IR Global – Meet the Members – France

France: A potent mix of economy and culture

France is world famous for its culture. It is one of the great democracies, responsible for everything from artistic masterpieces and important literary works, to revolution and everything in between.
But, while it may be tempting to imagine France as simply a place of museums, art galleries and fine dining – there is also a powerful economic engine beneath the Gallic hood. France is a modern, efficient economy at the heart of Europe with a multitude of attractions for foreign investors.

The country is one of the most powerful members of the European Union and the Eurozone, with full access to the European Single Market and its 500 million consumers. It’s central location and excellent transport infrastructure make France an ideal location to service those consumers, plus others in the wider European area and North Africa.
Aside from its influence in Europe, France has an affluent domestic market of almost 70 million people and has already demonstrated its attractiveness to foreign investors with a range of initiatives to encourage and support investment from both large and small companies.

Figures from Business France, an organisation supporting small and medium-sized (SME) businesses, show that there were 25,000 foreign-owned subsidiaries in France in 2016 and over 1,000 foreign direct investment (FDI) projects. The data suggests that foreign companies already contribute 16 per cent of the total value of the French economy and are responsible for 30 per cent of all French exports.
This level of investment does not come about without a concerted effort from both the private sector and government to provide the right legislative framework and business environment to allow commerce and entrepreneurship to thrive.
The French Government has put in place a number of initiatives to encourage FDI. Figures from the French Ministry of Europe and Foreign Affairs show that France has signed tax conventions with over 120 countries, for the avoidance of double taxation. It has also provided companies with a single contact for tax matters (Tax4Business) and adapted flexible residence permits.
France has also issued a Responsibility and Solidarity Pact, which commits the government to help with economic growth by reducing tax and labour costs for companies and simplifying legislation, in order to help with job and wealth creation.

In accordance with this mandate, France has adopted the European Commission’s Competitiveness and Employment Tax Credit (CICE) aimed at reducing employment costs. It has also passed legislation on the simplification of running companies, which entered law in December 2014, enabling companies and users to make aggregate annual savings in the region of EUR 3 billion.
While the government is playing its part, the private sector also makes FDI attractive in France. France Invest is a body that unites and represents all areas of the French private equity industry, and provides funding for credible operations in the country. Figures from France Invest show that, in 2015, EUR 10.7 billion was invested by its members in about 1,645 businesses, 78 per cent of which were SMEs and 21 per cent mid-cap companies. Overall, 314,000 jobs were created by French private equity backed companies between 2010 and 2014 (net of jobs destruction), mainly in France.

Forward-thinking bodies like France Invest have had a dramatic impact. For the first time ever, in 2017, France took the crown from the UK as Europe’s top venture capital hub, with EUR 2.7 billion funds raised.
France is also at the cutting edge of technological development and the economy is very receptive to research & development in a range of high technology fields. Innovative technology companies receive strong backing through the government’s National Investment Program, and, by achieving the internationally-recognised ‘La French Tech’ accreditation, companies can access private and public sector support through specialist ‘La French Tech’ hubs. Several cities across France have been designated as ‘tech cities’, including Lille, Lyon, Paris, Nantes, Grenoble, Toulouse and Bordeaux. The world’s biggest start-up campus, Station F in Paris, catered for over 1,000 start-ups in 2017.
Of course, any investors considering France as a destination for development or expansion will need professional advisors with the expertise to help them to take advantage of every assistance the country offers, from tax incentives to employment legislation.

The following pages contain contributions from eight French lawyers, with expertise in different areas of French law that affect companies. They discuss issues that investors should be aware of, such as changes to tax and employment legislation, insurance intermediation, insolvency, legislation directly affecting FDI, as well as developments in attorney/client privilege.