If you are thinking of starting a business or expanding your business to France, you need to know some important factors, which are crucial for successful business. Even if you have enough resources and initial start-up, this is usually not enough, as it is more important to have a detailed knowledge of the economic, cultural and social factors that characterise France.

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Why choose to do business in France

If you have in mind doing business in France, then you probably already know that France is one of the countries with the highest gross domestic product (GDP), as well as the Human Development Index (HDI) is one of the highest in the world. It is considered to be a leading, innovative and extremely developed country that can boast with highly educated population and so it offers excellent conditions to start a business in Europe.

However, that is not all! France has the third largest economy in Europe and lags only behind Great Britain and Germany. With the election of current President Emmanul Macron in 2017, the French economy has experienced the true business renewal and redefined the role of the state in the economy, which has become an active promoter of the private sector through various initiatives such as investment funds.

And what do you need to pay special attention to when planning to expand your business to France?

Establishment of a company

When you decide to do business in France, you must first decide which kind of company you want to establish or whether you will do business through branch, subsidiary or liaison office.

The liaison office is a representation, which does not have a separate legal entity from the company it represents and cannot carry out a direct commercial activity. It can be involved in partnerships, advertising and other activities, but the conclusion of transactions is possible only with the company and not with the office.

Branches are not separate from the parent company, while subsidiaries are separate legal entities that have their assets separate from the assets of the parent companies. They may receive management fees and commissions from the parent company for their operations.

It is necessary to know that all smaller businesses can only work with the help of sales agents, which act as a kind of link between the company and the French market.

France provides highly educated staff

When it comes to doing business successfully in France, human resources are an extremely important factor, which has a very big impact on business. In this regard, France offers favourable conditions for successful business, as labour legislation is designed in such a way as to allow companies versatility. All employees have access to continuing professional education, which ensures the availability of a skilled and versatile workforce.

A very high educational structure of the population is typical for France. As much as 44% of the population between the age of 25 and 34 has a tertiary education, which is, for example much more than in Germany or England. France is the leading country among academics, as it is home to three of the six most prestigious institutions where a master’s study is carried out.

French tax law is considered complex

French tax law is very complex, so it is crucial that you learn about it thoroughly or get the right advice.

In France, there are three types of taxes you need to know about:

VAT is a value added tax, which is valid throughout the European Union in accordance with Directive 2006-112-EC, and is paid by the consumer and added to the price of taxable goods. The amount of tax on the sale of goods and services in France is 19.6%, and from 1 October 2012 it increased to 21.2%. The reduced tax rate applies to food and certain agricultural products (5.5%), books, public transport, newspapers and magazines (7%).

French corporation income tax (CIT) does not apply to the income of their permanent establishments in foreign countries, but to the income they generate on French territory. The subject of corporate income tax coverage are dividends of parent companies and capital gains. From January 2010, the CIT tax rate starts at 28%, and those companies with several million are subject to a tax rate higher than 31%.

PIT is personal income tax or income tax. France is subject to a progressive tax rate, which means that it goes from 0% to 45%, with an additional 3% taxation for the part of the income that exceeds € 250,000 for a single person or € 500,000 for a married couple. If the income of a single person exceeds € 500,000 or the income of a married couple € 1 million, then an additional 4% taxation applies.

There are also a number of tax breaks available for all businesses, but only if they work with local charities, invest in renewable energy and sustainable production methods, or in technology and research.

Effective marketing and communication are essential for success

Company promotion is an extremely important factor that has a significant impact on company performance. Once you set up a business in France, the real work is just beginning, as you will need to make it recognisable for the consumer market.

You will do this most effectively and easily digitally. As in other countries, the use of the Internet in France is extremely popular and customers are completely accustomed to online shopping. It is therefore not uncommon that there are more than120 thousand online storesin France today, which does not mean that the market is already completely saturated with this. According to some data, revenues in e-commerce are expected to further increasein the coming years.

Despite the fact that the market in online business is promising, this does not guarantee success, as it is necessary to face enormous challenges. It is important that you design your promotion in such a way that it is attractive, and at the same time you must have a good communication strategy. Knowledge of a foreign language and adaptation of the product to the local environment is extremely important.

What advertising strategies to use?

It is likely that at the beginning of your business in France, the promotion of the company will take place through paid advertising. The good thing about digital advertising is that it is very targeted, but it is only successful if it is properly designed and adapted to the target group. This means that your site must be appropriately optimized, which requires thorough market research, keyword analysis, page optimization, multilingual link, etc. When advertising, keep in mind the power of social media, which is extremely popular in France.

Good knowledge of language is not only important for successful promotion of your company, but also for its establishment and successful business. You will have a hard time dealing with all the documentation and procedures if you don’t understand the French language, so the help of a good translation agency is very welcome. If you also decide to advertise in multiple languages, then this is all the more important no matter which advertising strategy you choose.