Setting-up a business in France

A step by step guide

Unlike in the UK, where you can decide on an idea today and start trading tomorrow, in France you need certain documents – or at least started the process to obtain them. These are two documents that you need before you can go any further – with them you are almost an honorary French man or woman! What you need are:

• Certificate d’Immatriculation (Formal business registration)
• Carte Vitale (computerised card that allows you to reclaim medical expenditure)

In the past a carte de sejour (residency permit) was also required, but that is no longer the case.

Your first port of call should be a French accountant in the department where you plan to live, and preferably in your local town. But be prepared – in rural France you may find it difficult to locate one with more than a few words of English. Alternatively you could start at the Chamber of Commerce for your departement who may help you complete the forms but from then on you will probably be on your own. I recommend, therefore, working with an accountant, especially as you will ultimately need one.

In France every business must be registered with the Chamber of Commerce and also must have a qualified accountant (expert-comptable) to act on its behalf – be prepared for your accountant charges that are about double that of the cost of an accountant in the UK.
An early decision (and where an accountant’s advice is essential) is to select the form of business most suitable for your situation. For most start-ups this is likely to be an Enterprise Individuelle also known as EI (similar to UK self-employed status) or SARL (similar to UK private limited company).

Many people moving to France start as an Enterprise Individuelle (or Micro Business) and as their business grows change to become a SARL after one or two years. Being an EI has a number of benefits – the most tangible is that your personal income and business income are treated as one which means lower tax, less formal record-keeping, no mandatory pension contributions but full access to the health care system. Micro businesses must turnover less than 27,000 euros per annum – which also avoids the necessity to register for TVA (VAT).

Let’s assume you, like many others, choose to start up as an Enterprise Individuelle. You or your accountant will need to complete two forms:

• Demande d’Affiliation ou de modification d”Affiliation au titre d’un activite non-salarie (Form TNS) and;
• Declaration de debut ou reprise d’activitie non salarie (Form PO)

These will be in French and determine your business and tax structure (e.g. micro-business), TVA registration (not) and create your social security records. They must be sent (with appropriate cheques drawn on a French bank in Euros – budget around 200 Euros) to the Chambre de Commerce et d l’industrie and Greffe du Tribunal de Commerce in the Department where you live and will base your business.

You will be asked to supply a variety of documents with these forms – which may well differ Departement by Departement. So make sure you check exactly what is required in your Departement or your submission may be delayed or, at worst, rejected. These documents are likely to include:

• Photocopies of your own and spouse/partner passport
• Proof of French address (e.g. Acte de Vente)
• Copies (two) of your Birth Certificates
• French translation of your Marriage certificate (if applicable)
• Copy of existing health care cover – if you have a UK or worldwide Private Health care policy that’s ideal, if not you can try with the EH1C – although some Departments I hear are reluctant to accept this as proof of cover.
• Details of how you plan to fund your business; e.g. personal funds, loan

Believe me, it is worth investing a few hundred Euros to let your French accountant process these forms and handle the inevitable queries. If you are working from home or using part of your home for business these forms will also generate another form from the Centre Recette des Impots (Tax Office) requesting information on the proportion of your floor space you use for business. It is vital you take advice in completing this form or you could find yourself with a hefty tax bill – in France you pay tax on the proportion of your home used for business purposes.

If all goes well you will eventually receive:

• Certificate d’Immatriculation (Extrait du Registre du Commerce et des Societies). This is a formal document that is signed and sealed and contains details of your business structure and registration number (e.g. SIRET number). Many organisations will require your SIRET number to prove you are a bona fide business.

• Carte Vitale – this is a green credit card piece of plastic with an embedded a micro-chip that contains confirmation of your entitlement to health care.

You will also start to receive requests for contributions to the social and health system from MCIPLS (Assurance Maladie des Professions Independantes).

So there it is – you have a fully-fledged French business structure. You’ve got your SIRET (or SARL) registration and your are in the health system.

A BIT MORE HELPFUL ADVICE (BECAUSE YOU CAN NEVER GET ENOUGH!)

From my experience there are three fundamental sources of help and advice for anyone thinking of setting up a business in France. They are the mairie, the Chambre de Commerce and a French-based accountant. I could also add that a trip to an UK accountant to sort out the British tax position is also a good investment.

Befriending the Mayor and his assistant or in a larger town some of the staff is time well spent. The tack I find helps is to make an appointment, take a long a French translation of your business idea and ask advice. The questions to pose are ‘here is my idea, what do you think?’ followed by ‘is this something that you would support in your commune?’ and ‘what advice can you give me and what do I need to do to help make this work?’

Never forget that the Mayor has probably seen it all before, and he (it normally is a he) is extremely well connected and much more powerful than his UK equivalent. He also has a tremendous amount of experience to tap in to. Generally, the Mayor – particularly in rural communities – will be delighted that you are bringing economic input into the community. And he probably does not speak English. Cultivate the Mayor and you have a friend for life. Ignore him, and you will be in deep trouble.

After visiting the Mairie, take a trip to the Chambre de Commerce. All businesses in France need to be registered by the Chambre de Commerce for their departement. Do, however, visit the Head Office of your Chambre not one of its sub-offices. The Head office contains specialists, while sub-offices contain generalists. This registration generates the SIRET number essential for legally doing business and plugs you into the Health Care system. More than that, if you find the right person, the Chambre will be a source of help, advice, networking and referral.

In most Chambres you will find someone who speaks some English – but don’t be surprised if it is not the person who has the specialist knowledge that you seek. I often wonder if this is half the problem. People approach the Chambre with a specialist business question and through difficulties in communication don’t receive the advice they think they should. All I can say is that, in my Chambre, Saône et Loire based in Chalon sur Saône, the business support team is highly professional and dedicated to building the economy of the area. That is their job, after all.

In France a good accountant is not an option, it is a requirement.

Many people will be able to handle the book-keeping and basic profit and loss calculations. However, because every situation is different and driven by personal circumstances, I suggest only an accountant can advise on the best structure for your business. Get it wrong at the start and changes later can be expensive. Also, an accountant will be an expert in French taxation and advise the optimum way to minimise your tax.

It is important to bear in mind that your French accountant will need to be aware of UK income if you have selected to become French resident for tax purposes. However, as I always say in my replies I am not an expert in accounting or tax. It is absolutely essential for anyone embarking on major change such as launching a business in a new country to take professional advice. Funny enough, I often sense people are reluctant to spend a thousand or so Euros on this advice while thinking nothing of spending tens if not hundreds of thousands of Euros in the actual move and business launch. It is a false economy.

I will finish this summary of your most frequent questions with a simple Do’s and Don’ts Check List to help your business and life succeed in France.

DO
Approach your local Mairie with your ideas at an early stage
DON’T
Present your local Mayor with a fait accompli

DO
Persevere with your Chamber of Commerce
DON’T
Get angry with them if you don’t like what you hear

DO
Find a good French accountant and invest in their advice
DON’T
Expect him/her to speak English

DO
Learn as much French as you can before you leave the UK and continue to learn in France
DON’T
Walk in to official offices and speak English – how would you react if the tables were turned?

DO
Make sure that your UK tax affairs are in order before you leave the UK
DON’T
Expect the UK Revenue to forget you because you live in France

DO
Ensure that you have sufficient cash resources to last twice as long as your business plan suggests
DON’T
Assume you will find employment in France if you don’t speak French

DO
Integrate fully in the community and ask questions constantly
DON’T
Surround yourself with UK people, TV and newspapers

DO
Enjoy the lifestyle, first and foremost. Problems can be solved.
DON’T
Believe the TV programme on success and failure overseas. Remember they are entertainment not documentaries.

DO
Find local suppliers for your business
DON’T
Import everything from the UK

By David Hammond

David Hammond runs Burgundy Discovery which offers one, two and three day small group, personal guided wine tasting tours to carefully selected, family-owned winegrowers in Burgundy. Visit www.burgundydiscovery.com for full information.

Before moving to France, David ran an UK business for 20 years and acted as a volunteer business advisor to a local Enterprise Agency. He is happy to answer BRIEF queries from FrenchEntrée readers – however, please understand that he does so voluntarily and at considerable expense to his time. Contact him at [email protected].