How do you set up a business in France? Payroll, HR and entering the French market

Last checked and updated on 7 August 2023

For too many years, business in France was the butt of jokes about perpetual labour strikes and interminable lunch breaks. In reality, France is one of the biggest business centres in Europe, boasting a strong and stable economy and approaches that place companies at the forefront of thinking.

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It’s always easy to convince the French authorities to allow you to trade in the country, but if you can get a foot in the door, few nations offer greater opportunities – especially in such close proximity to the UK.

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Does France welcome overseas businesses?

France, especially Paris, is very much open for business to foreign investors. The capital city is among Europe’s most significant financial powerhouses, and the rest of the nation will welcome an entrepreneur that brings a potential for profit and work for the local labour force. Throw in France’s superior quality of life, and you have an appealing destination for any entrepreneur.

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What industries are most popular in France?

Did you know that EDF stands for Electricite de France? The presence of this giant cements energy as the most significant industry in France, though there are plenty of other sectors that generate profit and attract attention. The most popular industries in France include:

  • Advertising and media
  • Aerospace engineering
  • Agriculture
  • Automobile manufacture and maintenance
  • Financial advice and services
  • Pharmaceuticals
  • Technology and consumer goods
  • Tourism
  • Transport

Is it easy to set up a business in France?

It is not too difficult to set up a business in France, and you don’t even need to be in the country to do it – you’ll just need a registered address. Here are the steps:

How to set up a business in France

  1. Secure your trading address in France

    You will need to rent an office space or otherwise arrange a physical location for your business registration

  2. Decide upon your business structure

    Société à Responsibilité Limitée is most popular

  3. Choose a company name

    Known as a Dénomination ou Raison Sociale, ensuring it is available from the Institut National de la Propriété Industrielle, or INPI (Patent and Trademark Office)

  4. Write up your articles of association

    And have these notarised

  5. Submit this documentation to the Registres du Commerce et des Sociétés

    Or RCS (Business and Companies Register), to officially register your business

  6. If you do not have any difficulty here, you will receive a L’extrait Kbis (Company Registration Certificate)

    Which includes your Système d’Identification du Répertoire des Entreprises, aka SIREN number, within 24 hours

  7. Open a local bank account in the name of your business

    You will need a French business bank account in order to easily do business in France

You’re now legally compliant to do business in France, though you’ll still need to register to pay contributions to the Caisses Générales de Sécurité Sociale (General Social Security Funds) and to pay taxes to the Ministère de l’Action et des Comptes Publics (Ministry of Finance, Economy and Industrial and Digital Sovereignty.)

Can I run a business in France while living overseas?

Yes, there is no need to live or work in France to open a business, and you will not need to appoint a local employee to act as a representative. You can operate your company overseas as long as the business is registered to a French postal address.

Cultural considerations when running a business in France

When looking to trade with French business partners, ensure you understand some of the cultural nuances to avoid inadvertently causing offence. Business etiquette to be aware of includes:

  • If you want to discuss business, make an appointment – ideally no less than two weeks in advance. In France, cold calling and putting somebody on the spot is frowned upon. Certainly never turn up at an office unannounced
  • Tardiness is not a huge deal in France, but do expect people to wait for you to start. If you arrive late, you may find discussions are already underway, and it’s unlikely that anybody will go out of their way to fill you in on what you missed
  • Formality and hierarchy matter – you will likely find that only people of your equivalent rank will want to deal with you. More junior associates are wary of sharing opinions in public
  • While the la bise greeting of a kiss on the cheek, or two, or three (it depends on the region!) is traditional in France, most business associates will be happy with a handshake
  • Take the time to greet everybody in the room individually – a generic “bonjour” to address all parties will be considered rude. Calling an associate by their name unless explicitly asked is also a strict no-no. Business partners should be addressed as Monsieur or Madame – not Mademoiselle, as many French women consider this term outdated and offensive, and in some territories its use is outright banned

What business structures are supported in France?

These are the most popular structures if you wish to set up a business in France.

Type of French business entityWhat is it?
Société à Responsibilité Limitée(SARL)A French limited liability company – the most straightforward business entity to set up in the country
Entreprise Unipersonelle à Responsibilité Limitée(EURL)A limited liability company with just one shareholder. You’ll still enjoy the separation of your business and personal finances but pay personal income tax on profits, which will likely be higher than corporate tax
Micro-Entrepreneur/Auto-Entrepreneur/Micro-EnterpriseThree interchangeable terms for the same business structure – a small business owned by one person. This structure can only make so much profit, and you’ll pay personal income tax rather than corporate tax, but accounting will be simplified
Societé Anonyme(SA)A public company floated on the stock exchange
Types of business structure available in France

If your business has significant international renown, you may wish to open a French branch.

Taxation in France

If you want to do business in France, you must understand the taxation rules and regulations that will impact your bottom line. 

What is the corporate tax rate in France? 

The business tax rate in France has recently been simplified. At the time of writing, any business will pay a tax rate of 25% on any profits generated in France.

France has a double taxation treaty with the UK, so you will not be taxed twice on any business profits generated in France.

What are the employee income tax brackets in France?

All employees of a French business will need to pay income tax. These contributions depend on your marital status and how many children an employee has – deductions will be made for married employees with dependents. However, the core federal income tax contributions break down as follows:

Annual salaryIncome tax rate
€10,225 or lower0%
€10,226 – €26,07011%
€26,071 – €74,54530%
€74,546 – €160,33641%
€160,336 or higher45%
Income tax bands in France

Income tax is withheld from salary at the point of payroll, alongside up to 23% of a salary in Caisses Générales de Sécurité Sociale, or CGSS (General Social Security Funds) contributions.

Some employees may also ask you to pay a percentage of their salary (up to 25%) into the plans d’epargne enterpris, a private savings plan akin to an ISA whereby the funds are held for at least five years and gain interest.

How are taxes paid in France?

The French tax year runs from January 1st to December 31st, with all filing and payments due to the Ministère de l’Action et des Comptes Publics no later than May 31st of the following year.

Payroll and hiring employees in France

Hiring the right talent can make or break a company. Ensure your French business interests are staffed by the best possible talent.

Does France welcome overseas talent?

France has a low unemployment rate, primarily because the authorities prefer to prioritise the local labour force for job vacancies. France will always welcome highly-skilled experts in a niche industry, but you may face a battle to import non-EU employees for blue-collar roles.

Who needs a visa or work permit to work in France?

Anybody with an EU, EEA, or Swiss passport can work in France without restriction. If you are from a third country, including the UK, you must apply for a visa and a Carte de Sejour (Residence Card.)

If you are making a short visit to France to set up your business, apply for a visa de court sejour (short-stay visa), valid for up to 90 days

This visa cannot be extended, so if you think you’re likely to stay longer or you wish to import employees, apply for a visa de long sejour (long-stay visa) or an EU Blue Card. If you impress the French authorities sufficiently, you can upgrade to a passeport talent (talent passport), which allows access to France for up to four years.

What employee benefits are compulsory in France?

Employees of a French business are entitled to the following mandatory benefits by law.

  • No less than 25 days of personal holiday allowance.
  • 90 days of protected sick leave, payable at full salary through Caisses Générales de Sécurité Sociale.
  • Up to 45% of an employee’s salary payable in social security contributions.
  • Overtime payable at 1.15 times salary for the first two hours, then 1.5 times salary after this.
  • No less than 16 weeks of maternity leave, paid through Caisses Générales de Sécurité Sociale.
  • No less than 28 days of paternity leave. 3 days are paid by the employer, and the rest through Caisses Générales de Sécurité Sociale.

A 13th month bonus salary, payable in December, is not mandatory but is considered customary. You may struggle to attract employees without this perk.

Employment law considerations in France

The minimum wage in France is €11.07 per hour.

French employees are protected by a legal “right to disconnect” when outside working hours, so do not expect your team to respond to phone calls, text messages, or emails during evenings or weekends.

If you plan to change your employees’ working conditions or contracts, these adjustments must be agreed upon with a trade union (if applicable) before rollout.

Cultural considerations when hiring employees in France

If you wish to run a business in France that relies upon the local labour force, ensure you understand some of the nuances you will encounter. These include:

  • Unions are a major part of the French working landscape, and your employees are likely to join such a body. Work with unions, not against them – your life will be much easier
  • French employees have a slightly complex relationship with their work. It is important to be seen as hard-working and diligent, but nobody wants to be considered a workaholic in France. Be careful not to exploit your employees, and do not attempt to contact them out of hours unless it’s an emergency
  • If you’re running a small start-up, your employees may be happy to dress and behave a little more informally, but otherwise, expect staff to dress to impress and respect hierarchy
  • The myth of the three-hour lunch break for French employees is just that, especially in major cities, but lunch remains an essential part of any employee’s day and will usually be treated as a bonding exercise for your team

FAQs about setting up a business in France

Still have questions or are seeking a swift answer to a basic query? Here are some of the most frequently asked questions about establishing a business in France.

How long does it take to set up a French entity?

It should not take more than a couple of weeks to get your French business entity up and running, and you will not need to be a resident of France to do so.

What are the most common business structures in France?

Société à Responsabilité Limitée, or SARL, is a limited liability company in France and the most common business structure. You can simplify your accounting by registering as a micro-entrepreneur, but this limits your permitted turnover, and you’ll pay personal income tax rather than a business tax. You could also register as a Société Anonyme, or SA – a public company that sells shares.

What are collective bargaining agreements in French employment law? 

Trade unions are commonplace in France across a range of industries. If your employees organise into a union, you’ll need to enter into a conventions collectives nationales, or CCN, that agrees upon acceptable terms and conditions. Changes to employment contracts or working conditions cannot be made without updating a CCN.

What is a Plans d’Epargne Enterpris?

The plans d’epargne enterpris, or PEE, is an optional savings plan. Employees can ask to have a portion of their salary (no more than 25%) paid into a PEE, which will be inaccessible for at least five years and gain interest. You will be welcome to offer to match these contributions as a bonus employment benefit. 

How much must employees and employers contribute to social security in France?

France has some of the highest social security contributions in the world. Employers must pay up to 45% of a salary in Caisses Générales de Sécurité Sociale, though this is tax-deductible. Employees typically pay 20-23%.

What is a common probationary period for employees in France?

Probationary periods are typically between two and four months for a French employee, depending on their level of seniority.

What is the total cost of employment to hire an employee in France?         

Thanks to high social security contributions, it costs around 1.6 times an employee’s salary to make a hire in France, though these contributions are tax-deductible.

What is the minimum share capital required to establish an entity in France?

You will only need to pay up €1 in share capital to establish your French business entity. 

Do you need to set up a local bank account in France?

Yes, you will need to open a local business bank account in France.

What is the standard working week in France?

France has a shorter working week than most European nations at 35 hours per week, usually Monday to Friday, though these 35 hours do not include an unpaid lunch hour. Work/life balance matters in France, so you’ll be expected to pay overtime if you exceed this.

What are common supplementary employee benefits in France?

A 13th month salary, paid in September, is extremely common in France.

Can employment contracts be terminated at will by the employer in France?

Absolutely not – you need a compelling reason to terminate employees without notice and/or severance pay in France, especially if they are union members.

What is the standard annual leave entitlement in France?

All employees are entitled to a minimum of 25 days of personal holiday in France, plus public holidays. The country typically grinds to a halt in August, the most popular holiday month. 

Can you establish a branch of your company in France?

Yes, you can open a branch if your existing business already has a reputation in France.

What are the main options for setting up payroll in France?

You can run your payroll from overseas if you are not living in France while running your business, hire an in-house payroll clerk, or partner with a third-party HR, payroll and tax specialist within France.

What are the different types of work permits and visas in France?

If you need a work permit in France, the most popular choice is the visa de long sejour (long-stay visa), which allows somebody to stay in France for longer than 90 days if they have a Carte de Sejour (Residence Card.). Entrepreneurs and director-level employees that meet the criteria can also apply for an EU Blue Card or passeport talent (talent passport) for more extended stays with fewer restrictions surrounding travel and work.

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