Running a small business in France

General Discussion
1

Hello All


I am hoping for some insights and advice from some experienced expats.


I would like to live and work in France, However I have limited options available to me as one, I am a non EU citizen and two,I am over 30 so can't get a student visa.


I am thinking one way is to buy a business.. It is going to be impossible to get sponsorship as I don't work for a large multi national. I want to live in a small ski town in the Alpes.


I don't think an auto-entrepreneur will work for me either.


I was thinking of trying to partner with a local in small cafe / restaurant maybe. I have met a few different people in the village in the Haute Maurienne. A have a friend who maybe able to introduce me to a few people.


I was wondering if anyone has any experience in running a business in France and dealing with all the taxes etc.


On top of that I'd have to deal with all the other issues, Carte de Sejour, getting into the health system, getting a tax number, banking etc


My french is above basic, and it improves pretty quickly. I stayed in France for 6 months last year an it improved a lot. My accent even got better.


I'd love to hear what some experienced people think.



thanks, Ashley



2

Ralph has beaten me to it but said it all. I run a pme, my wife is my associée and we have one employee. You can't get round the 48% charges sociales to the RSI, that's not négotiable, tax isn't a great problem in France, it's the charges sociales that are crippling, although it doesn't help to be taxed on top. That's why most people, including me, talk about 60% to the state: 48% in charges sociales and 12% tax. More when you really go in to all the ins and outs. the RSI will probably want 6 000€ out of you in your first year as a "forfait" and that isn't dependant on income, even if you lose money you'll have to pay...! I'd try and get a job, seasonal work, whatever to get into the system and give yourself time to get to understand France, how it works and more importantly what doesn't work!

Bonne chance !

3

Ashley i wish you luck , being part of a small community is nice.

France is a great place to live if you can accept that they have one of the most progessive tax regiemes in Europe , perhaps the World , where they load social costs on business.

I have spoken to many people who have set up small business in France , they have all struggled and in many cases found better opportunities to make more money for their efforts in other countries like UK, Switzerland , Portugal , who understand how business works and what support they need to grow and prosper.

I would advise you seek employment first with a restaurant ? cafe? first then look at the amount of business they generate so you can see over a year, the real opportunity.

Small businesses fail in France due to cash flow,usually because they can't afford to pay for the RSI. This can be a real burden as in January they demand the first q payment upfront ie before you have earnt this money.

If you employ somebody the social costs can be 60% of salary , RSI , Pension etc, its also very difficult to dismiss people .

If you have taken 20 k salary from the previous year the RSI will demand 9600/4 = 2,400 Eu In January

This comes out of the business but affects cash flow especially if you have made no profit from last years trading.

If you have a partner , wife her social medical costs are covered by the business (RSI you pay) and you have 2x tax allowances (so you can earn up to approx 19,000 Eu /yr )before paying personal tax)

Sorry the accountants wont be able to minimise the tax you pay !

If you could let me know what business and T/O you would generate, i could give you a more accurate

fig on the costs.

4

It is the Haute Maurienne valley I would like to do something in, the Savoie. I don't think it will be possible to get employment as it's seasonal work. Winter and Summer with slow periods in between. Tourism, and construction, energy are the main employers I'd imagine.

5

Also I love Switzerland also, however I've been visiting the Haute Maurienne in the alpes for a few years nows and have gotten to know the valley and few people really well. That has been the reason to try an do something there as I know a few people and it would make meeting people and fitting in a bit easier.

6

Yes this is kind of what I am thinking. To take on a local to help navigate the French system and taxes etc. I don't think its going to be possible unless you know some people very well.

7

I've been to Haute Maurienne several times now, so I know the good and bad points about the valley. And it was the remoteness that I was attracted to. Being part of a small community.

8

Thanks for the honest feedback. I had started to become aware of all the taxes in my research. Surely having a good accountant can help to minimize the tax you pay?

It sounds tough to make it work in France?

I guess I'd fallen for a small part of the Alps and hoped to run a small business and be able to enjoy the mountain life in the off periods.

9

Hi Ashley,

I am looking forward to hearing responses to your query.

Although I have ZERO experience with running a small business in France I think my approach may interest you. I am an American francophile with advanced though not perfect French. My thinking is very similar to yours, and for the past year or 9 months I have been inventorying various types of business with the idea that I will "buy myself a job".

Here are my observations so far:

  • Taxes per se are not the primary concern, since taxes are basically due in any country, no matter what you do. It's not the amount of the taxes that is important, unless you have a philosophical problem with paying taxes. Rather, it is the process, frequency, paperwork and timing that would make the difference.
  • Hiring and hosting an employee comes in at about 2x the cost in the US. As far as the periods of vacation -- those have to be covered. Many many people in France -- both French and foreign -- hire workers on an informal or part time basis, and thus sometimes avoid a lot of paperwork, not to mention expense. I am not familiar with the laws around part time labor, or the penalties associated with under-the-table labor.
  • Tourism industry seems prevalent and growing, and seems an appropriate entry for non-French working in France.
  • Once you become a resident and a tax-paying business owner, you should qualify for the French medical system.
  • I am learning the rules connecting part- or full-time residency with business ownership. In many countries, including the US, you are automatically placed on the path to residency if you purchase a self-supporting business in the country. In the US, this does not make you a citizen, but qualifies you as a resident.

My own approach to buying a business and finding a partner or partners is this: I pay for the business and the building; my partner invests with 'sweat equity' if he/she has no capital. For example, I am prepared to buy a hotel-restaurant, but I am not a chef and I have not managed a restaurant. This means I need a partner who does that.

I hope this helps even a little bit - I will appreciate reading what becomes of you and your plans.

Ciao.

10

Hi Ashley ,

I see that Andrew and John have given good advise , let me share my experience an put some more detailed costs for you to consider .

France is a great country to live in , has a good social support system, good housing and medical care .

it seems that you have a passion for working in the mountains , so my advice would be to consider working for an employer there. Depending on where you wish to live you might be able to find a job easier in the English speaking resorts Ie , 3 valleys area , Courchevel , Meribel, Val Thorens or Near Mont Blanc areas, chamonix , Megeve , Morzine ,these are very popular for the Brits.

Have you considered setting up a business in Switzerland , Its much more biz friendly, less red tape, Beaurocracy .

Zermatt, Verbier, Crans Montana, are popular brit sking areas.

You will need a a local person living in Switzerland who will be your business non salaried director .

Companies can help you with this but usually charge 4-5000 Chf year for this service .

Should You go ahead In France

Setting up an SARL in France for your small biz, consider the following costs

Accountant , (cost approx 3,500+ eu year )

Business Set up costs approx 4,000-5000 EU Notaire etc )

Insurance indemnity (legal indemnity cost approx 80 Eu month up to cover of 0.5million eu)

Bank account /charges cost 30-40 eu monthly fee + other money transfer costs

Your carte vitale. (medial insurance)(they will ask which regieme you want )

You have to register for Vat (TVA) and charge your customers 20% for most services although there are other applicable rates.

For a Sarl you can put in 3,000 Eu ,as share capital to start the business .

If you area registered Director You need to pay for private insurance In case of chomage ,

can be up to 25% of your salary depending on which biz you are doing .

If you have to close the business down in case of financial difficulties, and are a director ,you will not qualify for unemployment benefit chomage In France ??? so without insurance you get nothing , whereas if you are an employee you are entitled to chomage after 2 years employment and this can be up to 70% of salary for a period of 2 years, depending on your age.

TAXES

RSI , Regieme Social Independants :-

This is the killer of most small business in France as you have to pay each Quarter upfront based on the salary you took the previous year , if your business is down you still have to pay ,if you pay late, they fine you another 10% of the cost.

The RSI fees costs are 48% of what you take as salary,

Personal taxes, you get an allowance of approx 9,000 Eu prior to tax.Personal tax is a sliding scale ranging from 12-70% depending of how rich you are .

Professional taxes another 500-700 EU year. +

Tax on your house , French taxes Fonciers + Taxes audio visual these are deependant on where you live and if you own the house or are a tennant.

biz Corporate taxes approx 12-20% of profit the company makes.(This may have changed now to an even higher rate )

You used to be able to take a dividend and just pay 12-20% personal taxes now they charge you the RSI 48% so you are effectivly taxed 60%.

So In sumary if you are ok with paying yourself a very low salary, to exist its ok.

Good Luck , let me know how you get on , i am a keen skier , and also love the mountains.

I still live in France and its a fantastic place to live , i just wish that the French government understood that small companies grow into larger ones , taxing small single owner companies that can't afford to reinvest , kills enterprise.

11

Fraid to say sounds like a huge headache -

to start with non AE 's have a minimum cotisation to pay regardless of chiffre d'affaires which is pretty high, plus add rental/tax on premises etc. I have 3 friends - non AE all that have closed their businesses this year simply because it wasn't financially viable. Add in your personal circumstances (ie not being EU, not having a titre de séjour) it seems pretty un doable to me to be honest.

(ps I am myself a small business owner, both commercant and, as secondary activity, teacher - all as an AE )

12

You might want to consider the following: how are you going to get the money to buy the business? how are you going to make sure that the business is viable? how are you going to go into partnership without knowing the ins and outs of the legal system? how are you going to live between seasons? are you a chef?

I know the Maurienne, and, frankly, it is far from being a goldmine although the prices are almost as high as in the Tarentaise. Honestly this project is going to require some careful thinking over, especially if you are considering purchasing shares in a restaurant without the capital and without being a professional.

13

You will stand more chance of getting a seasonal job if you look for a job in an ‘English language’ ski resort. Not being fluent in French will be less of a negative and having some French will be seen as a big plus. Don’t expect much in the way of a salary though as you will be competing with gap year students and the like.

14

Once you get over the fact that the state will be taking around 60% of what you earn it isn't too bad! Having said that, it's far better being salaried in France than running a small business (earnings, hours, protection etc.) but unemployment is high, you need to be fluent to stand a chance of being interviewed and more often than not need the relevant qualifications for almost any job. If you have an area in mind then local contacts will be the best bet and simply ask ;-)