SETTING UP IN. France FACTS & FIGURES

Transcription

1 SETTING UP IN France FACTS & FIGURES

2 02 NIS Global is an international group of independent accounting and advisory firms set up to provide mutual clients with support as they establish and maintain operations outside their home country. Services provided by member firms include: Advice on requirements for doing business Entity registration Human resources and payroll Accounting, bank accounts, monthly reporting Year-end compliance and reporting Taxation US GAAP and IFRS Mergers and acquisitions

3 corporate income taxes 03 GENERAL TAX RATES FOR 2014 Standard rate 33.3% Reduced rate 15%* *Applies to small and medium sized companies (SMEs). SMEs are defined as having a turnover less than EUR 7,630,000, being at least 75% owned by individuals or companies qualifying as small and medium size companies and having fully paid up share capital. The first EUR 38,120 of profit is taxed at 15% and the balance of profit at 33.33%. FRENCH ACCOUNTING ENTRY FILE (AEF) A new law enters into force as from January 1st, 2014 regarding French Accounting Entry File. Accounting entries concerned: 1. The file must include all book-entries in all of the ledgers (detail of accounting entries), and not the aggregate entries in the general ledger. The file must comply with French GAAP. 2. Book-entries must be sorted by chronological order. 3. The file includes carry-forward entries and contains for each entry all accounting data included in the electronic accounting system. Non-compliance with this rule may imply a 0.5% penalty, based on turnover. SOCIAL CONTRIBUTION FOR MEDIUM-SIZE COMPANIES A 3.3% social contribution (CSB) is levied on CIT of companies whose turnover exceeds EUR 7.63 million and whose corporate income tax exceeds EUR 763,000.

4 04 TAX LOSS CARRY FORWARD Tax losses can be carried forward indefinitely but may only be offset against the taxable income for a given period to the extent of EUR 1 million plus 50% of the taxable income for that period. LOCAL ECONOMIC CONTRIBUTION TAX (CET) CET is composed of two elements: 1. Corporate property contribution (CFE), based on the value of real estate and 2. Contribution for value added of companies (CVAE), based on the added value (tax). CET is capped at 3% of a company s value added. Some exemptions are available. TAX INCENTIVES R&D. Credits of 30% are given on qualifying expenditure up to EURO 100 million and 5% on any excess. The credit can be carried forward for 3 years and if not fully used within those 3 years then the company can receive a tax refund. Innovation Tax Credit. SMEs (companies with less than 250 employees and sales less than EUR 50 million) qualify for an innovation tax credit. This is calculated at 20% of qualified expenses and capped at EUR 400,000. Patent Box. Income relating to patents or patentable rights may benefit from a 15% tax rate. Capital gains realized on patents or patentable rights held for at least 2 years may also be eligible. Payroll-related incentives. A payroll tax credit (CICE) is available based on the wages of employees earning less than 2.5 times the minimum wage. It is calculated at 4% (increasing to 6% in 2014). Other schemes are available. Regional tax incentives. Tax exemptions and rebates are available to businesses establishing or expanding in specific locations.

5 05 COMPANY CAR TAX (TVS) Company car tax is due quarterly for any car owned or used for more than 30 days in the year. The tax is payable annually and ranges from EUR 750 to EUR 4,500 depending on the vehicle. The tax is not deductible for corporate tax computations. TAX FILING AND PAYMENT DEADLINES Companies subject to French Corporate Income tax (CIT) must file an annual CIT return. The return includes balance sheet information as well as a P&L statement. The return must be filed within three months after the end of the financial year. Four instalments are payable during the financial year. The final CIT payment must be made by the 15th of the fourth month following the end of the fiscal year. Failure to comply triggers a 10% to 40% penalty. Late payment interest of 0.40% per month may also apply.

6 value added tax (VAT) 06 VAT IS A TAX ON SUPPLIES OF GOODS OR SERVICES Standard rate on most goods and services 20% Intermediate rate (includes restaurants, passenger transport and other items) 10% Reduced rate (applies to supplies relating to 5.5% basic necessities) Businesses must register and charge VAT on sales. However, exports of goods outside the EU are completely exempt from VAT. VAT is normally a neutral tax for businesses and is ultimately borne by end user consumers. Businesses merely collect VAT on their sales and deduct the VAT which they have paid on purchases. If companies have paid more VAT than they have collected, the difference is refunded on request. VAT returns are usually filed and paid monthly or quarterly between the 15th and 23rd of the following month. EU Sales Lists are required detailing cross border supplies of goods between registered EU businesses within the EU. Further monthly analysis of Sales (Dispatches) and Purchases (Acquisitions) is required under the Intrastat System. The Annual threshold for Acquisitions is EUR 460K but there is no threshold for Dispatches.

7 personal income tax 07 INCOME TAX IS A PERSONAL TAX PAID BY RESIDENTS ON BUSINESS PROFITS, PAYROLL INCOME AND OTHER INCOME Income tax is based on family income, and ranges from 0 45%. An exceptional contribution tax applies at a rate of 3% on income between EUR 250K and EUR 500K and at 4% on income above EUR 500K (the above bands refer to a single taxpayer, doubled bands apply to married couples). There is currently no income tax withholding on payroll income. Income tax returns are filed within five months after the calendar year end. Income tax is paid either monthly or by instalments (February, 15 and May, 15). Each instalment equals to 1/3 of the previous year s tax. The balance has to be paid on September, 15. Monthly instalments equal to 1/10 of previous year s tax. Balance is paid in the last months of the calendar year. An annual wealth tax applies to individuals with a net worth over EUR 1.3 million. Taxable wealth from EUR 800,000 is taxed by layers from 0.45% to 1.5%. The maximum overall annual tax liability for income, wealth and local taxes cannot exceed 75% of that year s income. local and council tax Owners must pay a tax based on the assessed rental value of their dwellings as at 1st of January each year. Occupants must also pay a dwellings tax based on a deemed rental value. Amounts due can differ significantly between localities.

8 payroll tax 08 EMPLOYERS DEDUCT SOCIAL SECURITY FROM SALARY AND MAKE PAYMENTS TO THE SOCIAL SECURITY OFFICES Social security charges are levied on both employer and employee. Employers are responsible for deducting the employee element from gross salaries. RATES FOR 2014: Non executive Executive BENEFICIARY INSTITUTIONS Employee Employer Employee Employer Social Security (including maternity benefit)* 9.00% % 9.00% % Unemployment* 2.40% 4.30% 2.40% 4.30% Pension (main)* 6.80% 8.45% 6.80% 8.45% Pension (complementary)* 12.80% 19.16% 12.66% 20.02% Health insurance (including occupational injury fee)* Variable rate Variable rate Total average cost for the employer from 15% to 40% From 40% to 50% *Individual types of deduction may be assessed on different bases and may or may not be capped. Other minor employer contributions may apply including those for transport, accommodation and training. Social security is payable to the tax authorities by the 15th of the following month on a monthly or quarterly basis. Payroll taxes are summarised and reported by the end of January each year for the prior calendar year.

9 accounts filing 09 COMPANIES There are three main forms of company: Public Limited Company (SA), Simplified Public Limited Company (SAS) and Private Limited Company (SARL). The SARL is the most common form of international subsidiary. Annual financial statements include a balance sheet, income statement and annual notes, and must be prepared within three months following the year end. The General Shareholders Meeting for approval of the accounts must take place within six months following the year end of the company. Accounts are filed within 30 calendar days from the date of their approval. Filing deadline: PREPARATION, ADOPTION, AUDIT, DISCLOSURE (assuming December 31st year end): Corporate Income tax return: April 30th (within 3 months for noncalendar financial years) General Meeting: June 30th + 6 months Filing with the Trade Register: July 30th + 7 months AUDIT Some company structures (SA and SAS belonging to a group) always require statutory auditors. SARLs are usually exempt from audit if two of the following three criteria are met: Turnover Balance Sheet Employees million 1.55 million

10 subsidiary 10 OR BRANCH OFFICE? Status SUBSIDIARY COMPANY Separate French legal entity Ownership Overseas parent can own directly or indirectly through holding company Control Controlled by its board of directors Scope of activities Defined in the company s articles Corporate Limited to value of paid-up share capital Liability Entity Establish a registered office Incorporation or Check the company name for availability and validity Registration Obtain long stay visas and residence permits for non EEA directors Open a bank account and deposit the required share capital Issue shares Appoint legal representative and, if necessary, auditors Complete application form M0 and prepare associated documentation File a request for company registration with the Centre de Formalités des Entreprises (CFE) Publish a notification of incorporation in a legal gazette Purchase special accounting books from the Commercial Court or authorized shops Register with an employee retirement plan On-going obligations Maintain accounts and records Filings and registrations relating to changes to constitution, directors, shareholders etc. Accounts approval by shareholder meeting within six months after year end Filing of financial statements and tax returns and payment of corporate and other taxes

11 11 FRENCH BRANCH A French branch is normally a permanent establishment in France and has its own decision making powers No independent legal status. A branch is part of the parent company Part of the overseas company A branch may carry out all the operations mandated by its overseas parent company A branch does not have limited liability protection. Therefore the parent company is fully liable Establish a registered office Appoint a representative with power of attorney to represent & manage the Branch Prepare/collect the documentation required for Branch registration File a request for foreign company (branch) registration with the CFE. Including application M0 form File a declaration with the tax authorities if the investment is over EUR 1.5 million and provide a statement certifying that no criminal convictions are held & an affiliation certificate if the parent is from a non-eu country Purchase special accounting books from the Commercial Court or authorized shops. Register with an employee retirement plan Maintain branch accounts and records File its foreign parent company s annual accounts & a French translation with the Companies Register each year

12 12 LIAISON OFFICE STANDALONE REP Status A liaison office is not a separate No legal status and no legal entity and has no permanent establishment in permanent establishment in France France Ownership Part of the overseas company Part of the overseas company Control Controlled by overseas Head Office Controlled by overseas Head Office Corporate Liability Employers are liable for the payment of social charges Employees are personally liable for the payment of social charges Scope of activities Liaison offices can only conduct non-commercial preparatory or auxiliary operations such as market research, advertising and storing merchandise. They cannot carry out commercial activities Entity Company registration is Incorporation automatic with the social or registration Registration Social Security registration required Form M0 needed + original employment contract signed (preferably in French). On-going obligations Payment of payroll-related contributions and other relevant taxes Standalone can only conduct non-commercial preparatory or auxiliary operations such as market research, advertising and storing merchandise. They cannot carry out commercial activities Company registration is automatic with the social registration Social Security registration required Form M0 needed + original employment contract signed (preferably in French). Payment of payroll-related contributions and other relevant taxes

13 employment law 13 LEGAL CONSIDERATIONS Work and residence permits Nationals of all EU/EEA States and Switzerland can work without restriction in France. For all other nationalities a full work and residence permit must be acquired. Employment contract There are 3 contract types: CDI (unlimited term), CDD (fixed term) & Part Time CDI. A written job contract is strongly recommended, preferably in French. Labour regulations Based on employment contracts, legislation and collective agreements. Minimum wage EUR 9.53 per hour Legal working hours Maximum of 35 hours per week. The working day cannot exceed 10 hours but may be extended to 12 hours under a collective agreement. Managerial staff classified as autonomous can work more than 35 hours a week, but are given extra holidays. Legal minimum vacation Two-and-a half working days leave for each month worked, i.e. five weeks of paid leave per year worked. Employee representation Companies with at least 11 employees must have elected employee representatives. Companies with 50 or more employees must also have an elected works council.

14 NIS Global Head office Highlands House Basingstoke Road Spencers Wood Reading Berkshire RG7 1NT United Kingdom e: San Francisco office Suite # Spear St San Francisco California United States e: For further information, please contact Pete Doyle on +44 (0) at our UK Head Office; or Doreen Davis-Owen on +00 (1) at our San Francisco office DISCLAIMER: This booklet is intended for general guidance only. It cannot cover every situation and should not be used for decision making without professional advice. The authors accept no responsibility for loss arising from any action taken or not taken by anyone using this publication. PUBLISHED 01/2014