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Setting up a commercial SME business in France

Please note that the information herein is of a general nature and you should not act or refrain from acting on it without professional advice on the specific facts of your case. No liability is accepted by the author or Sykes Anderson Perry Limited in respect of this article. Taxation and law are complex subjects and the above is a basic outline only and is intended only as a general guide. Nothing herein constitutes financial advice.

Civil or Commercial?

Unlike English law French law makes a fundamental distinction between companies carrying on a commercial business and those carrying on a non-commercial business. This dictates the corporate structure you can use. The structures below are for commercial businesses broadly buying and selling and providing non-professional services (other than the SCI).

Structures available

SMEs which are incorporated with limited liability are usually set up either as société par actions simplifiée (SAS) or société à responsabilité limitée (SARL). They can be independently owned or the shares can be owned by a foreign “mother company”.

1. Société par actions simplifiée (SAS)

This is the most flexible structure and widely used in practice. You can tailor the constitution of the SAS to meet your requirements. This includes creating different classes of shares. The manager of the SAS can be a corporate entity. It can have a single shareholder when it is known as a Société par actions simplifiée unipersonnelle. The SAS is registered with the Trade Registry (Registre de commerce et des sociétés). Transfers of shares in a SAS are taxed at 0.1%.

2. Société à responsabilité limitée (SARL)

This is a more traditional vehicle and is more strictly regulated by the French Commercial Code. Transfers of shares need the agreement of the majority of the shareholders representing at least 50% of the shares. The manager of the SARL must be a physical person. It can have a single shareholder when it is known as an Entreprise unipersonnelle à responsabilité limitée. It must be registered with the Trade Registry (Registre de commerce et des sociétés). Transfers of shares in a SARL are taxed at 3%.

3. French branch (succursale)

This is a branch of a non-French company trading in France. Legally it is viewed as part of the non-French company. This keeps things simple though the branch will be taxed in France on its French profits.

4. Société en nom collectif (SNC)

This is a legal entity in France in which the shareholders or partners are liable for the company’s debts.

5. Société civile immobilière (SCI)

This is a vehicle for owning French real estate. It is not used as a trading vehicle.

Registering the company in France

You generally do not buy off the shelf companies in France. You register the company at the local Registre de commerce et des sociétés. There is a Registry in larger towns. To do this you must file the constitution documents, bank certificate of company’s capital which has been deposited, company’s registered address, publication in legal journal and complete a specified form.

February 2018
David Anderson
Solicitor-Advocate and Chartered Tax Adviser