Investing in France | Practical Law

Investing in France | Practical Law

A Q&A guide to investing in France.

Investing in France

Practical Law Country Q&A w-023-7805 (Approx. 18 pages)

Investing in France

by Aurélie Dantzikian and Manon Pourcher, LAMY LEXEL (First Law International Member Firm)
Law stated as at 01 Dec 2019France
A Q&A guide to investing in France.
This Q&A gives an overview of the key factors affecting inward investment, including information on the jurisdiction's legal system; key laws and regulatory authorities; investment restrictions; and details of international treaties, customs and monetary unions. The guide also provides information on investor individuals; visa permits; restrictions on foreign ownership; transfer pricing and thin capitalisation rules; imports and import duties; safety regulations and standards for commercial goods and services; structuring and tax incentives; investment guarantees; recent developments and proposals for reform.
To compare answers across multiple jurisdictions, visit the Investing in... Country Q&A tool.
This Q&A is part of the Investing in…Global Guide. For a full list of contents, please visit

The market

1. How does your jurisdiction compare internationally as a destination for inward investment?

Secure business and political climate

France welcomes foreign investment and has a secure business and political climate that attracts investors from around the world. President Macron's election in 2017 has boosted foreign investors' trust in France's economy and France's increase in attractiveness for foreign investment has been spectacular. France is once again a leading European country for foreign direct investment (FDI), particularly in the industrial sector.
France has an educated population, first-rate business schools and a talented workforce. It boasts sophisticated financial markets and strong intellectual property protections. The country is also well known for its high-speed passenger rail, maritime ports, road networks and public transportation infrastructure.
In February 2019, France enacted a charter between the French central government and the French regional governments. Under the terms of this charter, the French national and local authorities agreed to make every effort to encourage foreign investment, and to facilitate and support foreign investment projects. The charter mobilises local and national actors to support foreign investors through from the identification of projects to their realisation.
Increasing foreign investment in France is of paramount importance for both the French state and the regions. It is a key driver of economic and social reforms, as foreign companies based in France make up 21% of employment in industry, 20% in research and development (R&D), and account for 30% of French exports.

Strengths and weaknesses

France is one of the top ten world economic powers and has many attractions for foreign investors, including:
  • A strategic geographical location in the centre of Western Europe.
  • A developed tertiary/services sector (including tourism).
  • A vast industrial base and strong agricultural production capacity.
  • Leading infrastructure and quality public services.
  • A skilled and productive workforce (France rates the second highest in Europe in terms of hourly productivity) with dynamic demographics.
  • An investment-friendly business environment and a stable and transparent legal framework.
  • A diversified economy that is full of a wide range of players ranging from large multinationals to high-tech start-ups.
The main obstacles to attracting foreign direct investments in the French economy are the persistence of relatively high corporate tax rates and labour costs.

Tax incentives

French law has many tax incentives to attract new businesses and foreign investors. These take the form of tax credits and exemptions at both a national and regional level, and include:
  • A corporate tax exemption or reduction during the first years of an investment.
  • In certain areas in France, such as urban enterprise areas (zones franches urbaines), local authorities can provide full or partial temporary exemptions from the local economic contribution (contribution économique territorial) (CET) to companies that set up or expand their operations or take over ailing businesses.
  • An R&D tax credit (crédit d'impôt recherche) for eligible R&D expenses (see Question 25).
  • Cinema and audio-visual production companies that pay corporate tax can obtain a tax credit for their production expenditures.

Labour market liberalisation

Although France is reputed to have a complicated and constraining labour market, labour costs have been significantly reduced thanks to recent reforms simplifying employment laws, including in relation to dismissal procedures. Dismissal procedures now include a scale of mandatory termination damages that provide security and transparency to both employees and companies. These reforms have also improved industrial relations by merging different employee representative bodies and restructuring business sectors. This allows for better collective negotiations and greater scope for collective agreements at the micro level.

Business environment simplification

Many recent reforms have been aimed at revitalising the national economy and attracting foreign investors. The most significant reforms include the following:
  • The number of administrative formalities for the establishment of foreign companies has been reduced.
  • The establishment of a EUR20 billion tax credit programme (competitiveness tax credit), abolition of the solidarity tax, and creation of the research tax credit and incentives for young innovative companies.
  • A project to create new labour legislation to support vocational training and add more flexibility to the labour market.
  • Foreign companies have been given access to the same subsidies as French companies (support for productive investment, R&D, vocational training, job creation and so on).
  • Several measures to simplify administrative procedures have also been introduced so that, for instance, a company can now incorporate in as little as six days (see Question 29).
  • Strong digital and paperless measures have also been implemented. There is no longer a need to submit original copies of most documents to numerous administrations. In particular, the French commercial courts registry now accepts electronic signatures and documents. Similarly, the number of tax accounting and publishing requirements for companies has been greatly reduced.
2. What types of companies are attracting foreign investment into your jurisdiction and what are the most active sectors?
According to the latest available data from the 2019 Ernst and Young European Attractiveness Survey, France is ranked second (after the UK) in the Top 20 European foreign direct investment destination countries in 2018.
France is a very innovative country. With domestic research and development spending equal to 2.2% of GDP, France ranks sixth in the world according to the World Competitiveness Yearbook 2018 (behind the US, China, Japan, Germany and Korea). The five main R&D investment sectors are:
  • Cars.
  • Aircraft and spacecraft manufacturing.
  • Pharmaceuticals.
  • Scientific and technical activities.
  • It and information services.
France specialises in growth areas such as biotechnology and environmental technologies.
In 2018, seven French actors featured in the ranking of the world's 100 top innovators (the Atomic Energy Commission, Alstom, Airbus, Safran, Saint-Gobain, Thales and Total).
France hosted 144 R&D centres in 2018 (up 85% on 2017), making it the most attractive destination for innovation investment in Europe. France is taking on a key role in the European R&D and innovation economy according to the 2019 EY Attractiveness Survey, and attracts more projects than Germany and the UK combined. France was the leading recipient of R&D activities in Europe in 2017. It attracted 16% of the R&D centres on the continent, compared to 15% in the UK and 12% in Germany. France was also Europe's leading recipient of foreign investment in industry, particularly in:
  • The agri-food sector.
  • Knowledge-intensive sectors such as consulting and financial services.
In 2017, the government set itself the goal of making France a "Start-up Nation", and, on 15 January 2018, created a fund of EUR10 billion to finance innovation, which will be funded by sales of public assets.
The most attractive sectors for foreign investment in France are the following (
  • Healthcare. France is the European leader for patent applications filed in the healthcare sector (CSIS, 2016).
  • Aerospace. The French aerospace sector was worth more than EUR60 billion in 2016, growing at over 4% a year (Gifas).
  • Food. France's agri-food sector is the world's fourth largest exporter with EUR44,2 billion in food exports (
  • Robotics. France is number one in Europe for the number of start-ups specialising in designing service robots (World Robotics, 2017).
  • Automotive. France is the leading EU country for sales of electric vehicles (ACEA, 2016) and is also the only country in western Europe to produce batteries.
  • Information technology. France is Europe's leading producer of video games (VG Chartz, 2017). France is also ranked number one for the cheapest ultra-highspeed broadband connectivity in Europe (DG Connect, 2017).
  • Chemical industry. France has the second largest chemical industry in Europe, with total revenues of EUR75 billion, and annual chemical sector R&D expenses amounting to EUR1,8 billion (UIC, 2018).
  • Cleantech. France is the second largest European producer of wood fuel (ADEME), the second largest European market for wind power (WindEurope) and has the largest hydroelectric capacity in the EU (Observer).
  • Financial services. France has the biggest stock exchange in the eurozone, with Euronet Paris reaching EUR3.6 trillion compared to Deutsche Börse's EUR1.8 trillion. France is also home to the eurozone's top financial markets for venture capital and of 31 of the world's 500 largest companies (Fortune Global 500).
  • Logistics. France has the largest road network in Europe, with more than 1 million km of roads, as well as the second largest railway network in Europe and the second most extensive high-speed rail network
The banking and financial market is also very important for France's appeal. Since Brexit was announced, 41 firms have chosen Paris as their post-Brexit location. However, different cities have different strengths. While 43% of Luxembourg's new residents are asset management firms, 41% of the new residents in Paris are banks.
3. What will be the main factors affecting the market and how do you expect the market to develop?
The election of President Macron has undoubtedly boosted the French economy. French economists anticipate a sharp increase in purchasing power in 2019 thanks in particular to measures obtained by the "yellow vest" popular movement, which will expand purchasing power. The drop in the price of oil will further increase these gains. The latest Organisation for Economic Cooperation and Development (OECD) projections anticipate economic growth to continue at around 1.5% in 2019 and 2020. These projections are consistent with those of the International Monetary Fund (IMF), who forecast a GDP growth of 1.5% for France in 2019, compared to 1.3% for Germany. Surveys and reports reveal that positive financing conditions and business tax cuts will boost investment despite slowing external demand. Lower labour taxes, a more flexible labour market and improved training opportunities will help job creation, notably for low-skilled workers, which will support household consumption. Core inflation will improve, underpinned by the strengthening of the economy and an increase in wages.

Legal system

4. What are the constitutional arrangements and legal system.


The current constitution, the Fifth Republic, was enacted by referendum in 1958. The political system is semi-presidential. The President, elected by universal and direct vote, chooses and revokes members of the Government, including the Prime Minister. Parliament is composed of the National Assembly and the Senate. The National Assembly is elected by universal and direct vote and the Senate is elected by indirect vote. The Government is composed of a cabinet of various other ministers (appointed by the President, on being proposed by the Prime Minister) who supervise various public departments.
The Prime Minister is responsible for the Parliament. The President has the power to dissolve the National Assembly and the Government, and has a great deal of power over the legislative procedure. If the President and the Parliamentary majority are not in line, the French concept of "cohabitation" applies where the system works as a Parliamentary system, where the Prime Minister takes precedence over the President, including in the appointment of members of the Government.
The separation of powers extends to the existence of a dual judicial system, where there is a judicial system for criminal and civil matters, and an administrative justice system for matters between public authorities and private parties.

Legal system

The French legal system is based on civil law. While case law is not generally considered to be as important as in common law systems, the role of case law in the French legal system has grown, and is used to interpret and adapt statutory law.
The French legal system is organised into a dual judicial system that includes:
  • Ordinary courts that handle criminal and civil litigation between private parties.
  • Administrative courts that handle litigation between public authorities and private parties.
A special court deals with conflicts between both judicial systems.
French civil law is based on the Code Napoléon originally drawn up in 1804, and is known as the Civil Code.
French business and economic laws and regulations are governed by the Civil Code and the Commercial Code.
5. What are the key laws and regulatory authorities governing foreign investment in your jurisdiction?
The French government maintains legal monopolies through public service companies in sectors such as:
  • Rail (RFF).
  • Public transport in Paris (RATP).
  • Tobacco manufacturing and distribution (Altaldis).
  • Nuclear plants (EDF).
  • Defence.
  • Aerospace.
Investments in French companies are unrestricted other than in these legal monopolies and in certain sectors where authorisation is required. There are two national authorities for foreign investment:
  • The French Central Bank, which requires a notification for all transactions exceeding EUR15 million. This notification is for statistical purposes only and remains confidential.
  • The Minister of Economy, which requires investors to submit a request if the target company is involved in the exercise of official authority or operating in specific business areas mentioned in Article L.151-3 of the French Monetary and Financial Code and its related decrees. These specific areas were recently modified in November 2018 and vary according to the nationality of the investor.
EU or EEA foreign investors. An investment carried out by a EU/EEA foreign investor requires prior authorisation from the French government when it concerns one of the following sectors:
  • Private security activities, such as private security services provided to public or private operators of vital importance, directly and specifically participating in security missions in airports and ports, or taking place in reserved or protected areas of national defence.
  • Research, development and production of:
    • pathogen agents, zoonoses, toxins, their genetic elements and their translation products (as mentioned in Annex I of Regulation (EU) 428/2009 on the control of exports, transfer, brokering and transit of dual-use Items (Duel-Use Regulation));
    • means to fight against agents prohibited by the Chemical Weapons Convention of 13 January 1993.
  • Dealing in devices to intercept communications and remotely detect conversations (as allowed under the French Penal Code).
  • Services in relation to the security evaluation and certification of IT systems operated by state agencies or bodies.
  • Production of goods or supply of services in the IT security sector by a company doing business with a private or public operator of infrastructure of vital importance.
  • Dealing in dual-use items and technologies used by companies involved in national defence.
Non-EU/EEA foreign investors. An investment carried out by a non-EU/EEA foreign investor requires prior authorisation from the French government when it concerns one of the following sectors:
  • Gambling.
  • Private security (such as surveillance, guarding, CCTV or cash transportation).
  • Research, development and production of means to fight the illicit use in terrorism of pathogens or toxic agents.
  • Dealing in devices to intercept communications and remotely detect conversations (as allowed under the French Penal Code).
  • Services in relation to security evaluation and certification of IT systems operated by state agencies or bodies.
  • Production of goods or supply of services in the IT security sector by a company doing business with a private or public operator of infrastructure of vital importance.
  • Dealing in dual-use items and technologies used by companies involved in national defence.
Both EU/EEA and non-EU/EEA foreign investors. Both EU/EEA and non-EU/EEA investors require prior authorisation from the French government for investment in the following sectors:
  • Certain cryptology activities.
  • Companies with access to national defence secrets.
  • Weapons, ammunition, military explosives, war equipment and associated equipment (as defined by the French Defence Code).
  • The activities of companies that have entered into an agreement with the French Ministry of Defence to study, design or supply equipment, a product or service (directly or through subcontractors) in the sectors above.
  • Activities dealing with devices, products, and services essential to preserve the interests of the country in relation to public order, public safety or national defence, including in relation to the security and proper functioning of infrastructure and equipment. Under Decree No 2014-479 of 14 May 2014, these activities include the protection of public health and protection of the integrity, security and safety of supply/operation of:
    • the electricity, gas, hydrocarbons and other energy resource sectors;
    • the water sector;
    • transportation networks and services;
    • telecommunication networks and services;
    • infrastructure of vital importance.
If in doubt, a potential investment can be sent to the Minister of Economy to verify whether it is subject to authorisation or other special requirements.
6. Is your jurisdiction a member of any international treaty organisations and/or economic, customs or monetary unions or free-trade areas?
France has signed bilateral and multilateral trade agreements within the framework of international organisations such as the:
  • World Trade Organisation (WTO).
  • OECD.
  • EU (France was a founding member of the EU in 1958).
France has also concluded various bilateral investment treaties (BITs) securing foreign investments. Its most important network of treaties are those administered by the EU.
Under Article 3 of the Treaty on the Functioning of the European Union (TFEU), the EU has jurisdiction over:
  • Customs matters.
  • Monetary policy for member states whose currency is the Euro.
  • The common commercial policy.
The EU has signed international trade treaties with emerging countries and regions such as:
  • The MERCOSUR nations (Argentina, Brazil, Paraguay, and Uruguay).
  • India.
  • Malaysia.
  • The Association of Southeast Asian Nations (ASEAN).
In the past few years, the EU has focused on signing the next generation of free trade and investment pacts with industrialised countries. These agreements aim to cover additional fields of international trade law such as intellectual property and environmental law.
The main example of these further agreements is the Comprehensive Economic and Trade Agreement (CETA) signed by the EU and Canada in 2016 and ratified in France on 23 July 2019.
7. What other international agreements apply to foreign investment?
France has signed bilateral tax treaties with more than 100 countries.
Foreign investors can benefit from the International Centre for Settlement of Investment Disputes established by the Convention on the Settlement of Investment Disputes between States and Nationals of Other States 1965 (ICSID Convention). This treaty allows foreign investors to settle investment disputes between contracting states and nationals of other contracting states.

Investor individuals

8. Are there any visas, permits or other requirements for foreign individuals entering your jurisdiction for business purposes?
Non-EU nationals intending to work in France must obtain a work permit, a visa authorising them to work or a residence permit.
9. Are there any visa waivers or fast-track procedures available for foreign individuals entering your jurisdiction as investors?
Investors can benefit from a specific permit known as the Talent Passport for Economic Investors. To obtain this permit the investor must:
  • Make a direct economic investment personally or through a company they manage or in which they hold at least 30% of the capital.
  • Create or safeguard, or undertake to create or safeguard, employment within four years of making the investment in France.
  • Make or undertake to make an investment of at least EUR30,000 in tangible or intangible fixed assets in France.
10. What are the circumstances under which an individual becomes liable to pay tax in your jurisdiction? Can individuals be liable for tax on foreign-source income?
Individuals are considered residents for French tax purposes if they:
  • Live with their family in France.
  • Spend most of their time in France.
  • Carry on their main profession, occupation or employment in France.
  • Have the centre of their economic interests in France.
Unless otherwise provided by an international tax treaty, French resident individuals are taxed on their total global income.
Unless otherwise provided by an international tax treaty, non-residents are taxed on their French income only.

Investment restrictions

11. Are there any restrictions on foreign ownership and investment in specific industry sectors? Do any formalities, permit or notification requirements apply?
Non-EU and non-EEA nationals must obtain an authorisation to invest in certain types of activities, see Question 5.
12. Does the government retain and exercise control over certain industry sectors? If so how?
The government maintains control over sectors considered to be public services or relevant to national sovereignty such as national defence, justice, civil protection, social security, public hospital services and education.
If these services are not fully state-run or part of the administration, the government can sign a public service delegation contract with a private company and maintain control under the terms of that agreement.
13. Are there restrictions on foreign ownership or occupation of real estate? Do any formalities, permit or notification requirements apply?
There are no restrictions on foreign companies owning real estate in France. However, foreign investors must meet some tax obligations.
Foreign companies with registered offices outside the EU/EEA that own and use real estate in France can be requested by the French tax authorities to appoint a fiscal representative in France. If the business qualifies as a "real estate property company" (société à prépondérance immobilière), this representative is necessary when the real estate or the shares of the company are sold.
14. Are there any minimum capital requirements for foreign investment?
There are no specific requirements for foreign investments. A joint stock company (société anonyme) (SA) must have a minimum share capital of EUR37,000. The share capital of a simplified joint stock company (société par actions simplifiée) (SAS) and limited liability company (société à responsabilité limitée) (SARL) can be freely determined by the company bye-laws and can amount to a symbolic EUR1.
15. Are there any exchange control or currency regulations? Are there any restrictions on the remittance of profits abroad?
There are no exchange control or currency regulations under French law nor any restrictions on the remittance of profits abroad.


16. Are there any restrictions on the importation of commercial goods?
The following products are subject to an import ban:
  • Counterfeits.
  • Objects of any kind containing pornographic representations or images of minors.
  • Asbestos or products containing it.
  • Products containing certain hazardous substances (such as lead salts or nickel).
  • Plants, plant products and other products (such as bark, seed, soil and growing media).
  • Animal foodstuffs or food of animal origin that are subject to prohibitions under French or EU health regulations.
  • Polycarbonate baby bottles made from 2,2-bis(4hydroxyphenyl) propane (also known as bisphenol A).
  • The skins or furs of cats and dogs and any products containing them.
17. What import duties apply to commercial goods?
Imports are not subject to customs or import duties within the EU. However, commercial goods acquired from another EU member are subject to Value Added Tax (VAT).
Imports from outside the EU are subject to VAT and are payable in accordance with the Common Customs Tariff in force in the EU, decided at the EU level.
18. Are the safety regulations and standards applicable to commercial goods in your jurisdiction compatible with other standards that are recognised internationally?
France is one of the leading countries in the world in terms of product quality and product safety.
As France is a member of the EU, the safety regulations and standards applicable to commercial goods are drawn from the relevant EU legislation, including:
  • Directive 85/374/EEC on liability for defective products (old Product Liability Directive), implemented in French law through Law No 98-389 of 19 May 1998.
  • Directive 2001/95/EC on general product safety (General Product Safety Directive), implemented in France by decree No 2004-670 of 9 July 2004.
As such, French safety regulations regarding commercial goods are compatible with EU regulations and are recognised internationally.
19. Are there any similar or equivalent restrictions on providing services into another jurisdiction?
There are no restrictions on providing services into another EU country.
However, for certain professional services (professions réglementées), such as legal, medical, or financial/banking services, individuals must demonstrate that they have the same level of qualification in their home country before pursuing their profession in another EU member state.

Structuring and tax

20. How is foreign investment into your jurisdiction typically structured? What forms of legal vehicle are attractive to foreign investors?
Foreign companies commonly use a representative office as a first step in establishing a presence in France. The foreign company may then wish to establish a branch in France before incorporating a subsidiary, that is, a legal entity separate from the parent foreign company that takes one of the legal forms offered by French law.
There are numerous company structures under French law, but trading companies generally take one of the following forms:
  • Simplified joint stock company (société par actions simplifiée) (SAS), which offers flexible corporate and governance structures allowing the partners to freely set specific rules in the company bye-laws.
  • Limited liability company (société à responsabilité limitée) (SARL), which can be used as a cheaper alternative to the SAS. However, due to its strict legal framework, which does not allow much flexibility, a SARL is generally unsuitable for businesses with an external growth strategy.
  • Joint stock company (société anonyme) (SA), which is used for larger companies as its governance is strictly governed by law. This is the only one of these company forms that can be publicly listed.
Other options for foreign investment include contractual agreements such as:
  • Joint-venture agreements.
  • Distribution agreements.
  • Franchise agreements.
  • Commercial agency agreements.
21. What are the circumstances under which a business becomes liable to pay tax in your jurisdiction?
A corporation is considered to be a French tax resident if its headquarters, as set out in its articles of incorporation, are in France, or its place of effective management is in France.
A corporation is considered to operate a business in France if it has any of the following:
  • An autonomous establishment in France.
  • A dependent agent empowered to act on behalf of the non-resident business in France.
  • A complete cycle of activity in France (for example, manufacture and sale of a product).
22. What are the main business tax rates?

Corporate income tax (CIT)

The income tax base is territorial. Profits are subject to French CIT only if derived from:
  • A business operated in France.
  • Real-estate assets located in France
  • Activities taxable in France under a double tax treaty.
For 2019, the standard rate of CIT is 28% for the part of net income under EUR500,000 and 31% for the part of the net income over EUR500,000. If the company has a turn-over higher than EUR250 million, the standard rate of CIT is 33.33% for the part of the net income over EUR500,000. For 2020 the standard rate of CIT will be 28% and will be 25% by the end of 2021.
Four quarterly instalment payments are mandatorily scheduled throughout the financial year. The final payment is scheduled on the 15th day of the fourth month following the closing of the financial year.

Territorial economic contribution (local taxes)

Companies engaged in a business in France are subject to the territorial economic contribution (CET) consisting of two distinct taxes, capped at 3% of the added value of:
  • The real property contribution that is assessed on the rental value of the company's immovable assets.
  • The contribution on the added value that is assessed on the added value produced by the company.


Supplies of goods and services in France are subject to the VAT at a standard rate of 20%, unless reduced rates or exemptions apply. As a general rule, if a business (resident or non-resident) makes taxable supplies in France for which it is liable to pay the VAT, it will be required to register and account for the French VAT.
As a general rule, a taxable person can recover input VAT charged on goods and used for business purposes by offsetting the VAT against output VAT charged on supplies made.
23. What is the tax treatment in your jurisdiction of profits from an investee company remitted outside your jurisdiction by an investor?
Unless tax treaties provide otherwise, dividends are subject to:
  • 30% withholding tax on dividends paid to non-resident companies (12.8% for non-resident individuals).
  • 75% withholding tax on dividends paid to certain "non-cooperative" states and territories.
However, most tax treaties provide either a reduced rate or a withholding tax exemption.
Under Directive 90/435/EEC on the taxation of parent companies and subsidiaries (Parent-Subsidiary Directive), dividends distributed by French subsidiaries to EU parent companies are exempt from withholding tax, if, among other conditions, the recipient holds 10% or more of the shares of the subsidiary for at least two years (the 10% threshold is lowered to 5% if the effective beneficiary cannot receive credit for the French withholding tax in its country of residence).
24. What transfer pricing and/or thin capitalisation restrictions may apply to investments into your jurisdiction from elsewhere?

Transfer pricing

France has transfer pricing legislation under which the correct transfer price for a transaction between related parties must be that which the parties would have agreed at arm's length.
To determine the tax owed by companies that depend on, or control, enterprises outside France, any profits transferred to those enterprises indirectly through increases or decreases in purchase or selling prices or by any other means must be added back into the taxable income shown in the companies' accounts.
The same procedure applies to companies that depend on an enterprise or a group that also controls enterprises outside France.
To enforce these rules, the French tax authorities must prove both that:
  • A dependent relationship existed between the parties involved in the transaction under review.
  • A transfer of profits occurred.
French legislation requires certain companies to provide significant documentation to the French tax authorities in relation to transfer pricing.

Thin capitalisation

For French tax purposes, the deductibility of interest paid by a French borrowing company is capped at:
  • 30% of the company's EBITDA (or EUR3 million, if higher).
  • 10% of the EBITDA (or EUR1 million if higher) if the company is deemed to have a low share capital (a debt/equity ratio below 1.5).
Specific rules apply where the company has opted for the tax integration regime.


25. What tax incentive or other schemes exist to encourage foreign investment?
The main incentive provided by French tax legislation is the R&D tax credit (crédit d'impôt recherche), which is a corporate tax incentive for R&D expenses incurred by trading companies located in France, regardless of sector or size.
This mechanism allows companies to benefit from a:
  • 30% partial refund (either by way of tax reduction or tax reimbursement) of expenses under EUR100 million.
  • 5% partial refund (either by way of tax reduction or tax reimbursement) of expenses exceeding EUR100 million.
The mechanism was extended to "innovation" expenditure (as defined) incurred by small and medium-sized companies, offering a yearly tax credit of 20% on up to EUR400,000 of expenses (that is, a yearly tax credit of up to EUR80,000).

Investment guarantees

26. What legal guarantees exist against expropriation and/or provide for appropriate compensation? What is your government's track record in this regard?
The French Code of Expropriation ensures that expropriations can only happen where they are in the public interest, and must be compensated.
Most investment treaties contain expropriation provisions setting out a principle of non-discrimination and asserting that compensation must meet fair market value.
At the end of the 1980s, France made a public policy shift toward privatisation. Since then, expropriation has no longer been an issue.
27. Are there any issues in relation to the enforcement of intellectual property rights?
There are no particular issues in relation to the enforcement of intellectual property rights in France, except marginally in certain copyright and related-rights matters in relation to the ownership of such rights in some international situations. These issues generally relate to the favourable treatment given to authors and performers by French law and French courts.
Authors benefit from a "moral right" that cannot be transferred and may be in conflict with the owner of the rights, for example, if that owner wishes to modify the protected work.
Foreign performers can also challenge that their neighbouring rights have been properly assigned in France under French law, even though their contracts are valid under their originating laws.
Some courts are specialised according to the types of intellectual property rights in question. For instance, the courts of Paris have sole jurisdiction over matters of patents and European trade marks.
28. Are there any issues in relation to the gaining and enforcement of judgments and/or arbitral awards?
Foreign litigants are not treated differently under French law.
Court proceedings are free of charge except for some small fees (stamps and so on), but parties must be represented by a lawyer, whose fees they must bear.
Lawyers' fees are not generally regulated under French law.
Parties usually must bear the cost of arbitral proceedings, depending on the applicable arbitration rules.
Enforcement is carried out by special bailiffs (huissiers de justice).
No lawyers are required at the enforcement stage, but it is advisable to retain one in case of a challenge or enforcement issues.
Foreign judgments and arbitral awards are not tried anew under French law but must be recognised by a French court before enforcement can be sought in France.
Following new regulation, an International Chamber was created in 2018 within the Court of Appeal of Paris (Chambre Internationale de la Cour d'Appel de Paris) (CICAP). CICAP has jurisdiction to hear appeals on decisions relating to international commercial and financial disputes, and allows for the use of evidence in English without any French translation.
Judgments from other EU states are automatically recognised under Regulation (EU) 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Recast Brussels Regulation).
France has also executed a number of bilateral treaties with foreign countries setting specific conditions for recognition in those cases.
If a judgment originates from outside the EU and there is no bilateral treaty as to recognition, there are some general conditions to be met for the foreign judgment to be recognised.
Once foreign judgments or arbitral awards are recognised, they can be enforced as if they originate from France.
Paris is home of the International Chamber of Commerce's International Court of Arbitration, established in 1923. This is probably the most widely known international commercial arbitration institution, and its arbitral awards are effectively and efficiently enforced in France and abroad.

Recent developments and proposals for reform

29. Have there been any significant recent or proposed legal developments affecting investors?
The Loi Pacte law and Action Plan for Business Growth and Transformation (Plan d'Action pour la Croissance et la Transformation des Entreprises) (PACTE), enacted on 22 May 2019, aims to:
  • Remove obligations that complicate companies' development, simplifying business creation and easing obligations concerning workforce thresholds.
  • Facilitate access to diversified funding (public listing, investment capital, crowdfunding and initial coin offerings).
  • Provide companies with the resources they need to innovate and will enable researchers to set up companies with a minimum of difficulty and simplify patent filing procedures for small and medium-sized enterprises (SMEs).
  • Ensure that employees' work is better rewarded due to:
    • abolition of the corporate contribution to incentive schemes for companies with fewer than 250 employees;
    • abolition of the corporate contribution to profit-sharing for companies with fewer than 50 employees.
The major PACTE measures include:
  • The legal obligations that arise over certain thresholds are significantly reduced and simplified to create a new legal environment more favourable to SME growth.
  • Incentive schemes and profit-sharing employee incentive agreements are facilitated for companies with fewer than 250 employees, with abolition of the corporate contribution.
  • The Civil and Commercial Codes are modified to take greater consideration of social and environmental issues.
  • Entrepreneurs' administrative requirements are simplified thanks to the creation of a single online platform for business formalities.
  • Deadlines for and costs of judicial liquidation (compulsory winding-up) procedures are reduced and their predictability improved.
  • Pathways for researchers who wish to set up or work with a company are simplified to revitalise links between public research and the private sector.
  • The Dutreil Pact is updated to encompass free of charge transfers. Business transfers to employees and funding of takeovers of small companies are facilitated.
  • Simplifying and ensuring portability of pension savings products. All citizens are able to maintain and add to their savings products throughout their professional lives, and withdrawals of lump-sums are facilitated.
  • The export support model is transformed through creation of single regional windows, so that international markets become natural outlets for SMEs.
  • The procedure for prior authorisation of foreign investment in France is strengthened and expanded to better protect strategic sectors. Article 152 of the law allows the Minister of Economy to issue injunctions against foreign investors in relation to French strategic companies. If necessary, the Minister of Economy can also:
    • suspend investors' voting rights;
    • appoint a proxy;
    • prevent the investor from receiving dividends;
    • create golden shares.
30. Are there any planned or on-going treaty negotiations or political developments that could have an impact on your jurisdiction's bilateral relationships with other nations and/or other economic, customs or monetary unions, free-trade areas or markets?
Several treaties were signed in 2018 and came into force in 2019, such as the EU-Japan Partnership Agreement, which entered into force on 1 February 2019, and the Free Trade Agreement concluded with Singapore, which entered into force on 13 February 2019.
The EU also engaged in unsuccessful negotiations with the US to conclude the Transatlantic Trade Investment Partnership (TTIP) on setting up a free trade area. The negotiations were reopened on 15 April 2019 on a more limited agreement covering the elimination of tariffs on industrial products only, and excluding agricultural products.

Contributor profiles

Aurélie Dantzikian, Partner


T +33 4 26 84 31 53
F +33 4 78 52 26 00
E [email protected]
First Law International Member Firm (Chambers Global Elite Network)
Areas of practice. Distribution; competition; anti-trust; IP/patent; biotechnology; information technologies; privacy, security and data protection; consumer protection; contract engineering; renewables energy.
Languages. French, English, Spanish
Professional associations/memberships. Lecturer in Master «Animation and development of brand networks» University Jean Moulin and at IFAG for web & law; First Law International; Cuisine du Web (promotion of web entrepreneurship); MEDEF (promotion of supports trade/investments by French companies in the world); Entreprise du Futur (congress for top management to look at future trends); Waoup (start-up factory).

Manon Pourcher, Associate Partner


T +33 4 26 84 31 53
F +33 4 78 52 26 00
E [email protected]
First Law International Member Firm (Chambers Global Elite Network)
Areas of practice. Distribution; competition; intellectual and industrial property; biotechnology; new technologies; compliance (GDPR and so on); contract engineering; consumer affairs; renewable energies.
Languages. French, English
Professional associations/memberships. Member of First Law International.