Entries by escec

Reducing a Business’s Share Capital | Reduction Capital Entreprise

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Reduction capital entreprise, or share capital reduction, refers to the process of decreasing a company’s share capital. This occurs when the original assets contributed by partners or shareholders during the company’s formation are adjusted for financial or strategic reasons.

By law, all partners or shareholders must be treated equally during this process, ensuring proportional distribution.

Why Reduce Share Capital?

A company may undertake a reduction capital entreprise for two main reasons:

  1. Due to financial losses: If losses exceed reserves and retained earnings, reducing capital can help restore the company’s equity to at least half of its share capital.
  2. For structural or strategic reasons: If capital no longer aligns with the company’s size or operations (e.g., after selling part of the business), a reduction can enhance financial credibility or allow partners or shareholders to recover part of their initial contributions.

In cases of severe financial distress, a reduction capital entreprise may be followed by a capital increase to clear liabilities, a process known as the “accordion effect.”

Methods of Capital Reduction

A business can implement a reduction capital entreprise in three ways:

  • Reducing the number of shares
  • Lowering the nominal value of shares
  • Repurchasing shares for cancellation (only applicable if the reduction is not loss-driven)

Capital Reduction for SA (Société Anonyme)

What Is It?

Social capital in an SA consists of all resources contributed by shareholders when the business is created. A reduction capital entreprise in an SA involves decreasing the share capital amount while maintaining proportional fairness among shareholders.

Why Reduce Share Capital?

  1. Loss-driven reduction: If a company’s losses exceed reserves, reducing capital can help restore the balance between equity and capital.
  2. Non-loss-driven reduction: If the capital no longer aligns with business needs (e.g., after selling part of the company), a reduction can improve financial credibility and allow shareholders to reclaim part of their original contributions.

Important: In an SA, the share capital cannot be reduced below €37,000.

How Does It Work?

A reduction capital entreprise in an SA can be executed through:

  • Reducing the number of shares
  • Decreasing the nominal value of shares
  • Repurchasing shares for cancellation (only for non-loss-driven reductions)

Required Formalities

The procedures depend on whether the reduction capital entreprise is due to losses or not.

Loss-Driven Reduction

  1. Auditor’s Review: If applicable, auditors must assess and report on the proposed reduction at least 15 days before the extraordinary general meeting (EGM).
  2. Shareholders’ Decision: The reduction must be voted on at an EGM with a two-thirds majority of shareholders present or represented. The decision must be recorded in meeting minutes.
    • The EGM can delegate execution powers to the board of directors or executive board, but retains final approval authority.
  3. Legal Announcement: The company must publish an official notice with key details (company name, capital change, decision date, etc.) within one month.
  4. Formal Declaration: The reduction capital entreprise must be registered with the business formalities office and published in the official legal bulletin (BODACC).

Required Documents:

  • Certified minutes of the capital reduction meeting
  • Updated and certified articles of association
  • Proof of publication in a legal announcement medium
  • Declaration of beneficial ownership changes, if applicable

Tax Exemption: The reduction capital entreprise is exempt from company registration tax (SIE).

Tax Implications

  • Loss-driven reductions are not taxable as no profits are distributed.
  • Non-loss-driven reductions may result in shareholder distributions, which are subject to taxation based on their nature.

By optimizing your business strategy with a well-planned reduction capital entreprise, you can enhance financial stability and align capital with operational needs.

1. Social Status of Managers

The social status of the company’s managers is a significant differentiator between SAS and SARL. This status determines how the managers are classified in terms of social security, which influences their contributions and benefits.

  • SARL Management: In an SARL, if the manager owns more than 50% of the company, they are considered a “majority manager.” Majority managers fall under the Non-Salaried Workers (TNS) regime and are subject to specific social security contributions, typically around 45% of their remuneration. Moreover, even if they receive no salary, they must pay minimum flat-rate contributions, around €1,200 annually. Conversely, minority managers (those owning less than 50%) are considered employees, receiving a salary and having no obligation to pay social security charges on dividends received.
  • SAS Management: In an SAS, the distinction between majority and minority shareholders doesn’t affect the social status of the manager. Whether the manager is a minority or majority shareholder, they are classified as an employee. As such, their social security contributions are calculated based on their salary, which usually includes both employee and employer contributions, averaging around 80% of the net salary. Dividends, however, remain exempt from social security charges.

2. Taxation

Both SARL and SAS are typically subject to corporate income tax (CIT), but there are options to be taxed under personal income tax under certain conditions.

  • SARL Taxation: Profits in an SARL are generally subject to corporate tax. However, if the company meets specific criteria (such as being a family-owned business), it can opt for personal income tax treatment. This option offers flexibility but is not always advantageous, depending on the income levels and tax rates applicable to the partners.
  • SAS Taxation: SAS also generally falls under corporate tax. Notably, a newly established SAS can opt for personal income tax, but only within the first five years of its creation. After this period, it defaults to corporate tax, making this structure less flexible in the long term for those looking to manage tax based on personal income levels.

3. Liability and Number of Partners

Both SAS and SARL offer limited liability, meaning shareholders are only liable up to the amount of their contributions. However, the number of partners and the complexity of management can influence the decision.

  • SARL: Suitable for small to medium-sized businesses, SARL can have between 1 to 100 partners. The management structure is more rigid, making it ideal for businesses where control needs to be tightly held, often by family members or close associates. The shareholders’ liability is limited to their contributions, making it a secure option.
  • SAS: Offering greater flexibility, SAS can have unlimited partners, making it suitable for larger businesses or those planning to attract investment. The management structure allows for a President and other possible governing bodies (e.g., General Manager), providing more flexibility in operations and decision-making. The liability of shareholders is similarly limited to their contributions.

4. Management Flexibility

The flexibility in management structure is another critical difference between SARL and SAS.

  • SARL: In SARL, management is typically handled by one or more managers appointed by the partners. The powers and responsibilities are defined strictly by law, which can limit the flexibility in decision-making processes. This structure is advantageous for maintaining control but can be restrictive for businesses looking to expand or adapt quickly.
  • SAS: SAS offers more management flexibility. The President, who can be supported by a General Manager or other officers, oversees the company. The roles and responsibilities can be tailored within the company’s articles of association, allowing for a more adaptable management approach. This flexibility is appealing for startups and growing businesses looking to adjust management roles as they expand.

5. Share Transfers and Shareholding

The ease of transferring shares can be a crucial factor, especially for companies considering future changes in ownership or attracting new investors.

  • SARL: The transfer of SARL shares is more regulated, often requiring approval from other shareholders, especially if the buyer is a third party. The process typically involves a registration fee of 3% after a deduction of €23,000, proportional to each partner’s ownership.
  • SAS: SAS offers more straightforward share transfer procedures. Transfers can be done with a simple account-to-account transfer and are subject to a lower registration fee of 0.1%. This flexibility makes SAS more attractive to investors and suitable for businesses that plan to raise capital through new share issuances.

1. Social Status of Managers

The social status of the company’s managers is a significant differentiator between SAS and SARL. This status determines how the managers are classified in terms of social security, which influences their contributions and benefits.

  • SARL Management: In an SARL, if the manager owns more than 50% of the company, they are considered a “majority manager.” Majority managers fall under the Non-Salaried Workers (TNS) regime and are subject to specific social security contributions, typically around 45% of their remuneration. Moreover, even if they receive no salary, they must pay minimum flat-rate contributions, around €1,200 annually. Conversely, minority managers (those owning less than 50%) are considered employees, receiving a salary and having no obligation to pay social security charges on dividends received.
  • SAS Management: In an SAS, the distinction between majority and minority shareholders doesn’t affect the social status of the manager. Whether the manager is a minority or majority shareholder, they are classified as an employee. As such, their social security contributions are calculated based on their salary, which usually includes both employee and employer contributions, averaging around 80% of the net salary. Dividends, however, remain exempt from social security charges.

2. Taxation

Both SARL and SAS are typically subject to corporate income tax (CIT), but there are options to be taxed under personal income tax under certain conditions.

  • SARL Taxation: Profits in an SARL are generally subject to corporate tax. However, if the company meets specific criteria (such as being a family-owned business), it can opt for personal income tax treatment. This option offers flexibility but is not always advantageous, depending on the income levels and tax rates applicable to the partners.
  • SAS Taxation: SAS also generally falls under corporate tax. Notably, a newly established SAS can opt for personal income tax, but only within the first five years of its creation. After this period, it defaults to corporate tax, making this structure less flexible in the long term for those looking to manage tax based on personal income levels.

3. Liability and Number of Partners

Both SAS and SARL offer limited liability, meaning shareholders are only liable up to the amount of their contributions. However, the number of partners and the complexity of management can influence the decision.

  • SARL: Suitable for small to medium-sized businesses, SARL can have between 1 to 100 partners. The management structure is more rigid, making it ideal for businesses where control needs to be tightly held, often by family members or close associates. The shareholders’ liability is limited to their contributions, making it a secure option.
  • SAS: Offering greater flexibility, SAS can have unlimited partners, making it suitable for larger businesses or those planning to attract investment. The management structure allows for a President and other possible governing bodies (e.g., General Manager), providing more flexibility in operations and decision-making. The liability of shareholders is similarly limited to their contributions.

4. Management Flexibility

The flexibility in management structure is another critical difference between SARL and SAS.

  • SARL: In SARL, management is typically handled by one or more managers appointed by the partners. The powers and responsibilities are defined strictly by law, which can limit the flexibility in decision-making processes. This structure is advantageous for maintaining control but can be restrictive for businesses looking to expand or adapt quickly.
  • SAS: SAS offers more management flexibility. The President, who can be supported by a General Manager or other officers, oversees the company. The roles and responsibilities can be tailored within the company’s articles of association, allowing for a more adaptable management approach. This flexibility is appealing for startups and growing businesses looking to adjust management roles as they expand.

5. Share Transfers and Shareholding

The ease of transferring shares can be a crucial factor, especially for companies considering future changes in ownership or attracting new investors.

  • SARL: The transfer of SARL shares is more regulated, often requiring approval from other shareholders, especially if the buyer is a third party. The process typically involves a registration fee of 3% after a deduction of €23,000, proportional to each partner’s ownership.
  • SAS: SAS offers more straightforward share transfer procedures. Transfers can be done with a simple account-to-account transfer and are subject to a lower registration fee of 0.1%. This flexibility makes SAS more attractive to investors and suitable for businesses that plan to raise capital through new share issuances.

Company Registration in France: Formalities for Business Registration

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Verified:  – Directorate for Legal and Administrative Information (Prime Minister)

When launching a business in France, one of the most crucial steps is company registration in France. This process involves officially declaring your business’s activities with the relevant authorities and completing a series of formalities. The required documents and procedures vary depending on the type of business being created. Below is a comprehensive guide on the key steps involved in the company registration in France process:

Types of Businesses Subject to Company Registration in France

  1. Commercial Businesses:
    • Limited Liability Company (LLC)
    • Single-member Limited Liability Company (EURL)
    • Simplified Joint Stock Company (SAS)
    • Single-member Simplified Joint Stock Company (SASU)
    • Public Limited Company (SA)
  2. Civil Businesses:
    • Professional Civil Company (PCS)
    • Civil Business of Means (SCM)
    • Liberal Practice Business (SEL)
    • Civil Real Estate Business (SCI)

When Should the Application for be Filed?

The application for it must be submitted once all the necessary formalities for setting up your business have been completed. This includes the following steps:

  1. Formalities Related to Regulated Activities:
    If your business is involved in regulated activities, such as those requiring specific permits, diplomas, or accreditation, you must complete these procedures before applying for registration.
  2. Declaration of Beneficial Owners:
    Some businesses are required to declare their beneficial owners. You can consult the relevant guidelines to determine if your business falls under these regulations and how to fulfill this obligation.
  3. Domiciliation of the Business:
    The legal address of your business must be established. Ensure that this address is also registered with the postal service to receive important correspondence related to your business after it.
  4. Appointment of the Business Manager:
    The partners or sole partner must appoint the business manager. This step is required for certain business structures like SAS or SARL.
  5. Adoption of the Statutes:
    The business statutes must be drawn up, outlining the structure and operations of your company. If contributions in kind are involved, a contribution commissioner must be appointed to assess the value of these contributions.
  6. Publishing the Business Creation:
    Once the statutes have been finalized, the business creation must be published in a legal publication (such as a legal announcements journal). This is a mandatory step before submitting the registration application.
  7. Filing the Share Capital:
    After the share capital is constituted, it must be deposited into a business bank account. The capital can be accessed once it is completed.
  8. Acquisition of the Necessary Registers:
    Don’t forget to purchase the mandatory business registers, such as those related to accounts and employees, as required by law.

Can You Start Your Activity Before it?

Yes, you can begin your business activity before completing the company registration in France. However, it’s important to mark all documents with the phrase “Business in formation.” Additionally, you must create an annex to the business statutes that outlines the documents passed before applying for registration.

How to Apply for Company Registration in France

To apply for company registration in France, visit the Company Formalities Office website. This will guide you through the process and allow you to submit your application. Upon submission, your business will be automatically entered into both the National Company Register (NBR) and the Trade and Businesses Register (TBR).

What Documents Are Required?

The documents required for company registration in France depend on the type of business you are establishing. Here is a brief overview:

  • Limited Liability Companies (LLC): Articles of association, identification of the business manager, proof of capital deposit, etc.
  • Public Limited Companies (SA): Similar documents but with additional shareholder and board member details.
  • Professional Civil Companies (PCS): Special forms related to the civil nature of the business.

Once your documents are submitted, you will receive a receipt acknowledging the filing of your company registration in France application. This receipt is important as it allows you to proceed with other necessary procedures, such as enrolling in insurance or applying for complementary services. The receipt is valid for up to one month, until you receive confirmation of your business’s official registration.

What Happens After Company Registration in France?

After company registration in France is completed, you will receive a certificate containing your company’s official identification numbers, such as the SIREN number and NAF (EPA) code. These numbers are essential for conducting legal and administrative operations in France.

If your application is incomplete, the Company Formalities Office will notify you of the missing documents. You will need to submit these documents within 15 working days.

How to Obtain a Siret Number and Siren Number

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Definition and Structure The Siren and Siret number are unique identifiers assigned to businesses and establishments in France.

  • Siren (Système d’Identification du Répertoire des Entreprises): A 9-digit number that uniquely identifies a company.
  • Siret Number (Système d’Identification du Répertoire des Établissements): A 14-digit number that includes the 9-digit Siren plus a 5-digit internal classification number (NCI) specific to each establishment.

Key Differences Between Siren and Siret Number

  • It identifies a company as a whole.
  • It is specific to each establishment within a company and includes geographical information.

For example:

  • A company with a headquarters and two retail stores will have one Siren number and three Siret numbers (one for each location).
  • An individual entrepreneur operating multiple activities under one company will have one Siren number but a separate it for each location.

How to Obtain a Siret Number and Siren Number

Siren and Siret numbers are automatically assigned when registering a business. This applies to:

  • Companies (any legal form)
  • Individual entrepreneurs, including micro-entrepreneurs
  • Foreign businesses operating in France

No separate application is required. Once the business registration is approved, the numbers are accessible via the declarant’s personal space on the Company Formalities Window.

Usage of Siren and Siret Numbers

  • It provides access to legal and financial information about a company. It must be displayed on employee pay slips, commercial documents, and administrative forms.
  • It identifies a business’s geographical location and is required on employee pay slips and company invoices.

Changes to Siren and Siret Numbers

  • It is permanent unless the business ceases operations (e.g., due to dissolution or the entrepreneur’s death).
  • It changes if a business relocates. The new number is issued through the Company Formalities Window.

Recovering a Lost Siret Number or Siren Number These numbers are public and can be retrieved via:

  • The Sirene Directory, which contains details on all registered businesses in France.
  • The Company Directory, which provides access to legal and financial information, including VAT numbers and EPA codes.

By consulting these directories, anyone can find the necessary identification details for businesses operating in France, including their Siret number.

How to Obtain an Extrait Kbis in 2025

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As of January 31, 2024, the extrait Kbis serves as an official document confirming a company’s registration in the Trade and Businesses Register (RCS) in France. This extract is essential for businesses to prove their legal existence. It can be obtained online, usually for free, but its necessity for various administrative procedures has decreased in recent years. This article provides a comprehensive guide on how to get an extrait Kbis and when it is still required.

When Do You Need an Extrait Kbis?

The extrait Kbis is primarily required by companies involved in commercial activities. The document must be recent, typically issued within the past three months. Individual companies (EI) or micro-entrepreneurs can obtain an extrait Kinstead, while commercial entities will need the extrait Kbis.

It’s important to note that handcrafted or liberal professions are not registered in the Trade and Businesses Register (RCS). These businesses are instead listed in the National Register of Companies (RNE). If your company is registered in the RNE, you can obtain an RNE extract, which serves as an equivalent to the extrait Kbis, and it is available for free from the Company Directory website.

Uses of the Extrait Kbis

The extrait Kbis serves as an official “identity card” for a commercial company, confirming its legal existence. Businesses typically need to provide this document for the following reasons:

  • Opening a professional bank account
  • Purchasing equipment or services from suppliers
  • Completing certain formal administrative procedures

However, many processes now accept a company’s Siren number or proof of registration with the National Register of Companies (RNE), which eliminates the need for an extrait Kbis. For example, you no longer need to submit an extrait Kbis when applying for public contracts or requesting a commercial exploitation authorization.

Contents of it

It provides essential details about the company, including:

  • Company name, abbreviation, or sign
  • Siren number
  • EPA (NAF) code
  • Legal structure (e.g., SARL, SA, GIE, SCI)
  • Amount of share capital
  • Company addresses (head office, any secondary establishments within the EU or EEA)
  • Business age and creation date
  • Detailed activity description
  • Website domain name
  • Contact details for executives, directors, and auditors
  • Information on mandatory authorizations for regulated professions
  • Court decisions in cases of safeguard, recovery, or liquidation procedures

Please note that many administrative processes now only require a company’s Siren number or proof of registration in the National Register of Companies (RNE) instead of it. This proof of registration can be downloaded for free from the Company Directory website.

How to Obtain it ?

There are several ways to obtain it for your company:

  1. Online Service (monidenum.fr)
    Company heads can obtain a free extrait Kbis using the monidenum.fr online platform. After creating a personal account and logging in, you can search by company name, Siren number, or manager’s name to download the extract.
  2. Infogreffe Website
    The Infogreffe website allows you to search for a company by entering the Siren number or company name. The document is available for a fee, depending on how it is delivered:
    • Electronic transmission: €3.20
    • Postal delivery: €3.85
  3. Commercial Court Registry
    You can also visit the registry of the commercial court where the company is domiciled to obtain it.

France Business Registry: The New National Register of Companies (RNE)

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Directorate for Legal and Administrative Information (Prime Minister)

As of January 1, 2023, the France Business Registry, officially known as the National Register of Companies (RNE), has become the sole registration body for all businesses operating in France. This reform centralizes company information, streamlining business registration and enhancing transparency.

A Centralized France Business Registry

Established under the 2019 PACTE Law and implemented by the Ordinance of September 15, 2021, the  (RNE) consolidates multiple business registers into a single, unified system.

What Businesses Are Included ?

The RNE covers all economic sectors, including:

  • Commercial businesses
  • Handicraft and artisan enterprises
  • Liberal professions (e.g., consultants, lawyers, healthcare professionals)
  • Agricultural businesses

Transition from Multiple Registers to the (RNE)

Business Activity

Previous Register

New Registry as of 2023

Commercial

National Trade and Businesses Register (NCR), Special Trade Officer Register (SFCR)

(RNE), NCR (additional), Special Register of Commercial Agents (additional)

Handicraft

Business Directory (RM)

(RNE)

Liberal Professions

No central register

(RNE)

Agriculture

Register of Agricultural Assets (RAA)

 (RNE)

All data submitted through the one-stop business registration portal (Formalites.entreprises.gouv.fr) is now automatically recorded in the (RNE). Businesses can access their registration details for free via DATA INPI.

What Information Must Be Provided?

Two decrees issued on July 19, 2022, outline the required details for business registration, modifications, and annual filings.

Entity Type

Required Details

Individuals

Full name, pseudonym, birth details, nationality, registration number (if applicable), address, contact information

Sole Proprietorships

Business name, trade name (if any), main activity, business address, website domain (if applicable)

Main Business Establishments

Business type, name, address, shared premises details (if any), main and secondary activities, start date, operational method

Legal Entities

Company name, legal structure, share capital amount, registered office, main activity description, statutory duration, website domain

Authorities with Access to it

Government bodies, including the Directorate-General for Public Finance, notaries, and regional economic authorities, have full access to RNE records.

Penalties for False Information in the France Business Registry

Providing false or misleading information can result in:

  • A fine of €4,500
  • Up to six months of imprisonment

France Business Registry: Registration Fees

Service

Fee (€)

New Business Registration (Individual & Legal Entities)

5.90

Modification (e.g., address change, business activity update)

5.90

Annual Accounts Submission

5.45

Document Filing for Legal Entities (e.g., amendments)

5.90

The Future of Business Registration in France

The France Business Registry (RNE) represents a significant step toward a simpler, more transparent, and efficientbusiness environment. By centralizing all company data, this system ensures better accessibility, reduced bureaucracy, and improved business oversight.

Whether you’re launching a startup, expanding an enterprise, or managing legal updates, the France Business Registry simplifies every step of business registration and compliance.

Société Anonyme (SA): Everything You Need to Know

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Verified by – Directorate of Legal and Administrative Information (Prime Minister)

The Société Anonyme (SA) is a legal structure suited for large-scale businesses aiming to go public.

Definition of Société Anonyme (SA)

A Société Anonyme (SA) is a commercial company that can operate in any industry except for certain regulated sectors (such as tobacco retailing and regulated liberal professions like doctors, lawyers, or accountants).

The minimum number of shareholders required is 2 (or 7 if the company is publicly traded). Shareholders can be individuals or legal entities (companies, associations). There is no legal limit to the maximum number of shareholders.

The Société Anonyme is particularly suitable for large businesses requiring significant capital beyond the means of a limited group of investors. It can raise capital publicly to finance major projects.

In return for their investment, shareholders receive shares that can be traded on the stock market, offering the potential for profits (dividends).

Capital Structure of a Société Anonyme (SA)

The share capital of a Société Anonyme (SA) must be at least €37,000, divided into shares. Contributions can be in cash or in-kind (assets such as equipment, real estate, patents, etc.). However, industry contributions (such as expertise or specific labor) are not allowed.

Shareholders’ financial liability is limited to their contributions, protecting their personal assets from company creditors.

At least 50% of the cash contributions must be paid at the company’s formation, with the remaining balance to be paid within five years of registration.

In-kind contributions must be assessed by an auditor, with their report submitted to the commercial court registry and made available to shareholders.

Governance of a Société Anonyme (SA)

Management Structures

The governance of a Société Anonyme (SA) can take two forms:

  1. Board of Directors
  2. Executive Board and Supervisory Board

Board of Directors

Most commonly, an SA is managed by a Board of Directors that defines business strategies and ensures their implementation. The Board conducts necessary controls and evaluations.

The Board consists of 3 to 18 members, who may be individuals or legal entities. Employee-elected directors and those representing employee-shareholders are not counted within this limit.

A Chairperson, elected from among board members, presides over shareholder meetings and has a casting vote.

Board members serve a maximum term of 6 years.

A CEO (Director General) is appointed by the Board or its Chairperson. The CEO is responsible for day-to-day management and represents the company in dealings with third parties. Up to five Deputy CEOs can be appointed.

Role of the General Meeting

The General Meeting plays a crucial role in decision-making, including:

  • Appointment and dismissal of board members
  • Appointment of auditors
  • Approval of financial statements
  • Distribution of profits
  • Amendment of company bylaws
  • Dissolution of the company

Ordinary resolutions are passed in an Annual General Meeting (AGM), while extraordinary resolutions (such as bylaw modifications) require an Extraordinary General Meeting (EGM).

Taxation:

Corporate Taxation

The Société Anonyme (SA) is subject to corporate tax (IS). It must file an annual corporate tax return (Form 2065) within three months of the fiscal year-end. If the fiscal year closes on December 31, the deadline is the second business day following May 1.

The corporate tax rate is 25% on taxable profits. A reduced 15% rate applies to SMEs with revenue under €10 million, whose capital is fully paid up and at least 75% owned by individuals. This lower rate applies to profits up to €42,500; profits exceeding this amount are taxed at 25%.

Taxation of Executives and Shareholders

  • Executives (CEO, Chairperson, Board Members): Salaries are taxed under personal income tax (IR) and are deductible from company profits.
  • Board Members: Remuneration (previously known as attendance fees) is taxed as investment income, subject to a 30% flat tax (12.8% income tax + 17.2% social charges).
  • Shareholders: Dividends are taxed under capital income, subject to a 30% flat tax. Shareholders can opt for income tax rates instead.

Social Security System for SA Executives

Executives (Chairperson, CEO) are considered salaried employees for social security purposes, giving them access to employee health and pension benefits. However, they are not eligible for unemployment insurance unless they subscribe to private coverage.

Board members only benefit from social security if they are remunerated.

Transfer of Shares in a Société Anonyme (SA)

Free Transfer of Shares

In principle, Société Anonyme shares are freely transferable without approval requirements. However, the bylaws can introduce restrictions, such as:

  • Approval Clause: Requires shareholders’ consent before selling shares to external parties.
  • Pre-emption Clause: Grants existing shareholders priority to buy shares before they are sold to outsiders.

In contrast, restrictions that completely prevent share transfers for a fixed period are prohibited.

Registration Fees

The transfer of shares incurs a registration fee of 0.1% of the sale price. If the company primarily owns real estate assets, this tax increases to 5%.

The minimum fee is €25.

Comparison: Société Anonyme (SA) vs. SAS vs. SARL

Feature

Société Anonyme (SA)

SAS

SARL

Minimum Shareholders

2 (7 if publicly traded)

1

1-100

Leadership

Chairperson + Board / Executive Board

President

Manager

Capital Requirement

€37,000

No minimum

No minimum

Capital Contribution

50% at formation

50% at formation

20% at formation

Corporate Tax (IS)

Yes, option for income tax

Yes, option for income tax

Yes, option for income tax

Executive Taxation

Salaries taxed under income tax

Salaries taxed under income tax

Salaries taxed under income tax

Executive Social Security

Employee status

Employee status

Self-employed or employee

Share Type

Shares

Shares

Units

Public Market Listing

Yes

No

No

Share Transfers

Free (approval possible)

Free (approval possible)

Subject to shareholder approval

Registration Fee

0.1%

0.1%

3% after €23,000 deduction

Determining the Nature of Your Business Activity as a Microentrepreneur in France

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Directorate for Legal and Administrative Information (Prime Minister)

If you plan to start a business as a microentrepreneur in France, determining the nature of your activity is crucial. Your classification affects tax obligations, regulatory compliance, and registration procedures. Understanding these distinctions helps ensure a smooth setup and adherence to the microentrepreneur France framework.

Types of Business Activities for Microentrepreneurs in France

Businesses in France fall into three main categories:

  • Commercial activities (e.g., trade, hospitality, services)
  • Crafts and artisanal businesses (e.g., skilled manual work, trades requiring expertise)
  • Liberal professions (e.g., consulting, coaching, intellectual services)

Certain activities, such as agriculture, do not qualify under the microentrepreneur France scheme.

1. Identifying a Commercial Business as a Microentrepreneur in France

Characteristics of Commercial Activities

A commercial business under the system involves:

  • Buying goods or products for resale at a profit
  • Providing services in hospitality, transport, entertainment, IT, or security
  • Leasing goods or services

Note: Only movable goods qualify for trade-related activities.

Do You Need a Diploma?

No specific diploma is required to operate a commercial business under the microentrepreneur France framework.

Is the Micro-Enterprise Model Suitable?

Yes, but revenue thresholds apply:

  • Services & Liberal Activities: €77,700
  • Trade & Hospitality: €188,700

Allowed vs. Excluded Commercial Activities

Allowed: Food trucks, delivery services, graphic design, photography, event DJing Excluded: Real estate agencies, pharmacies, opticians, tobacco shops

Who to Contact?

  • Registration: Business Formalities Window (Guichet Unique)
  • Chamber of Commerce and Industry (CCI) for guidance

2. Identifying an Artisanal Business as a Microentrepreneur in France

Characteristics of Artisanal Activities

To be classified as a craftsman under the microentrepreneur France regulations, your business must:

  • Appear on the official list of craft trades
  • Employ fewer than 11 people at creation
  • Require specific technical skills, proven by a diploma or professional qualification

Examples: Hairdressing, plumbing, pastry-making, taxi services, shoe repair

Is the Micro-Enterprise Model Suitable?

Yes, provided annual revenue stays within micro-business thresholds.

Who to Contact?

  • Registration: Business Formalities Window
  • Chamber of Trades and Crafts (CMA) for assistance

3. Identifying a Liberal Profession as a Microentrepreneur in France

Characteristics of Liberal Professions

A liberal activity primarily involves intellectual services, such as consulting or coaching.

  • Requires a diploma or professional qualification
  • Services are billed as fees rather than direct sales

Examples: IT consulting, translation, professional coaching, public writing

Is the Micro-Enterprise Model Suitable?

Yes, but regulated professions are excluded. Check the official directory of regulated professions for details.

Who to Contact?

  • Registration: Business Formalities Window
  • URSSAF handles micro-entrepreneurs in liberal professions

4. Unauthorized Activities for Microentrepreneurs in France

Certain activities are not eligible under the microentrepreneur France scheme, including:

  • Agricultural activities: Farming, equestrian training, farm tourism
  • Artist-author professions: Activities classified as artistic creations

Note: Horse boarding and equestrian shows are commercial activities, not agricultural.

Who to Contact?

For agricultural business registration, consult the Chamber of Agriculture.

Conclusion

Choosing the correct classification for your business is essential when becoming a microentrepreneur in France. This affects taxation, administrative obligations, and compliance with regulations. Consulting the relevant Chamber of Commerce, Chamber of Trades, or URSSAF is crucial for accurate guidance and successful registration under the microentrepreneur France system.

Starting a Business in France: Choosing the Right Legal Structure

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Directorate for Legal and Administrative Information (Prime Minister)

When starting a business in France, selecting the appropriate legal structure is a crucial step. Several factors must be considered, including the number of owners, the level of financial liability, tax obligations, and capital requirements. Below is a comparative analysis of different business structures available in France.

Comparison of Business Legal Forms

Business Type

Capital Requirements

Number of Owners

Liability

Taxation

Sole Proprietorship (SE)

Not applicable

Not applicable

Limited to business assets

Income Tax (IR), optional Corporate Tax (IS)

Single-Member LLC (EURL)

No minimum

1

Limited to capital contribution

IR, optional IS

Limited Liability Company (SARL)

No minimum

2-100

Limited to capital contribution

IS, optional IR for some cases

Single-Person Simplified Joint-Stock Company (SASU)

No minimum

1

Limited to capital contribution

IS, optional IR for five years

Simplified Joint-Stock Company (SAS)

No minimum

Minimum 2

Limited to capital contribution

IS, optional IR for five years

Public Limited Company (SA)

€37,000 minimum

Minimum 2 (private), 7 (public)

Limited to capital contribution

IS, optional IR for five years

General Partnership (SNC)

No minimum

Minimum 2

Unlimited, jointly liable

IR

Limited Partnership (SCS)

No minimum

Minimum 2 (1 general partner, 1 limited partner)

Unlimited for general partners; limited to contributions for limited partners

IR, optional IS

Limited Partnership by Shares (SCA)

€37,000 (€225,000 if publicly traded)

Minimum 4 (1 general partner, 3 limited partners)

Unlimited for general partners; limited to contributions for limited partners

IS

Detailed Overview of Business Structures in France: Starting a business in France

Sole Proprietorship (SE)

For individuals wanting to start a business in France, a sole proprietorship is the simplest form. It does not require share capital or corporate formalities. However, the business is not a separate legal entity, meaning financial liabilities are attached to the owner.

  • Liability: Business debts are limited to professional assets, offering some protection for personal assets.
  • Taxation: Income is taxed under personal income tax (IR), with an option to elect corporate tax (IS).
  • Social Security: The entrepreneur falls under the self-employed social security scheme, with contributions calculated based on revenue.

Single-Member LLC (EURL)

An EURL is ideal for entrepreneurs looking for limited liability while operating alone in France’s business environment.

  • Capital: No minimum requirement; contributions can be cash or in-kind.
  • Liability: Limited to the amount of capital invested.
  • Taxation: By default, income tax (IR) applies, with an option for corporate tax (IS).
  • Social Security: The owner is considered self-employed unless a third-party manager is appointed, who is treated as an employee for social security purposes.

Limited Liability Company (SARL)

A SARL is a common choice for small and medium-sized enterprises (SMEs) starting a business in France.

  • Ownership: Requires at least two partners, up to 100.
  • Liability: Limited to capital contributions.
  • Taxation: Generally subject to corporate tax (IS), with an optional income tax (IR) election for newly created family-owned SARLs.
  • Social Security: Depends on shareholding—majority managers are self-employed, while minority managers are under the general employee scheme.

Single-Person Simplified Joint-Stock Company (SASU)

A SASU is a flexible corporate form for sole business owners, particularly attractive for those starting a business in France with growth ambitions.

  • Capital: Freely set by the owner.
  • Liability: Limited to contributions.
  • Taxation: Corporate tax (IS) applies by default, with an optional income tax (IR) election for up to five years.
  • Social Security: The president is classified as an employee, benefiting from standard employee protections, excluding unemployment insurance.

Conclusion

When starting a business in France, selecting the right legal structure is essential to ensure compliance, manage liability, and optimize taxation. Entrepreneurs should evaluate their specific needs and, if necessary, consult a legal or financial expert to make an informed decision. By understanding the available business structures, foreign and local entrepreneurs can set up a successful company in France with the most suitable legal framework.

Can a Foreigner Open a Company in France?

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If you are a non-European national living abroad and wish to open a company in France, there are specific procedures you must follow. As a foreign entrepreneur, you must first apply for a visa before moving to France. Once you arrive, you can apply for a residence permit to live and work in the country. The type of residence permit you need will depend on the type of business activity you plan to undertake.

Steps to Open a Company in France

  1. Visa Application
    Before you can open a company in France, you need to apply for a visa. Once you arrive in the country, you will need to apply for a residence permit.
  2. Residence Permit Options
    There are two primary types of residence permits available for entrepreneurs in France who want to open a company:
    • Temporary Residence Card: Entrepreneur/Professional
      This permit is typically issued for 1 year. To be eligible, you must:
      • Prove that you have a viable business project.
      • Demonstrate that your business activity complies with public safety, health, and welfare regulations.
      • Show that you have sufficient financial resources, equivalent to €21,203.
    • Multi-Year Residence Card: Talented Passport – Company Creator
      This permit is issued for up to 4 years. To qualify, you need to:
      • Provide proof of a real, viable business project that will be economically sustainable.
      • Show that you have an investment of at least €30,000 in your company.
      • Have a Master’s degree or equivalent, or at least 5 years of professional experience in a similar role.
      • Prove that your resources meet the required minimum amount, which is also €21,203.

How ESCEC International Can Help

Navigating the process of establishing a business and opening a company in France as a foreigner can be complex. ESCEC International provides expert guidance and support through every step of your entrepreneurial journey. From visa applications to residence permits and business registration, our team can ensure that you meet all the necessary requirements and comply with French regulations.

Whether you are planning to launch a startup or take over an existing business, we can assist you in securing the right visa, preparing your business plan, and connecting you with local resources to make your venture a success.

Professional Capital Gains Exemption France

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When selling your business in France, you may qualify for a Professional Capital Gains Exemption under certain conditions. This tax benefit, outlined in Article 238 quindecies of the French General Tax Code, allows business owners to be fully or partially exempt from capital gains tax on the sale of their business, provided the value of the assets transferred does not exceed €1,000,000.

This exemption applies to a range of professional business activities, offering significant tax relief for entrepreneurs looking to sell their business, whether it’s a sole proprietorship or a complete business unit.

Eligibility for the Professional Capital Gains Exemption in France

Who Qualifies for the Exemption?

To benefit from the Professional Capital Gains Exemption France, the seller must meet specific criteria:

  • Sole proprietors,
  • Managers of partnerships subject to income tax (IR),
  • Partners in partnerships subject to IR, provided they are actively involved in the business,
  • Companies subject to corporate tax (IS).

Eligible Business Activities
The exemption is available for businesses operating in various sectors, including commercial, industrial, artisanal, liberal, or agricultural fields. It also applies if the sale involves a management lease contract, where the assets are sold to the lessee or another party under the terms of the contract.

Requirements for the Professional Capital Gains Exemption

  1. Duration of Activity
    The seller must have been actively involved in the business for at least 5 years, either through direct participation or in the case of a management lease, the business must have been running for at least 5 years at the time of transfer.
  2. Business Transfer Criteria
    The sale must involve a monetary or gratuitous transfer of the business or a complete business unit, and the value of the transferred assets must not exceed €1,000,000. The valuation of assets can include the agreed sale price, market value, capital charges, and indemnities benefiting the seller.
  3. Complete Business Unit
    The sale of a complete business unit (meaning an independent, operational group of assets) is eligible for the exemption, provided that the buyer continues the business operations. This exemption also applies to companies subject to corporate tax, given they meet the criteria for small and medium-sized enterprises (SMEs) under EU law.
  4. Control and Dependence
    The seller must not have direct or indirect control of more than 50% of the buyer’s company after the sale, nor hold an active managerial role.

Exemption Scope and Calculating Your Exemption

The Professional Capital Gains Exemption France applies to both long-term and short-term capital gains. However, the exemption does not cover real estate capital gains.

Full or Partial Exemption
The exemption is full if the value of the transferred assets, excluding real estate, does not exceed €500,000. If the value is between €500,000 and €1,000,000, the exemption is partial.

Calculation Formula for Partial Exemption
The exemption rate is calculated as follows:

1,000,000−value of assets transferred500,000500,0001,000,000−value of assets transferred​

For example, if the sale price is €750,000:

1,000,000−750,000500,000=0.5500,0001,000,000−750,000​=0.5

Thus, the capital gain will be eligible for a 50% exemption.

Combining Exemptions for Maximum Benefit

The Professional Capital Gains Exemption France can be combined with other tax reliefs, such as:

  • Exemption for retirement-related capital gains (Article 151 septies A),
  • Exemption based on business size for small businesses with certain revenue thresholds (Article 151 septies of the General Tax Code),
  • Exemption for property held for business use (Article 151 septies B).

These exemptions can be strategically combined to maximize the relief available on capital gains taxes during a business sale.

Final Thoughts on Professional Capital Gains Exemption France

For entrepreneurs selling their business in France, understanding the Professional Capital Gains Exemption is crucial. This exemption offers significant tax savings, provided that the sale meets the conditions outlined in the French tax code. Whether you’re selling a sole proprietorship or a complete business unit, leveraging this exemption can help you retain more of the proceeds from your sale.

If you meet the eligibility requirements, don’t miss out on this valuable tax benefit that can significantly lower your tax burden. With the proper planning and advice, the Professional Capital Gains Exemption France can be a powerful tool in optimizing your business sale.