Distribution company structure in France
Company Founders:
- I am French and currently a resident outside EU. Does this mean I just cannot set up a company in France myself?
- My wife is Korean (not married in France yet).
Business and enterprise:
- The CEO of a Korean company offered my wife to distribute his products in EU.
- First, we want to create a foreign company ‘O’ that holds the exclusive Rights of distribution in Europe.
- Then, we want to open a company ‘F’ in France to start distributing the products from next year.
- Korean language is a must, so we believe my wife should have the right to apply for a work permit in France for this purpose.
The products:
- Korean Import/export are regulated between EU and South Korea by the « Free Trade Agreement » dated 2011.
- VAT on these products are only 5,5%.
Type of enterprise:
Here we are. Company ‘F’
We cannot know if this distribution will be successful or not. However, we would like to anticipate as much as possible from the very beginning. Indeed, we want to ensure strong basis of the company rather that saying later « we did not think of this or that. According to our business plan (which will change for sure), the 1st year and most probably the second year, the turnover will be less than 90,000 euros which could match the « micro-enterprise structure. However, we also anticipate possible annual net income of 500,000 euros as soon as the 6th year. It looks like the micro-enterprise will not be appropriate anymore then.
Company ‘O’
It would be the company who holds the Rights of distribution in the EU region. The company ‘O’ will rent its rights as per the following:
- A percentage of the Net Profit or,
- A percentage of the Net Sales or,
- A fixed annual amount that can be variable year after year.
- Is there any maximum percentage or amount the company ‘O’ can ask to the French company ‘F’?
- Is there any restriction for the company ‘O’ to invoice these Rights of distribution to the company ‘F’, under the French Law?
- These costs will be considered by the company ‘F’ as expenses before the final annual financial report. Is this a legal practice or can this be seen as an attempt of fiscal fraud?
- Could you please give us your advice for the best enterprise ‘F’ structure in France for our business?
- Can we totally change the structure of a company after few years ? if yes, I suppose the company has to close down first, (could be a micro enterprise) then we create a new one (SARL, SAS, etc.). Is this feasible/legal to do?