France: Europe's Overlooked Powerhouse

Kimberley Clark, Ireland, Correspondent, k.clark@europhotonics.com

When most people think of France, their thoughts turn to wine and food – for which the French are rightly famous. Seldom does the imagination gravitate to business and, in particular, to high-tech business as personified by photonics.

But that is all changing, as our sister publication EuroPhotonics reported in its October/November 2008 issue.

Since taking office in May 2007, French President Nicolas Sarkozy has worked on a series of reforms to increase flexibility and liberalization in business. These include reducing taxation, making labor laws more flexible, attracting foreign talent by simplifying entry conditions for skilled workers, and making R & D a national priority. The government’s economic policy aims to promote investment and domestic growth in a stable fiscal environment.

France provides various business structures with different tax and general-liability implications. The three most common company forms are the société anonyme (SA), the société à responsabilité limitée (SARL) and the société par actions simplifiées (SAS). A SARL or an SAS can be formed with a single partner, whereas seven partners are required for the more sophisticated SA, which can make a public offering. The SAS, or SASU (société par actions simplifiées unipersonnelle), is the most recent type of French company and is well suited to foreign and holding companies that want to maintain 100 percent control of one of their subsidiaries. The SARL is the least complicated form.

As an added incentive, the country offers a generous tax credit: 50 percent reimbursement of a company’s R&D expenses in year one, 40 percent in year two and 30 percent in year three, up to a limit of €100 million – a solid inducement for the entrepreneurial type.

In short, France is an influential economy at the heart of the European Union and its market of 493 million consumers. With a GDP of ~$2.5 trillion, it is the world’s sixth-largest economy. Its status as a leading economic player is further confirmed by membership in the G-8, the European Union, the World Trade Organization and the OECD. According to the United Nations’ Conference on Trade in Development, France is the third leading destination worldwide for foreign direct investment after the US and the UK.