

Thank you Merci

See you later à plus tard

Dates are usually written in the day, month and year sequence. For example: 1st of July 2018 or 1/7/18
Numbers are written with a period to denote thousands and a comma to denote fractions. For example: €1.234,56 (one thousand, two hundred and thirty four euros and fifty six cents). The euro symbol appears before the numeric.

Income Tax and Social Security in France

The tax year runs from 1st of January to 31st of December.

Apprenticeship and Training Tax in France

These taxes are due when the client has a permanent establishment in France only. This excludes the liaison offices.

  • They are paid every year, on the 28th of February
  • Depending on the size of the company, it is possible to deduct training expenses or trainees wages and indemnities
  • When the company decides to provide training to employees, the company can receive grants from the institution

Income Tax In France

When it comes to paying contributions to tax authorities, deadlines often depend on the size of the company - however, contributions should be paid by the 15th of each month for companies with more than nine employees.
Personal income taxes are not withheld on payslips. They are directly paid by each employee to the State at the end of each tax year. Pursuant to the 2016 Budget Act, the annual thresholds for the payment of wage tax were increased by 0.10%.

Social Security in France

The social security ceiling for 2018 has been raised to €3,311 per month, and consequently to €39,732.00 a year.
When preparing payslips, salary bracket A now extends to €3,269, bracket B is the portion of salary between €3,311 and €9,933, and bracket C lies between €9,933 and €13,244.

Regarding social security contributions, the contribution rate based on total wage is 7.30% for employees, and to 23.45% for employers.

In 2018, the family allowance contribution rate is based on total annual wage, and ranges from 3.45% - 5.25%.
Supplementary pension contributions for cadre and non-cadre personnel are set at 7.75% (3.10% for employees, 4.65% for employers) - those contributions increase according to salary bracket.

The Apprenticeship Tax rate is 0.68%, while the Contribution To Training Tax rate stands at 1.00% of total remuneration.
Every January 1st, the work accident contribution rate is modified (a letter from the CARSAT includes details of the new rate) and this modification includes the transport tax, in some cases. NB: the transport tax is only required by some municipalities and is only due from companies with more than eleven employees. Rates charged by specific municipalities can be found on URSSAF’s website at www.urssaf.fr.

Lastly, the combined rate of capped employer pension contributions and FNAL (national housing aid fund) contributions for independent ‘VRP’ sales reps has also been increased, from 6.55% to 6.68% as of 1 January 2014.

URSSAF & Social Security

The URSSAF (Unions de Recouvrement des Cotisations de Sécurité Sociale et d'Allocations Familiales) is responsible for collecting social security contributions from employer and employees. This is includes sickness, old age, basic pension, accidents at work, and unemployment contributions - but also CSG, CRDS contributions, unemployment, and various taxes.
Deadlines for the payment of the contributions are:

  • For companies with less than 11 employees, contributions are due quarterly - on the 15th of the month following the quarter.
  • For companies with more than 11 employees, contributions are due monthly - on the 15th of the following month.
  • For companies with more than 50 employees, contributions are due monthly - on the 5th of the following month.


In case of sickness, company accident, maternity and paternity institutions can reimburse the wage (to a capped level) using a payroll treatment to reduce contributions (gross up).

Unemployment In France

This is a compulsory contribution that maintains approximately 57% of the gross, in case the employee loses his job (except resignation). The duration of the coverage depends on the seniority and the reason for unemployment. Employees may have a maximum of 23 months and more may be retained for employees over 55 years of age. Since 1 January 2011 the contributions are paid to the URSSAF, except for expatriates.

Compulsory Life Insurance In France

The life and death insurance is compulsory for all managers (Cadres). In case the company does not grant the compulsory life insurance to its executives, and in case of decease, the company will have to pay the sums to the heirs (3 x the annual Social Security ceiling). The collective labor agreement can oblige the company to implement a life and death insurance for all employees (it means for staff also).

Medical Insurance In France

Medical insurance is set up in order to complete the medical expenses that are not reimbursed by the Social Security. Since January 2016 it is compulsory to offer medical insurance to all employees (from the 1st employee). Some collective labor agreements have imposed a compulsory medical coverage but it is rare and market specific.

Reporting Tax & Social Security In France

Monthly

The DSN: The Nominative Social Statement (DSN) is an approach to simplify the steps taken by employers with regard to Social Protection and Administration. It aims to replace all the periodic or eventual declarations, and various administrative formalities addressed until now by employers, to a variety of actors (CPAM, Urssaf, Pôle Emploi, Tax Center, Special Caisses Régimes, etc.).

The DSN replaces the DAD year-end declaration, and is based on the single, monthly and dematerialized transmission of payroll data and on reports of events.

Quarterly

Depending on the institution, some declarations must always be made on a quarterly basis:

  • ASSEDIC: Unemployment Social Security Annual Summary (submitted quarterly to GARP for Expatriates
  • Declaration Nominative: Pension
  • Declaration Nominative: Medical & Life Assurance

Yearly

  • Fiche Fiscal Employee Summary of Earnings: It is not compulsory to provide this document to employees but employers can decide to do so.
  • Taxes on Training, Building, Apprentices & Tax on Disabled Employees: These taxes must be declared and paid (if applicable).
  • Déclaration Annuelle des Donnees Sociale: Must be submitted by 31 January to CRAM
  • URSSAF Social Security Annual Summary: Must be submitted by 31 January to URSSAF
  • Declaration Nominative Annuelle Mederic: Must be submitted by 31 January to MEDERIC
  • Gras Savoye Medical & Life Assurance: Must be submitted by 29 February to GRAS SAVOYE
  • CARDIF Supplemental Pension: Must be submitted by 31 January to CARDIF

The Annual Declaration of Wage is to be sent to the state every year on 31 January. Expenses and reimbursements paid during the year should be provided to payroll teams, and should be reported on an Annual Declaration of Wage for personal income tax purposes.

New Employees In France

A new start that has a Social Security number will require a Hiring Declaration (DPAE). This is to be completed and sent to the URSSAF before the employee starts. The employee must also be registered for foresight insurance, and for medical insurance by the employer.
If a new starter does not have a social security number, the employee must apply to the social security institution to request a number. He will first get a provisional Social Security number and, after several months, his final number.
A social security number is mandatory for anyone starting any employment.
The documents required for setting up an expat new start include:

  • ID / Work permit or prior Detachment form.

Work Leavers In France

There is no specific timescale for leavers to receive their final payment. Final documents must be returned at the end of the following month. No notification has to be made to authorities in the event of a leaver, however, the ASSEDIC wage certificate has to be filed on the website of the unemployment agency.

Payroll in France

Employers in France are obliged to provide employees with payslips containing details including hours worked and net pay for that period. Employers also have withholding obligations for social security contributions, but personal income tax is paid directly to the state by employees, at the end of the tax year.

Mandatory social security contributions include health benefits, health insurance, and retirement benefits. Employer contributions to social security amount to around 50% of an employee’s gross pay, while employee contributions are around 20% - these must be deducted at source and paid by the employer on the 15th of the following month.

The complexity of France’s payroll legislation means that it may be advisable for foreign employers setting up in the country to engage a global payroll provider in order to achieve compliance quickly, and deliver pay accurately, to an international employee population. Payslips may be issued to employees in electronic form, and payroll reports must be kept for at least 5 years.

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