« Income Taxes facts Important Knowledge Base | Home | How to Shop for T1 Cheap Phone Service and Internet Access »
Is France Really The Worst Country For Corporate Taxes?
By | February 18, 2010
Of all the EU countries, France has one of the highest corporate tax rates of 33.33%.
And this is not the only tax that companies have to fork out for – on top of corporate tax there is also the “Taxe Professionelle” (Professional Tax), the “Taxe Foncière” or “Taxe d’Habitation” (Housing Tax, payable if you are renting a place or own your place of business) and, last but not least, the Payroll Tax (national insurance, pension tax,…) which is more than 45%. And with France’s notoriously slow adminstrative procedures it seems the state always manages to stand in the way of entrepreneurs.
But is the situation that bad? How can such a difficult system produce one of the top seven economies in the world? Why is foreign investment still so strong in France? Clearly, the situation is not as bleak for companies as it first appears. On the contrary, if you are ‘in the know’ there are are lots of ways entrepreneurs can get the French system to work for them. So is this a good time to consider setting up a business in France and French company formation?
A new deal for companies considering French Incorporation
It’s now been more than 10 years since France decided to modernize its administrative system. French company formation, even if it has to follow strict rules, can now be done within a week. Registered numbers are usually given by Companies House the same day of the incorporation. The VAT number is given within a week after registration and the VAT number is valid from the stamp date.
All French procedures for tax declarations, payroll declarations and French incorporation is now centralized. This means that you can get your business up and running as soon as the French company formation process has been completed.
For 95% of businesses, French incorporation is very straight forward and speedy. And the administrative system – far from being a burden – is actually a blessing in disguise. The strict rules governing French businesses means companies will always be supported. Banks are also highly regulated and therefore can be trusted even in the worst economic climates.
Past governments have always tried to improve this system whilst keeping the regulations in place which is perhaps why La Defense is the biggest business centre in Europe and still attracts hundreds of foreign companies every year.
Taxes
Officially corporate tax is 33.33% but there are sweetners:
15 % rate
A company can have a 15% corporate tax rate on profit providing they comply with the following conditions:
- the company must be trading
- at least 75% of the capital must be owned by individuals
- share capital must be completely paid
- turnover must be less than 7.6 million €uros
- profit must be less than 38,120 €uros
No Tax
Depending on where you set up your company and what type of business you have, you may be liable to pay no tax at all. This system, created in the 1990’s to help fight unemployment in urban areas, is called “Zone Franche Urbaine” (Urban Free Zone). In these tax-free zones, companies that are trading have no corporate tax and in some case no professional tax and reduced payroll taxes for the first five years. There are more than 60 zones like this in France. Plus, depending on the business, some regions in France are also giving incentives to new start-up companies considering French company formation.
So no tax and lots of incentives – what a great deal!
Taxe Professionelle (1975-2010)
In 2010 the Professional Tax will be abolished. The French Parliament first voted to get rid of it in 2004 but it’s not until next year that the law actually comes into enforcement. It will cost the state 8 Billion €uros but will significantly reduce the burden of French companies.
A Bright Future For French Company Formation
Overall France is very strict on admin and is a highly regulated country but it’s not the worst one for investments or the worst one for taxes either. In lots of cases foreign entrepreneurs considering French incorporation, can reduce their taxes and set up a company in France, with far less hassle than was once thought. The
No related posts.
Related posts brought to you by Yet Another Related Posts Plugin.
Topics: corporate taxes | No Comments »