Setting up a business in France is complicated, but not impossible. There are four main rules to remember. The first is that at least one person involved in the business must speak reasonable French, otherwise you will drown in paperwork; hiring lawyers and accountants is one solution, but without adequate French how will you know if they’re doing a good job or not?
The second rule is that it is absolutely imperative to research the market, assess demand, check competitors’ prices, and write a water-tight business plan. The French Chamber of Commerce estimates that as many as seven out of ten start-ups fall at this hurdle. (Also remember to take distance into account. Half a centimetre on the map could mean a drive of 45 minutes, and no-one wants to drive that far for a pizza. Even if it is the best in the world.)
The third essential is to research the French system. It is completely different from the UK, so don’t assume anything. Take a course in French business management at your local Chambre de Commerce; read everything in sight, talk to other business people, get as much advice as possible.
The fourth golden rule is to fund your business properly. Apart from set-up costs, you need enough in the bank to run your business and support yourself for at least a year.
There is lots of help available. If you’re planning to set up as a skilled tradesman (joiner, plumber, electrician, etc) contact the Chambre des Métiers to get your UK qualifications recognised and to ask for advice on how to register. You will need to show that you have relevant qualifications plus three years’ experience and you will have to do a course (in French) on business practice in France, which will cost around €200.
For all prospective start-ups, there is also free advice and training available at the local Chambre de Commerce. They also advise on employing other people, and if necessary will help you get your business onto the registre de commerce.
A business that purely offers services, (ie a doctor, translator, architect, etc) is classed as a profession libérale and also registered at the Chambre de Commerce.
Networking cannot be over-emphasised. If people know you and like you, they’ll do business with you. So always be charming and patient. After all, the person you talk to in the Chambre de Commerce could turn out to be your first customer.
Increasing numbers of businesses solely target the expat market in France. But if you’re planning this, ensure that the local expat population is large enough to support your business in the long term.
Choosing a statut juridique means deciding the legal definition of your business. The simplest is an entreprise individuelle (EI). A SARL (Societé à Résponsabilité Limitée) is about the same as a limited company in the UK, but is more expensive to set up than an EI.
Health insurance is often called la sécu and the section dealing with self-employed people is URSAFF. You will have to register with them too. See their site www.urssaf.fr - in French.
For creative types, it is the Maison des Artists. (See their site at www.agessa.fr)
You will also have to pay social charges to cover benefits like pensions, sick pay and maternity and these charges depend on your statut juridique, but after the first year, are approximately 45 per cent of your net profit. For this reason it is worth getting good advice about what statut to choose. If you are officially unemployed while you're setting up your business, even if you're not claiming unemployment benefit, it is worth registering at the ANPE (French Job Centre) as you can then get loads of free advice plus even a dedicated personal advisor to help you set up your business and negotiate the minefield.
For tax, you will need to decide whether or not to register for VAT (TVA). You don’t have to register unless your turnover exceeds €76,300 a year (for a trading commerce) or €27,000 for a profession libérale, but once you’ve done your sums, it can be advantageous to register, as you might end up claiming back more than you pay out.
The tax régimes most commonly used by new start-ups are the réel simplifié under which a business calculates their real costs and profits and the micro-entreprise, under which businesses declare a broad estimate; ie for traders 72 per cent of their annual turnover is deemed to be costs and 28 per cent profit, of which you pay 45 per cent for social charges. For other types of business 52 per cent is offset against costs, and for professions libérales it is 25 per cent. (Rumoured to be going down in 2008 so check this carefully.)
If you are creative with an accounts book though and think your costs could be higher than those estimated under the micro-entreprise system, you’ll prefer the réel simplifié. It therefore pays all businesses to keep all receipts and note absolutely everything that could even vaguely be described as a business expense, including the cost of furniture polish for the office chairs.
To register, you will have to produce your birth certificate, marriage certificate, passport, and proof of address, along with any special paperwork. You then fill in a lengthy form, cough up around €100 and you’re in business.
FACT FILE
• For comprehensive information in French and English, see www.francobritishchambers.com
• For courses and info on setting up businesses see www.boutiques-de-gestion.com and www.business-in-europe.com.
• For info on running gîtes see www.gites-de-france.fr
• For information on self-employed contributions see www.urssaf.fr
TIPS
A B&B with less than six bedrooms does not count as a commercial activity, primarily because it is actually impossible to make a living doing this on such a small scale, especially as in most parts of France there is very little B&B business outside July and August.
All advertising (except on the internet) has be comprehensible to a French-speaker, so don’t write adverts purely in English.
If setting up shop in France all looks too daunting and you’re liable to be spending time in the UK, it could be worth setting up a company in the UK and simply opening a French office. This is a cheap option with ‘off the shelf’ companies available from as little as £200, but of course, you will have to spend time in the UK and be able to show that the company really does operate in the UK as well as in France, or you could be liable for a whopping French tax bill.
Disclaimer
This dossier article is intended as a general guide only. For specific information relative to your own situation, please use the contact details in the factfile. The information given here was correct at the time of publication. However, if you notice a gremlin causing typos or any other inaccuracies, do please let us know.
Updates
This article was last updated 15 September 2007