When starting a business in France, you will have to choose a legal form to help define the tax regime of your company and to carry out your professional activity.
Depending on the activity, the type of project, the number of associates or shareholders combined, among other considerations, the choice of the company will lead to a legal form that will be the most suitable for it.
The individual enterprise
It is a type of company made up by a single associate, often referred to as self-employed.
Such an enterprise has no legal existence distinct from its owner and has no separate legal entity nor patrimony. In other words, as the single associate is the sole owner of the business, it is he who gets all the profits and, if any, the one who suffers all the losses.
Single-associate companies
An entrepreneur can create a single-associate company. It will be an EURL or a SASU. Unlike the individual company, an EURL and a SASU have a separate legal entity independent of that of the entrepreneur. The entrepreneur has the status of single-associate and his financial responsibility is limited to the liability of the company. A single associate has the option to subject his company to both tax regimes: the income tax (known in France as IR) or to the corporate tax (known as IS), whereas in an individual company, the only option is to be subject to the income tax.
Multi-associate companies
Multi-associate companies are, as their name suggests, companies with multiple associates. They have the society status and therefore, the company has a legal entity. They may operate according to a civil or commercial form depending on the nature of the activity performed.
The best-known multi-associate companies are public limited companies (called société anonyme or SA in France), limited liability companies (société à responsabilité limitée or SARL), simplified joint stock companies (société par actions simplifiée or SAS) and general partnerships (société en nom collectif or SNC).
The limited liability company (SARL)
The SARL is constituted by at least two associates and a maximum of one hundred. It also assumes the existence of a share capital, which will be determined by the associates in a general assembly. In case of making their contribution in cash, it is possible to release only one fifth of the capital at the time of the constitution of the company and pay the remaining within five years from the registration of the company. This legal form allows all the associates to limit their responsibilities to the amount of their respective contributions.
It’s important to note that a SARL can be created from only one euro as capital. However, the total amount of liability should be in accordance with the activity carried out.
The Public Liability Company (SA)
A public liability company (SA) is a capital enterprise consists on the operation of major accounts and companies wishing to enter the stock market. The SA must have at least 7 shareholders and it is constituted with a minimum capital of 37,000 euros. A SA is represented by a general director and it must have a supervisory body, responsible for representing the shareholders' general assembly, defining with them the business strategy, and controlling the actions carried out by the executive power.
The Simplified Joint Stock Company (SAS)
The SAS is constituted with a share capital freely determined by the shareholders in the statutes of the company. At the moment of its creation, half of its capital can be released if the shares correspond to contributions in cash (the release of the remaining capital has to be made within five years).
This particularly flexible legal form allows the partners to organize precisely, in the statutes, the functioning of the society.
The General Partnership (SNC)
This legal form is rarely chosen by a multi-associate company because it has the disadvantage of not protecting the personal patrimony of the associates, who are indeed fully responsible for the debts of the company with their personal property. It can be constituted without a minimum amount of capital by at least two associates who have the status of trader. It is managed by one or more directors. With regards to the tax regime, a SNC is normally taxed according to the income tax unless otherwise specified at the moment of its creation.
FAQs
France has a dual system in place regarding its laws. One branch of the system is known as droit public, or public law. This branch defines the principles of operation of the state and public bodies. The other branch, known as droit privé, or private law, applies to private individuals and private entities.
What is the legal structure in France? ›
France has a dual system in place regarding its laws. One branch of the system is known as droit public, or public law. This branch defines the principles of operation of the state and public bodies. The other branch, known as droit privé, or private law, applies to private individuals and private entities.
What is the legal form SA in France? ›
Société anonyme (S.A.) is a French term for a public limited company (PLC) and has many equivalents all over the world.
What is the difference between SAS and SARL in France? ›
The founders of a SARL are called “partners”, the shares of this company being social shares, whereas the partners of a SAS are “shareholders”, the company being made up of shares. A SARL will have a Manager and a SAS will be headed by a President.
What is the difference between SAS and SASU? ›
A SASU is a commercial company similar to a EURL, a SARL or a SA. More precisely, a SASU is a Société par Actions Simplifiée (SAS) with only one partner. The SASU can be called a "single shareholder SAS" or in French "SAS à associé unique".
What legal system does France use? ›
The French system of law is a Civil Law system. This is different from the Common Law system of the United States and Britain in that, among other differences, a French court will apply relevant codes and regulations to the parties and facts before them with little reference to prior case decisions.
What government structure is used in France? ›
France has a semi-presidential system of government, with both a president and a prime minister. The prime minister is responsible to the French Parliament.
What is the legal form of SARL in France? ›
A Société A Responsabilité Limitée (SARL) is the most popular company structure in France. This legal structure is very simple as it only requires two partners who are liable up to the limit of their capital contribution.
What is the legal form se? ›
The European Company – also known as SE (Societas Europea in Latin) – is a type of public limited-liability company that allows you to run your business in different European countries using a single set of rules.
What does SAS mean in France? ›
Société par actions simplifiée (SAS; simplified joint-stock company in British English or simplified corporation in American English) is a French type of business entity.
Société à responsabilité limitée (English: society of/with limited responsibility), a French name designating a type of business entity.
What does GmbH mean? ›
GmbH is a German abbreviation for “Gesellschaft mit beschränkter Haftung,” meaning “company with limited liability.” GmbH—equivalent to Ltd. (limited), used in the United Kingdom, or LLC (limited liability company) or Inc. (incorporated), used in the United States—is the most common form of incorporation in Germany.
What is the difference between SARL and SA? ›
The number of partners and the starting capital
For starters, the most notable difference concerns the number of shareholders. Indeed, an SARL can be created by a single person and will rather be named EURL. For an SA, on the other hand, a minimum of 7 partners is required.
Is SAS still used today? ›
SAS is still a key building block of Data & Analytics
SAS Software has been applied these last decades to almost any kind of business problem in every industry. There are no limits given the large choice of analytics techniques provided by SAS from descriptive to predictive and prescriptive analytics.
What are the two types of SAS? ›
The following are the four types of SAS software.
- SAS for Windows. SAS offers the following features in Windows. ...
- SAS Enterprise Guide. The SAS enterprise guide is a graphical user interface that helps with the writing processes and assists you with unknown or new procedures. ...
- SAS Enterprise Miner. ...
- SAS STAT Software.
SAS licenses are known to be expensive so it makes it difficult for individuals and small businesses to use or scale. On the other hand, R is open source. In other words, it's free to use.
What is the organizational structure of France? ›
France is a republican State and a parliamentary democracy, often qualified as semi-presidential. The Parliament is bicameral and is made up of the National Assembly (Assemblée nationale) and the Senate (Sénat).
What is the hierarchy of law in France? ›
French legislation follows a hierarchy of norms (hiérarchie des normes). Constitutional laws are superior to all other sources, then treaties, then parliamentary statutes (loi), then government regulations. Legislation enacted by orders (ordonnances) and regulations issued by the executive under Art.
What is the structure of the French court? ›
The administrative courts in France
The administrative courts are divided into three tiers: First instance courts – administrative courts (Tribunal administratif) Intermediate appellate courts – administrative courts of appeal (Cour administrative d'appel) Courts of last resort – the Council of State (Conseil d'Etat)
What is the structure of the local government in France? ›
Three tiers of local government
In France there are three main tiers of local administration: the commune, department and region. These are both districts in which administrative decisions made at national level are carried out and local authorities with powers of their own.
