France legal and accounting and tax considerations in 2024

1. The standard corporate tax in France is 25%;
2. The standard VAT rate is 20%. VAT filings are reported i) on a quarterly basis for companies with an annual turnover below €1M and ii) on a monthly basis for companies with an annual turnover over €1 million;
3. Dividends and capital gains between parent-subsidiary companies are eligible for a 95% rebate on corporate tax;
4. A 25% withholding tax is applied on dividend payments to non-resident companies, unless reduced via a tax treaty;
5. Royalties’ payments to non EU companies are subject to withholding tax at 25%, unless reduced via a tax treaty;
6. Interest payments to foreign companies will be 100% withholding tax-exempt;
7. A French branch of a non EU based foreign company is subject to a 25% branch tax, unless reduced via a tax treaty;
8. An annual audit is mandatory for LLCs which exceeds two of three following thresholds: i) annual turnover over €3.1 million ii) total assets over €1.55 million or iii) more than 50 employees;
9. An annual audit is mandatory for Simplified Joint Stock Companies held or holding another company or exceeding two of three thresholds: i) annual turnover over €3.1 million ii) total assets over €1 million or iii) more than 20 employees;
10. All French companies must file their corporate tax returns usually by April the 30th. Late filing/payment results in a 10% penalty;
11. Business startups with less than 50 employees have an option to pay income tax instead of corporate tax during their first five years;
12. Annual losses can be carried forward indefinitely, for an amount of up to €1 million plus 50% of subsequent profits exceeding that amount;
13. Property tax is levied at an average rate of 13% on the cadastral value of land and buildings. The amount is payable on the 1st of January, with an exemption for the first startup year;
14. France has signed double taxation treaties with 123 countries including the Australia, Canada, China, Singapore and USA to reduce withholding tax on payments abroad;
15. All French companies must file their financial statements with the Commercial Court Registry within one month after approval by the general meeting of shareholders, or are subject to a fine of up to €1.500;
16. Companies are allowed to include a simplified balance sheet in their financial statements if they meet two of the three following thresholds i) less than €534,000 revenue ii) less than €267,000 total assets and iii) less than 10 employees;
17. Healy Consultants Compliance Department will assist our Clients with i) documenting and implementing accounting procedures ii) implementing financial accounting software iii) preparation of financial accounting records and iv) preparing forecasts, budget and sensitivity analysis;
18. It is important our Clients’ are aware of their personal and corporate tax obligations in their country of residence and domicile; and they will fulfill those obligations annually. Let us know if you need Healy Consultants’ help to clarify your annual reporting obligations.

• Legal and compliance

  France resident businesses must comply with over 400,000 norms and rules, one of the world’s highest figures. The Labor Code is also notoriously complex (3,400 pages long). Further information follows:

  • Reporting regulations

    • French law bars companies from collecting/disclosing personal information without approval from i) the individual and ii) the Commission on Informatics and Liberty. Companies in violation must notify i) the authorities and ii) impacted parties within 24 hours, or are subject i) to a fine of up to €300,000 and ii) up to 5 years of prison;
    • All French-resident businesses and individuals must disclose their assets detained abroad to the authorities or are subject to penalties including i) a €1,500 fine and ii) a fine representing 5% of assets for each year undeclared;
    • All companies have to show proof that they subscribe to i) a civil liability insurance and ii) a vehicle insurance.

  • Staff regulations

    • Before negotiating an employment contract, we strongly recommend our Clients to perform due diligence on i) the Labor Code and ii) their industry’s collective agreement, as both always prevail over individual contracts in France;
    • An employment contract must be put in writing and a clause is only enforceable if every word is written in French;
    • French-based businesses must pay social contributions averaging 41% of an employee’s gross salary, and consequently tend to pay net salaries lower than in the rest of Western Europe;
    • French employees are hired on i) open ended contracts (CDI) for permanent positions or ii) fixed term contracts (CDD) for temporary positions. New employees are usually hired on a CDD, which are however limited to duration of up to 36 months and will be deemed as open-ended contracts after that period;
    • Probation period shall not exceed i) 4 months for workmen or ii) 6 months for executives;
    • The standard working time is 35 hours a week but collective agreements may allow for a longer weekly working time in exchange for longer paid annual leave than the standard 5 weeks mandatory by law;
    • Employers must compensate overtime work by an extra payment of at least 25% the standard rate of pay. French employers cannot request their employees to work more than i) 10 hours per day and ii) 48 hours per week;
    • Employers must compensate overtime work by an extra payment of at least 25% the standard rate of pay. French employers cannot request their employees to work more than i) 10 hours per day and ii) 48 hours per week;
    • From 2016 onwards, all companies will be required to buy a complementary health coverage plan (mutuelle) for their employees;
    • French law bars discrimination in matters of employment on the grounds of gender, sexual preferences, ethnicity or race, religion and political or union affiliation;
    • Business with over 20 employees must reserve at least 6% of their permanent positions to persons with a disability. Please note that the employer benefits from annual subsidies of at least €4,000 per disabled person hired;
    • To prevent discrimination, companies with more than 50 employees will be forbidden from 2015 onwards to ask job candidates to submit resumes containing i) their name ii) their gender iii) their age and iv) their race or ethnicity.

  • Collective bargaining and labor unions regulations

    • Companies with more than 11 employees are required to elect employee delegates who i) have a right to take up individual and collective employees concern and ii) cannot be dismissed without the local labor inspector’s approval;
    • Companies with more than 50 employees must setup a company committee comprising of i) employee representatives and ii) the company’s manager. The committee must be informed of management decisions likely to affect employees;
    • Only ‘representative” labor unions may present candidates for the 1st round of employee delegates and company committees’ elections. Representative unions include i) CGT ii) CFDT iii) CGT-FO iv) CFTC v) CGC and vi) other unions which received at least 10% votes once during previous company elections;
    • Companies with more than 50 employees must set up an employee profit-sharing scheme, which content has to be negotiated with employees’ representatives;
    • All employees are entitled to appeal management decisions (including contract termination) to the local Labor Court, with equal representation of i) employees’ representatives and ii) employers’ representatives.

  • Trade regulations

    • Companies must always i) label their products’ price (tax inclusive) and ii) provide a receipt for sales over €25. Noncompliance may result in a fine of up to 50% of the transaction amount;
    • A company is only allowed to sell at a loss its products for i) 5 weeks per year and ii) during government-defined summer and winter sale periods. Selling at a loss is otherwise subject to a fine of up to €375,000.

  • Other company regulation

    • The French Competition authority forbids businesses to engage in concerted practices. Convicted businesses are subject to penalties including i) a fine of up to €75,000 and ii) up to 4 years of imprisonment;
    • France legal system is party to the New York convention on Recognition and Enforcement of International Arbitral awards. Arbitration in other countries which follow this convention will be enforceable in France.