The legal structure of your bisiness in France will impact on your liability and taxation. To help you make the right decision, I have compiled a basic overview of the different types of businesses available in France. As a rule of thumb, if you are alone your options are an Enreprise indiviuelle (sole trader which includes the micro entreprise and auto entrepreneur) or an Entreprise Unipersonnelle à Responsabilité Limitée, EURL (private limited company). If you have several associates you may choose between a Société à Responsabilité Limitée, SARL (Limited liability company) or a Société Anonyme (Business Corporation).
No legal documents are required to set up an enterprise individuelle. It is registered in your name with the Centre de Formalités des Entreprises and your general income will be taxable to the income tax (impôt sur le revenu). If your partner is working with you, he or she will have to be declared as an employee or as a conjoint collaborateur (collaborating partner) and therefore pay extra social charges. The main downside of the enterprise individuelle is that you are liable on your property for the company debts. You can however protect your house by having a notaire write a contrat d’insaisabilité.
The micro enterprise is a sub-category of the enterprise individuelle and offers several advantages for a first time entrepreneur in France:
- You choose whether or not to be TVA registered.
- Accountancy rules are simple: keep a journal comptable or accountancy book, plus a copy of all your invoices and receipts.
- Inland revenue declarations are easy: simply declare your turnover on your French Inland Revenue form. The taxman will apply a standard rebate on your turnover to determine the base for your imposition (-50% for services, -71% for trade).
- You may opt for the regime micro social in order to pay your social charges on a monthly or quarterly basis according to your real turnover. In order to opt for the micro enterprise, your yearly turnover has be less than 32,000 euros if you are providing services (consultancy, teaching, etc) and less than 80,000 for trade.
The auto entrepreneur system is also a micro-entreprise with a few differences
- Easier registration and closing down processes
- You cannot be TVA registered
- Your social charges can be paid on a monthly or quarterly basis according to your real turnover (12% for trade, accommodation and food served on the premises and 21.3% for services)
- You can also opt for the régime micro-fiscal simplifié and pay your income tax on a monthly or quarterly basis according to your real turnover (1.7% for services, 2.2% for professions libérales and 1% for trade, accommodation and food served on the premises)
- Opting for the régime micro-fiscal simplifié will also enable you to benefit from a taxe professionnelle exoneration for 3 years. If you wish to protect your assets, you may create an Entreprise Unipersonnelle à Responsabilités Limitées EURL. This type of company follows the principles of a SARL, but with a sole partner. You will have to choice to opt for income tax or corporation tax.
The Société à Responsabilités Limitées SARL is designed for a minimum of 2 partners and requires Articles of Incorporation (Statuts). The company has its own entity and the associates are responsible for debts only up to the amount of their contribution. Setting up a SARL costs about 1,500 euros, including the legal contracts validated by a notaire or accountant and insertion in the legal newspapers.
There is no minimum capital requirement, so you could theoretically set up a limited company with 1 euro. The company will be taxed on its profits, i.e. corporation tax of 33.33%.
What if you already have a business in England? The first option is to open a bureau de liaison or marketing office. This will limit you to marketing and business development activity, as no trade may take place. The second option is to create a succursale or branch office, which will carry out business in the name and on behalf of the main company.