As Brexit continues to drag on without a resolution, it might be tempting to bury your head in the sand and hope for the best. But if you’re a UK national thinking about setting up a business in France, it’s a good idea to be as prepared as possible for any development with Brexit. Brexit is likely to have significant implications for British expats who want to move to France, and the sooner you get started on what you can, the less hassle it will be down the road—and there won’t be any unwelcome surprises. Having a business in France is possible after Brexit—it just needs a little more foresight and planning than before.
- Moving to and Living in France after Brexit
- Business Formation in France
- Types of Businesses in France
- How to Register your Business in France
- Opening a Bank Account
- Paying Taxes
- Employing Staff
- Business Culture in France
- Where to Get Help and Other Useful Information
Moving to and Living in France after Brexit: Everything you Need to Know
British expats living in France after Brexit will need to apply for a residence permit, even if they’ve already obtained one prior to Brexit. In the event of a no-deal Brexit, UK nationals in France will retain their rights for one year, but must apply for a new residence card within the first six months that Brexit is in place. The card will cost €119 and the specific one you’re issued will depend on how long you’ve stayed in France, whether you work or are a student, and other factors such as family attachments in France. You will need a passport for travel, and you’ll need to get a social security number or register for healthcare, as you won’t be able to use an EHIC from the UK for healthcare. French authorities will continue to recognize your driver’s license, however, and due to delays in processing, it’s advisable to stick with a British license unless it’s about to expire. If you have a business in France, it’s advisable to register it in the country as soon as you can.
Business Formation in France
In France, you’ll need a residence permit if you’re not an EU citizen to start a business—this means that after Brexit, UK nationals wanting to start a business should apply for a residence permit as soon as possible. You’ll also want to make sure that any qualifications you depend on in order to run your business—if you’re a lawyer, for example, or an accountant—are recognized in France. It’s a good idea to do some research and see if there are any regulations specific to your industry that you need to be aware of, since many occupations are regulated in France. Also keep in mind that the process for charging VAT will change if your business is currently based in the UK.
In France, businesses are divided into five types, each with its own registration centre:
- freelance professional
- commercial agent
The registration centres are called Centre de Formalités des Entreprises, or CFE. If you’re unsure of what category you belong to, it’s a good idea to contact the CFE or visit their website for more information.
Types of Businesses in France
There are two main categories of legal business frameworks in France: a sole trader and a company, with subtypes for each category. As a sole trader, you’re personally liable for your business, meaning that your personal assets are at stake. Under the Entreprise Individuelle, or sole trader, category, you can set up a micro-enterprise to make your life easier with simplified tax reporting and accounting requirements, as long as your income is below a certain threshold. You can also set up as an Entrepreneur of Individual Limited Liability, which separates your personal assets from business assets.
If you set up as a company, your liability is limited to your investment in the business—but there’s more paperwork involved. An EURL, or Entreprise Unipersonelle à Responsibilité Limitée, is run by a single person, whereas a SARL, or Société à Responsibilité Limitée, can have anywhere from 2 to 100 partners. An SAS allows for a joint venture between a foreign owner and a French company. All of these options will make your tax reporting and accounting a bit more complicated, but may be the best option for larger companies. If you’re unsure, it’s advisable to speak with a lawyer about what the best option for you is.
How to Register your Business in France
First, you should find the correct Centre de Formalités des Entreprises (CFE) category for your business and register it with the right department. If you don’t know what category your business belongs to, check online to see the specifics of each category. In order to register, you may need documents such as your ID, proof of address, and proof that your spouse understands liability. If you have a company, you’ll have to publish an announcement of your business in an authorized newspaper and open a business bank account. The CFE will then process your application and send it to any relevant organizations, which will register your company with the national business directory, the tax office, the commercial court register, the labour office, health insurance, and other places your business needs to be registered at. Entrepreneurial courses may be required for certain types of entrepreneurs, such as artisans or tradespeople.
The National Institute of Statistics and Economic Studies (INSEE) will issue you a 9-digit business number when you register your business. Within a few weeks, you’ll get a 14-digit number which is your business number, plus a 5-digit establishment ID number. You’ll also get a code consisting of four digits and a letter, which categorizes your business type.
Opening a Bank Account
Opening a business bank account as a foreigner can be a complicated process—security among French banks has increased since 9/11, and as a result, there’s a lot of paperwork. People setting up as sole proprietors or freelancers will have an easier time, but people setting up limited companies will need documents like their business ID and articles of incorporation. If you’re planning on opening a business bank account as a limited company, be prepared with a business plan, including cash flow forecasts and a detailed explanation of the nature of the business. It’s a good idea to have a business plan anyway, so if you haven’t yet made one and you’re starting a new business, do this step before you do anything else!
The process of opening a business bank account may take several months and require you to have more than one meeting. If a French bank rejects your application, you can ask them for a letter of refusal, which they are legally required to give you. As long as your financial history is respectable, you can give the letter of refusal to the Bank of France, France’s national bank, which will then designate a bank which must accept you.
If you’re a sole trader or freelancer in France, you’ll pay taxes through the personal tax system, so you will pay income tax at the standard tax brackets based on how much you’ve earned. For corporations, the tax rate as of 2019 is 28% on income up to €500,000, and 31% for anything over that amount. Corporate tax is paid quarterly in March, June, September, and December, and there are three different corporate tax regimes for commercial, professional, and agricultural businesses.
The income brackets work the same for sole traders, freelancers, and employees—but as a freelancer, keep in mind that your income tax isn’t being deducted from your paycheque, so it’s important to save money for tax time! If you make more than €33,200 as a service-based business or €82,800 as a commercial business, you’ll also need to start charging VAT, which is currently (as of 2019) 20% in France. Keep in mind that once Brexit happens, you’ll have to register for an EU VAT account.
It’s expensive to hire staff in France, and employees are well protected by employment law. Before you employ staff, make sure you know the law so you’re not inadvertently asking someone to work under illegal conditions! For example, workers are entitled to two and a half days’ leave after each month worked, or five weeks per year. Employees are entitled to a 35 consecutive hour rest period each week, and a standard work week is 35 hours. Any time an employee puts in over the 35 hours is overtime and should be paid as such. The workday can’t exceed 10 hours, and in the case of night work, 8 hours is the maximum. There are quite a few exceptions, however, under collective agreements, so not all businesses may work in accordance with standard practices. If you’re unsure, it’s best to consult with a lawyer before doing hiring.
Business Culture in France
Written contracts for work are the norm in France—while in other countries it may not be standard practice unless the job is a high-level position, work contracts are more common in France for all types of positions. In general, French business etiquette is more formal than in some other cultures. In addition to being polite, it’s generally common practice to wear more formal business attire—so when in doubt, opt for a suit jacket and be well groomed. Casual Friday isn’t as widely practiced, so it’s not safe to assume that others will know why you’re dressed down on a Friday. It’s common to address others as “Monsieur” or “Madame.”
Respect for the language is important, and if you have a business card, it’s important to make sure that at least one side is in French, even if you primarily do business in English. French business lunches tend to be longer and more formal than lunch in other countries, with a two-hour lunch being normal—since France is well known for its artful food, take your time and enjoy your meal!
Where to Get Help and Other Useful Information
While we’ve covered some of the basics here, it’s a good idea to do more thorough research on your own if you’re planning on moving to France or setting up a business there. For starters, read the UK government’s guide to living in France post-Brexit. There are also citizen outreach meetings held by British Embassies across France if you’d like some of your questions answered in person.
Further reading on how to start a business in France is advisable. If you need some help getting started with your residence application, you can visit the French government’s website to help individuals living in France prepare for Brexit. It also has a section on how to prepare your business if you already have one there.
Although Brexit has been postponed again, it’s still up to you to stay prepared. The sooner you start preparing yourself for any changes, the easier it will be once they happen!