Doing Business in France
Choosing a business structure in France depends on your strategy. Which legal form to choose to conduct a business in France? Liability, share capital and tax regime differ widely from one form to another.
If you to choose to conduct a business through a legal entity and as regard with Corporate law. You must distinguish between:
- Unlimited liability companies ;
- Limited liability company.
The further developments will concern the limited liability companies in France.
Choice of legal structures
Limited liability companies are the most common structures in France. There are three main types of limited liability companies:
- The société anonyme (SA)
- The société à responsabilité limitée (SARL)
- The société par actions simplifiée (SAS)
The SAS is the most recent form of French company and offers the benefit of flexibility.
Mostly three kinds of tax:
– Corporate tax income: as defined above
– Income tax: for individuals rate depends and varies according to earnings
- Regular rate: 20%
- Middle rate: 10%
- Reduced rate: 5,5%
- Particular rate: 2,1%
Doing business in France requires to determine applicable rules which will govern the relationship between employee and employer. In France, collective agreements and the French Labor Code have a key role in order to frame relationship between employers and employees.
French law distinguishes between:
- Fixed-term contract
- Permanent contract
Fixed term contract
An employer can hire extra employees for a limited time and to meet temporary needs. This kind of contract is restricted by French law. Employers must have a reason for fixed-term contracts like temporary increase in the company’s business, seasonal work, replacement of an employee…
– Must be writing in French language
– Contract must specify the duration and the reason of the fixed-term contract
– Contract can only be renewed twice.
– Not necessarily written even if most of them are usually written in a document and when so must be written in French
– Contract must notably stipulate employee’s salary, job description, place to work
– Contract begin by a probationary period which allow employers to evaluate employee’s skills.
The employer is free to decide on the employee’s remuneration. However, this remuneration can’t be less than the monthly minimum wage. Moreover, the full working time is 35 hours per week, which is a reference basis.
There is a legal framework also in case of termination of the relationship. An employment contract may end by resignation, mutual agreement, dismissal, retirement, or end of a fixed term contract. Each of these terminations are framed within the rules of the French Labor Code.