Starting a Business in France

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Starting a Business in France

France is such a country where you can live peacefully and start your own business in France easily without having any difficulties. The reason is that the government of France is very co-operative and it wants the public to live satisfactorily.

Economy of the France

The economy of France is highly developed and free-market-oriented. It is the world’s 7th largest economy by 2019 nominal figures and the 10th largest economy by PPP figures. It is the 2nd largest economy in the European Union after Germany.

France has a diversified economy, that is dominated by the service sector (which represented in 2017 78.8% of its GDP), whilst the industrial sector accounted for 19.5% of its GDP and the primary sector accounted for the remaining 1.7% The fifth largest trading nation in the world (and second in Europe after Germany), France is also the most visited destination in the world, as well the European Union’s leading agricultural power.

France is the most visited destination in the world

France was in 2020 the largest Foreign Direct Investment recipient in Europe, Europe’s second largest spender in Research and development, ranked among the 10 most innovative countries in the world by the 2020 Bloomberg Innovation Index, as well as the 15th most competitive nation globally, according to the 2019 Global Competitiveness Report (up 2 notches compared to 2018).

France GDP Economic Sectors

France Economic Indicators

France GDP Growth Rate

France is the seventh largest economy in the world and the second largest in the Euro Area. the biggest sector of the economy is household consumption (55 percent) followed by government expenditure (24 percent) and gross fixed capital formation (22 percent). Exports of goods and services account for 29 percent of GDP while imports account for 31 percent, subtracting 2 percent from total GDP.

France GDP Growth Rate
Source: INSEE, France
France Interest Rate

France is a member of the European Union which has adopted the euro. France’s benchmark interest rate is set by the European Central Bank. The official designation for the rate is main refinancing operation.

France Interest Rate
Source: European Central Bank
France Inflation Rate

In France, the most important category in the consumer price index is services (48 percent of total weight), in particular actual rentals and services for dwellings (7 percent), health services (6 percent), transport (3 percent), and communication (2 percent). The index also includes: manufactured products (26 percent) such as medical products (4 percent) and clothing and footwear (4 percent); food (16 percent); energy (8 percent) such as petroleum products (4 percent); and tobacco (2 percent).

United Kingdom Inflation Rate
Source: INSEE, France
France Unemployment Rate

In France, the unemployment rate measures the number of people actively looking for a job as a percentage of the labour force.

France Unemployment Rate
Source: INSEE, France
France Government Debt to GDP

France recorded a government debt equivalent to 98.10 percent of the country’s Gross Domestic Product in 2019

France Government Debt to GDP
Source: INSEE, France
France Balance of Trade

Since 2004, France has been recording trade deficits due the gradual erosion of the export-oriented industry, the appreciation of the euro and the increasing dependency on imports of energy and manufactured products. In 2017, the biggest trade deficits were recorded with: China & Hong Kong, Germany, the Netherlands, Italy and Belgium; while the biggest trade surpluses were recorded with: the Middle East, the UK, Africa and Switzerland.

France Balance of Trade
Source: Ministère de l’Économie et des Finances
France Currency Euro

The euro is the official currency of France, which is a member of the European Union. The Euro Area refers to a currency union among the European Union member states that have adopted the euro as their sole official currency. In France, interest rate decisions are taken by the Governing Council of the European Central Bank.

France Currency Euro

France Stock Market

The CAC 40 Index is a benchmark French stock market index. It tracks the performance of 40 companies selected among the top 100 market capitalization and the most active listed equities traded on the NYSE Euronext Paris. The CAC 40 Index is free floating, modified capitalization-weighted index. The Index has a base value of 100 as of December 31, 1987..

France CAC 40 Stock Market Index

France Ease of Doing Business

France is ranked 32 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings. The rank of France remained unchanged at 32 in 2019 from 32 in 2018. The Ease of doing business index ranks countries against each other based on how the regulatory environment is conducive to business operationstronger protections of property rights. Economies with a high rank (1 to 20) have simpler and more friendly regulations for businesses.

Ease of Doing Business in France
Source: World Bank
France Business Confidence

Business Confidence in France decreased to 93 points in October from 94 points in September of 2020.

In France, Business Climate measures industrial entrepreneurs’ sentiment about current business situation and expectation about business conditions. The survey sample comprises about 4,000 enterprises in the manufacturing and mining industries. The indicator is calculated using factor analysis technique. The index is then calculated in a way to measure the current sentiment in relation to the historic index values of the period 1993-2011. A value over 110 indicates unusually high optimism and a value under 90 indicates unusually high pessimism. The value 100 indicates neutrality.

France Business Confidence
Source: INSEE, France
France Consumer Confidence

Consumer confidence in France fell to 94 in October of 2020 from 95 in September and compared to market expectations of 93. The index remains below its long-term average of 100 since April when the coronavirus pandemic started. Households have been less optimistic about their future financial situation (-8 vs -5); the share of households considering it is a suitable time to save has declined (32 vs 34); and those considering making major purchases were stable (-18). The standard of living in the next 12 months is seen deteriorating (-54 vs -47) and unemployment is seen higher (73 vs 71).

In France, the consumer confidence index is based on a survey of about 2 000 households. The questionnaire focuses on: past and future economic situation in France, past and future personal financial situation, unemployment, intention to make major purchases, current savings capacity and expected savings capacity. The indicator is calculated using factor analysis technique. The index is then calculated in a way to measure the current sentiment in relation to the historic index values of the period 1987-2011. A value over 110 indicates unusually high optimism and a value under 90 indicates unusually high pessimism. The value 100 indicates neutrality.

France Consumer Confidence
Source: INSEE, France
France Bank Lending Rate

Bank Lending Rate in France remained unchanged at 1.13 percent in September from 1.13 percent in August of 2020.

In France, the bank lending rate is the average rate of interest charged on loans by commercial banks to private individuals and companies.

France Bank Lending Rate
Source: European Central Bank
France Corruption Rank

France is the 23 least corrupt nation out of 180 countries, according to the 2019 Corruption Perceptions Index reported by Transparency International. The Corruption Perceptions Index ranks countries and territories based on how corrupt their public sector is perceived to be. A country or territory’s rank indicates its position relative to the other countries and territories in the index.

France Corruption Rank
Source: Transparency International
France Credit Rating

Standard & Poor’s credit rating for France stands at AA with stable outlook. Moody’s credit rating for France was last set at Aa2 with stable outlook. Fitch’s credit rating for France was last reported at AA with negative outlook. DBRS’s credit rating for France is AA (high) with stable outlook. In general, a credit rating is used by sovereign wealth funds, pension funds and other investors to gauge the credit worthiness of France thus having a big impact on the country’s borrowing costs. This page includes the government debt credit rating for France as reported by major credit rating agencies.

Euronext Paris Stock Exchange
Euronext Paris Stock Exchange

Taxation in the France

Taxes in France are made up of taxes in the narrow meaning of the word, plus social security contributions. Most of the taxes are collected by the government and the local collectivities, while the social deductions are collected by the Social Security. There is a distinction to be made between taxes (impôts), which applies to production, importations, wealth and incomes, and social contributions (cotisations sociales), which are part of the total wage paid by an employer when he remunerates an employee. Taxes and contributions together are called in French prélèvements obligatoires (compulsory deductions).

Corporate tax Personal
income tax
VAT or sales tax Social Security Rate for Compa-
nies
Social Security Rate for Emplo-
yees
31% (on profits over €500,000)
28% (over €38,120 but not over €500,000)
15% (not over €38,120)
0 – 45% (+ 4% tax on high incomes, or incomes over €500,000) 20% (standard rate)
10% (restaurants, transpor-
tation and tourism services)
5.5% (utilities)
2.1% (press)
45% 23%

How to Start a Business in France

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