TYPES OF COMPANIES UNDER FRENCH LAWS
2.1 -PARTNERSHIPS
The main type of partnership is the general partnership, created by a private writing or a writing in front of a
notary. There is no minimum capital required by law. Articles of association are registered to the register of commerce and all
partners, who may not be less than two in number, are tradesmen jointly and severally responsible of
liabilities.
All partners are to agree to allow share's disposal. The partnership is managed by one or more than one administrator who may not be a legal
entity. The partnership is not a taxable entity; partners are taxed personally upon their share of result depending on distribution provided for in
statutes.
2.2 - BUSINESS CORPORATIONS (SARL: Société A Responsabilité Limité)
Business corporations are neither a limited company, nor a partnership company whereas partners responsibility is limited to the amount of their contribution. Partners are to be 1 to 50 and a minimum capital (7
500 €) is
required. Share's disposal is not free and capital must be fully paid-up at the incorporation of the
company. The corporation is managed by one or more than one administrator who may not be a legal
entity. Partners approve Financial Statements once a year and statutory auditing is required only when certain turnover, total assets
or Head count limits are
reached.
2.3 - LIMITED COMPANIES (SA: Société Anonyme)
Disposition of shares of limited companies is free. Incorporation and operating formalities are different depending on whether public saving is called or not.
Shareholders, who may not be less than 7, are not tradesmen and their responsibility is limited to the amount of their contribution. Minimum capital amount (37
000 € or 225 000 € when public saving is
called) must be fully called when the company is incorporated although only one - fourth may be
paid-up. The remaining part must be paid-up within 5 years. The articles of
incorporation can be a private writing or a writing in front of a
notary. Shareholders approve Financial Statements once a year within 6 months after the closing date.
Limited companies should have a statutory auditor and a second one is required under certain conditions. When public saving is
called, the company is subject to the control of the Commission des Operations de Bourse.
Two types of limited companies exist: limited companies with a unique board of directors or limited companies with a body in charge of administration and direction and a body in charge of management control.
TAXATION
3.1 - CORPORATE INCOME TAX
French company tax is payable by all capital companies, whatever the nature of their business
activities. The standard rate is usually 34,33 %,
25 % for Small companies and the rate is 19% for certain capital gains arising from the disposal of fixed
assets. Enterprises subject to French company tax must fill in tax return within three months
after the closing
date of their accounting
periods. Moreover, except for the first two years of their existence, they must make an annual payment by 15 March, which depends on the turnover. Some tax credits may offset company
tax, such as research tax credit, professional education tax credit. Company tax paid by a company which distributes
dividends is deductible for taxpayers who receives this securities
income under conditions.
Civil companies for construction of buildings aimed to be sold are exempted if all members assume unlimited
liability. Each member is taxed on his pro rata share of profits, provided all members assume unlimited
liability. Industrial companies created to operate exclusively in certain regions are exempted from company tax for 10
years, and new businesses generally may enjoy a reduced rate exemption. Certain joint-venture arrangements are taxed like partnerships
(tax is charged on the members according to their own tax statut). Parent companies, i.e. companies having at least a 10% interest in another company, are entitled to deduct from their taxable profits nearly all of the dividends received from their
subsidiaries.
3.2 - INDIVIDUAL INCOME TAX
Individual income tax is based annually on the total net income of individuals and
households. The tax basis is obtained by adding net revenue for each category (real
property, industrial and commercial profits, remunerations of company officers and
directors, agricultural profits, wages and salaries, non commercial profits, investment
incomes, individuals' construction profits) determined according to particular rules applicable to
each
category, and by subtracting from the total, deficits and deductible expenses. French-source dividends and bond interests including all tax credits received by French tax residents are exempted up to the extent of an annual
legal
ceiling.
Income tax rate is progressive, but the "family quotient" system makes allowance for each taxpayer's
dependent person. This system reduces actual rates when there is at least one dependentperson. Tax returns are filed voluntarily each year by
taxpayers, by 1 March, and are controlled by tax services. Tax
Assessment satements for a given year's income are issued 15 September of the following
year. However, when income tax for the prior year exceeded 296 €, instalment payments are due by 15 February and 15 May. Monthly payments are also possible upon election by a
taxpayer.
Some particular provisions exist, such as exceptional or deferred revenues, taxation based on conspicuous lifestyle or taxation for individuals not living in France.
All incomes of residents for tax purposes are taxable wherever their source with the exception for employees on foreign
assignments. For non residents for tax purposes, only incomes arising in France are liable. However
fiscal agreements often superseded this common law provision.
Taxable income in principle is that of a calendar year, but an individual engaged in an
commercial
LABOR LAW
4.1 - IN GENERAL
Employment contracts are usually in writing and contracts can be entered for a fixed or an indefinite period of time. Both types of contracts may contain a trail period which is not presumed and whose duration is chosen by parties under the respect of applicable clauses. During this trail period either party may terminate the agreement without any further notice and without any severance
payment.
Under limits, employment contracts may be entered for a fixed period only in some cases provided for by law.
Contracts for a fixed period automatically expire at the end of the period without any notice being
required. Contracts for an indefinite period of time can be terminated only by giving prior notice. To terminate a
contract, an employer must respect applicable procedures in two stages: a conciliation stage and a justified notification to the
employee. When dismissals are more than 10 in 30 days, the employer must notify his project to the departmental director of labour, after having consulted
workers' representative.
In France, there is a legal minimum wage. This amount is currently about 6,83 €
per hour. A vacation allowance equal to 10 percent of the annual salary is also compulsory by law after a one year working
period.
The legal working week is 35 hours in 5 days. In some cases it can remain 39
hours pers week. Maximum working hours, rest periods, overtime shift systems are regulated by law and by collective
labour agreements.
4.2 - SOCIAL SECURITY
Public social security plan insure against expenditures with regard to illness,
maternity, old age, disability, death, family allowances, unemployment
allowances, occupational hazards. This plan is applicable to employees in the
industrial, commercial and craft fields as well as professionals and people working for non-profit organisations. Employers and employees share the payment of required contributions calculated as gross wage's
percentages. Employer is responsible for the payment of his share and for the payment of the
employees' withheld share.
BANKING AND FINANCE
Instruments are widespread in France, not only for international
trade, but also for dealing between firms. To reduce manipulation costs, some forms subject to data processing have been perfected
(turned-up bills of exchange and turned-up promissory notes).
Very short term titles, said money market titles, have been developed in France since 1985 and firms have been authorised to issue commercial
papers.
Organisations are divided between banks, allowed to receive consumer's deposits and financial institutions, not allowed to do it. Upon this
basis, an architecture has been built with the following specialities:
* deposit and business banks among which more than 160 are subsidiaries or agencies of foreign banks
* financial institutions which lend money but do not receive deposits. Some of them are even more
specialised. We may not quote each institution, but the main ones are:
- building contractors' branch
- national credit whose main object is to grant long term financing to industry
- equipment credit to small and middle size firms
- regional development societies.
* mutual and union networks
* savings and provident banks
* specialised public or semi-public institutions.
