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15 Nov
Which legal structure should you choose to set up your business in France?
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 VAT 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€ 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 VAT 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 1500€, 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€! 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.