France combines incredible business opportunities with a maze of regulations. Take, for example, the statutory chart of accounts that all businesses must use to record transactions on approved accounting software. To ease some of the regulatory burden, the French government has recently introduced steps to simplify the corporate income tax. And when it comes to tax incentives, the country ranks at the top.
At a Glance
Good to Know
France is the seventh largest economy in the world and the third largest economy in Europe after Germany and the UK. As well as being the world capital for fashion and luxury goods, it is also the world’s No. 1 tourist destination.
France was selected as the OECD #1 country for public funding and tax incentives. It has Europe’s second highest investment in Research and Development. Generous R&D tax credit schemes offer 30% credit on qualifying expenditures up to €100 million and 5% above this amount.
In addition to its solid welfare and social protection infrastructure, France’s healthcare system placed third in a 2021 OECD survey. Healthcare spending represented 9.3% of GDP in 2019. The country matches its public spending with a high quality of life — Paris was voted the top city in the world in a 2021 KPMG survey.
*13/14th salary is not obligatory but may be historically present in some sectors.
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Strict Labour Rules
Employment legislation is extensive and complex. Companies can benefit from seeking advice during the initial recruiting phase to ensure they comply with the strong workers’ protections. The 35-hour working week legislation can also be challenging for businesses unfamiliar with French labour rules.
Steep Payroll Costs
Payroll taxes and social security costs for employers in France are high. Businesses face an employer contribution of approximately 45% as an add-on cost to employees' gross salary. Employee withholdings for payroll taxes and social security costs amount to approximately 23% (excluding personal income tax deductions).
Complex Tax Regulations
The corporate tax environment is extensive and complex. However, the French government has been introducing simplification measures in recent years. For instance, the corporate income tax rate was reduced to a standard rate of 25%.
You can launch your business in France with ease. Our team of local experts are here to support your operation, every step of the way. With an unparalleled focus on the customer experience, we make the complex simple.
We back up our expert-led managed services and technical consulting with GateWay, a pioneering platform that unifies all your applications and data for cross-border success in a single place. Consider it your one-stop-shop for global growth.
“While local vendors tend to primarily care about their sliver of the business, HSP Group is, as the single provider, fully invested in the success of the entire organization.”
Head of Finance and Operations at a fast-growing FinTech