FRANCE GUIDE

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Global expansion is a step to make for any business, regardless of what you wish to achieve. The opportunities that can come with an expansion can be both incredibly exciting as well as intimidating and confusing, especially when you consider all of the registration procedures that needs to be done and documentation required.

Expanding to countries such as France – which is characterized by an exceptionally talented and entrepreneurial workforce, intricate employment and tax laws, a robust infrastructure network, and leading sectors in manufacturing and technology, agriculture, energy, transport, and tourism – can bring both excitement to the possibilities, but also significant stress to ensuring the entity with the country’s rigorous legal structures and laws.

Ensuring compliance without the sufficient knowledge of the country’s laws also adds to the stress of getting your new entity off the ground and ready to test new markets. Going at it without the proper support can increase the costs, time and risks involved.

Each new markets bring new challenges, and these can be worked through more efficiently and cost-effectively with the support of an International Professional Employer Organization (PEO) such as Bradford Jacobs, especially through our Employer of Record (EOR) framework. This can be best utilized when businesses are just beginning their expansion process and require more information before committing to incorporating an entity and fully establishing themselves in that market.

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France – The Economy

The economy of France is a highly developed, market-oriented economy. It is the world’s seventh-largest economy by 2021 nominal figures and the ninth-largest economy by PPP, constituting 3.3% of world GDP. It is the 3rd largest economy of Europe, after the economy of Germany and the economy of the United Kingdom.

France has a diversified economy, which is dominated by the service sector (which in 2017 represented 78.8% of its GDP), whilst the industrial sector accounted for 19.5% of its GDP and the primary sector accounted for the remaining 1.7%. France was in 2020 the largest Foreign Direct Investment recipient in Europe, and Europe’s second largest spender in Research and development.

It was ranked among the 10 most innovative countries in the world by the 2020 Bloomberg Innovation Index, as well as the 15th most competitive nation globally, according to the 2019 Global Competitiveness Report, and is the fifth-largest trading nation in the world (second in Europe after Germany). France is also the most visited destination in the world, as well the European Union’s leading agricultural power.

Paris is a leading global city and has one of the largest city GDP in the world. It ranks as the first city in Europe (and 3rd worldwide) by the number of companies classified in Fortune’s Fortune Global 500. Paris produced €738 billion (or US$882 billion at market exchange rates) or around 1/3 of the economy of France in 2018 while the economy of the Paris metropolitan area — the largest in Europe with London—generates around 1/3 of France’s GDP or around $1.0 trillion.

Paris has been ranked as the 2nd most attractive global city in the world in 2019 by KPMG. La Défense, Paris’s Central Business District, was ranked by Ernst & Young in 2017 as the leading business district in continental Europe, and fourth in the world. The OECD is headquartered in Paris, the nation’s financial capital. The other major economic centres of the country include Lyon, Toulouse (center of the European aerospace industry), Marseille and Lille.

Small and Medium-Sized Companies

SMEs in the ‘non-financial business economy’ in France generate 55.8% of value added and 64.1% of employment, which is roughly on a par with the respective EU averages of 56.4% and 66.6%. Micro-firms create more employment (at 31.5%) and contribute more to value added (at 24.1%) than the average for EU micro-firms.

French SMEs are also more productive than the EU average. Value added per person employed is 21.2% higher in France, at €54,000 against the EU average of €44,600.

SMEs in France employ an average of 3.4 people, slightly fewer than the EU average of 3.9.

CountryFrance
CapitalParis
No. of States/Provinces18 administrative regions
Principal CitiesParis, Marseille, Lyon, Toulouse, Nice, Nantes, Strasbourg, Montpellier, Bordeaux, & Lille
Language(s)French
Local CurrencyEuro (EUR)
Major ReligionCatholicism
Date Formatdd/mm/yyyy
Time ZoneCentral European Time (GMT+2)
Country Dial Code+33
Population65.5 million
Border CountriesBelgium and Luxembourg (northeast), Germany, Switzerland, and Italy (east), the Mediterranean Sea, Monaco, Spain, and Andorra (south)
Tax Year1 January to 31 December
VAT %20%
Minimum WageEUR 1,603.12
Taxpayer Identification NumbersFrench tax identification number (Numero fiscal de reference)
SIREN number (for businesses)
National Registration Number (INSEE code or the social security number)
Leading Sectorsmanufacturing and technology, agriculture, energy, transport, and tourism
Main importsCars, refined petroleum, packaged medicaments, crude petroleum, broadcasting equipment
Main exportspackaged medicaments, planes, helicopters, and/or spacecraft, cars, vehicle parts, and gas turbines
Main trading partnersGermany, Italy, Spain, Belgium, Netherlands, and the United States
Government TypeUnitary semi-presidential republic
Current Prime MinisterEmmanuel Macron (President), Jean Castex (Prime Minister)

The Main Sectors of the French Economy

France focuses on the following key sectors, which all have a significant impact on the country’s economy:

  1. Energy – One of the major industries in France is the energy sector. France’s leading electricity company, Electricite de France (EDF), is the largest utility company in the world. The energy company, which is listed on the French Stock Exchange, has the state as the majority shareholder.

    Renewable energies have been growing steadily in the last few years in France to reach 11.7% of primary energy consumption and 25.3% of gross final energy consumption in 2019. Renewable energies sustain the equivalent of 60,000 full-time jobs. The most developed renewable energies are still wood energy and hydropower, but onshore windfarms and heat pumps are two sectors that have progressed the most in the last few years with offshore windfarms currently under development.

    Energy production in France is primarily based on nuclear energy, which accounts for 78% of the country’s electricity. The increased reliance on nuclear energy enables France to boast one of the least carbon dioxide emission levels in the developed world.

    The future of France’s energy industry lies in renewable energy, especially since the French National Assembly passed a law in July 2015, which requires that 40% of the nation’s electricity be produced from renewable energy sources by the year 2030.

  2. Tourism – France is the most popular destination in the world, receiving about 85.7 million tourists each year. This massive tourist traffic also means that France is ranked fifth in the world in terms of tourist spending. The tourism industry is a key economic pillar in France, injecting over $70 billion to the country’s GDP. Of this total, 70 percent comes from domestic tourists, while the remaining 30 percent comes from international tourists.

    The industry represents 9.7% of the country’s GDP. France’s popularity to tourists is attributed to a wide array of prime tourist attractions located across the country.

  3. Agriculture – Agriculture was traditionally the primary economic activity in France prior to the Industrial Revolution in the 19th century. France is recognized as having the sixth largest agricultural production in the world, and the largest in the European Union. France is also the second largest exporter of agricultural products in the world and is only surpassed by the United States.

    Huge wheat farms are located in the northern region of the country, while the southern part of France is renowned for its vineyards and horticultural products. France is the largest producer of sugar beets and the second largest producer of cheese and wine in the world. Western France is the main producing region of dairy products, poultry, apples, and pork.

    The vast majority of agricultural exports are destined to member states of the European Union, which receive 49% of all agricultural exports from France. The agricultural industry in France has the privilege of receiving significant support from the EU in the form of subsidies, which amount to more than $11 billion.

    In recent years, the industry has implemented numerous reforms as a result of international agreements including the General Agreement on Tariffs and Trade.

  4. Manufacturing & Technology – Manufacturing is among the largest industries in France, accounting for billions of dollars in the country’s GDP. The country is recognized as the fourth largest automobile manufacturer in the world and is home to two of the largest automobile manufacturers in the world: Peugeot and Renault. France is also renowned for its aerospace sector, which is dominated by Airbus, which is the world’s leading aircraft manufacturer.

    Technology is another important economic pillar in the country’s economy. France is ranked among the most technologically advanced countries in the world, and the country has an ideal environment for technological research and innovation. This environment has led to the growth of some of the largest technology companies in the world.

  5. Transport – Transport in France is a multi-billion industry, and some of its key players are major global companies. France has one of the densest networks of road and railways in the world, which interconnects the nation’s cities.

    The railway network in France stretches 18,580 miles, most of which is under the operation of SNCF (French National Railway Corporation). However, the largest company in France’s railway transport is Alstom, which is based in Saint-Ouen, but has operations all over the globe and has over $37 billion in assets. The French cities of Paris, Marseille, and Lyon have extensive metro systems, while Rennes, Lille, and Toulouse have light metro systems.

    France has one of the highest concentration of airports, with a total of 478 airports across the country. The busiest airport in the country is Charles de Gaulle Airport in Paris, which records about 60 million passengers each year, making it the fifth busiest in the world. Air France is the French national carrier, and flies to 150 destinations on all six continents of the world.

Compliance Highlights

  • www.impots.gouv.fr – gives you access to all the official online services of the General Directorate of Public Finance (DGFiP). This is a site of the Ministry of Economy and Finance.

    The services of the General Directorate of Public Finances (DGFiP) are present throughout the territory, as close as possible to its users and partners. Installed in the Public Finance centres, these services belong to different categories, which reflect the diversity of the missions carried out by the DGFiP and its audiences. These include:
    • Individual tax services (SIP)
    • Business tax services (SIE)
    • The treasuries
    • Property Tax Centers
    • “Registration” poles
    • Land registration services
  • The Ministry of Labor – draws up and implements French occupational health and safety policy and manages cooperation with the social partners in the Conseil d’orientation sur les conditions de travail (COCT) [Steering Committee on Working Conditions].

Labor Contracts Law

In France, the employer and employee relationship is mainly governed by the Civil Code, in which contract laws were amended in 2016, and the Labor Code. These cover working hours, paid vacations, discrimination, sick leave, termination, severance, notice periods, maternity/paternity leave. When hiring and drawing up employee contracts all of these must be considered, as well as any collective agreements that also set down minimum guarantees and entitlements. Over 90% of French workers are covered by collective agreements.

Payroll – Tax Contributions and Benefits

Income Tax: The tax year runs from January 1 until December 31 with returns due by mid-May. French residents are taxed on worldwide income; non-residents are taxed only on French income with tax due for the first year generally not paid until September 15 of the following year.

Salaried employees have their due tax withheld by employers for remitting to the tax authorities. Those with a taxable income over €250,000 (US$294,000) attract a 3% surcharge on the extra, while those with taxable income above €500,000 (US$590,000) pay a further 4% Individuals are audited by the Tax Administration, who look for inconsistencies between declared income, overall lifestyle, and the household’s lifestyle. If the authorities consider there is ‘hidden income’, the taxpayers will be asked to justify their returns.

Health and Social Insurance: The Ministry for Solidarity and Health and the Ministry of Economy and Finance administer the general scheme. This covers unemployment and pensions for all salaried workers in the private sector through a network of national, regional, and local institutions and consultation with employers and employees. Around 80% of revenue comes from contributions and taxes calculated on percentage rates from employer and employees. These rates include:

Sick Leave: Employees unable to work through illness or sickness receive a daily benefit from the social security system with their employer legally required to make up the difference as stipulated by the Labor Code. Employees receive 90% of salary for the first 30 days, two-thirds for the next 30 days, with qualifying periods increased by 10 days for each five years or service. Benefit is paid from day one of incapacity for work-related illness or injury, or from the eighth day in other cases and cannot exceed 90 days in total

Paid Annual Leave/Vacations: The minimum is five weeks after completing one year’s employment, although the Labor Code and collective agreements may allow for more based on length of service. The reference period is June 1 to May 31 of the current year, allowing two-and-a-half working days each month to a maximum of 30 days. Unused leave cannot be carried forward and employees who are sick during vacation cannot claim additional days. A maximum 24 days can be taken in one stretch.

Public Holidays: Employees who have to work on Labor Day will receive twice their normal daily pay. For other public holidays, the labor legislation does not provide for any salary increase, but collective agreements may contain more favorable provisions. There is no mandatory right for employees to have extra time off if a public holiday falls on a Saturday, or to have the following Monday off if the holiday falls on a Sunday.

Maternity and Paternity Leave and Benefits:  Under the French Labor Code minimum maternity leave totals 16 weeks with at least 10 taken following the birth. Mothers do not have to take the entire leave, but eight weeks is the mandatory minimum. Leave can increase to 26 weeks for a third child, 34 weeks for twins and 46 weeks for triplets. Social security pay a maternity allowance equal to average salary over the three months prior to birth (with a quarterly cap of €10,131, US$11,920) as long as the individual worked a minimum 150 hours over the previous three months

Since July 2021 paternity leave increased to 28 days, with the salary paid for three days by the employer and by social security for the remainder. Seven days are mandatory. The co-parent has up to six months to take the leave and must have worked at least 150 hours in the three months preceding leave to claim benefits. For multiple births, 32 days leave are allowed.

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