Best place to create a company in EU?

[thomasparra]

I was considering France but it's a nightmare as some of you mentioned to me before. I thought of starting the business for a year or two and see where it goes but even starting a company and dealing with the bureaucracy is giving me headaches. Corporate tax is average for Western countries (max 25% - and in my situation given my forecasted 5-figure profit before tax it should be around 17%). However after that, you still have to pay dividend tax which is 30% so you are looking at a 50% taxation on your net margin before tax. Same bulls**t if you pay yourself a salary you have 'cotisations sociales' so you are pretty much looking at a 40-50% taxation no matter what you do, unless you deduct lots of spends (flights, trains, hotels etc) from your company but you need to be careful not abusing it.

I am now looking at Ireland: 12.5% income tax, no tax withholding, full access to the EU market and banking system (SEPA EUR), multi currency accounts USD/GBP/SGD etc. I don't know how France would tax me on that. There is a dual taxation treaty so I don't know if would pay the French 30% dividend tax on foreign income.

My client base will likely be French, UK, Hong Kong and maybe US. What should I do as I currently reside in France? I could go back to Hong Kong or other friendly places but I would also spend a lot of money on living costs which would offset any tax savings compared to living in France now as I don't spend more than 500 euros per month and I also get some money from the government as long as I do not have a job or as long as my my company is not profitable enough to generate a decent salary.

What should I do? Start the company in France, and when I reach >100-200k in profit I can think of moving the business (or even myself) overseas?

 

[Marzio]

I was considering France but it's a nightmare as some of you mentioned to me before

Told you so!

I am now looking at Ireland

Please clarify: are you looking to manage an Irish LTD from France?

 

[JustAnotherNomad]

If you live and work in France, your company will be taxed like a French company anyway. You can't just choose how much tax you want to pay.
If you don't like that, you have to move.

 

[Alonzo]

There is a dual taxation treaty so I don't know if would pay the French 30% dividend tax on foreign income.

Ireland withholds 25% for France btw

If you live and work in France, your company will be taxed like a French company anyway. You can't just choose how much tax you want to pay.
If you don't like that, you have to move.

Indeed

 

[Panamood]

I was considering France but it's a nightmare as some of you mentioned to me before. I thought of starting the business for a year or two and see where it goes but even starting a company and dealing with the bureaucracy is giving me headaches. Corporate tax is average for Western countries (max 25% - and in my situation given my forecasted 5-figure profit before tax it should be around 17%). However after that, you still have to pay dividend tax which is 30% so you are looking at a 50% taxation on your net margin before tax. Same bulls**t if you pay yourself a salary you have 'cotisations sociales' so you are pretty much looking at a 40-50% taxation no matter what you do, unless you deduct lots of spends (flights, trains, hotels etc) from your company but you need to be careful not abusing it.

I am now looking at Ireland: 12.5% income tax, no tax withholding, full access to the EU market and banking system (SEPA EUR), multi currency accounts USD/GBP/SGD etc. I don't know how France would tax me on that. There is a dual taxation treaty so I don't know if would pay the French 30% dividend tax on foreign income.

My client base will likely be French, UK, Hong Kong and maybe US. What should I do as I currently reside in France? I could go back to Hong Kong or other friendly places but I would also spend a lot of money on living costs which would offset any tax savings compared to living in France now as I don't spend more than 500 euros per month and I also get some money from the government as long as I do not have a job or as long as my my company is not profitable enough to generate a decent salary.

What should I do? Start the company in France, and when I reach >100-200k in profit I can think of moving the business (or even myself) overseas?

Check canary islands free zone. If your company qualifies, it is 4% corporate tax.

 

[thomasparra]

Told you so!



Please clarify: are you looking to manage an Irish LTD from France?

You did

But it's not like I have a lot of alternative options given my current situation (new business with not much visibility into its future income).

I am looking to stay in France at the moment (at least as a resident - I might move around the world a few weeks/months here and there. This way I have my base at my mom's in France for as long as I do not generate stable revenue from this business).

Moving to Ireland, or any other "tax friendly" countries would cost me 2000 to 3000 euros per month at the very least hence why I stay in France for the time being. My girlfriend is in HK, but if I moved there it would also cost me 2500/3000 per month at the very least (I was easily spending 5000 per month when I lived there). I could swallow it but psychologically I hate seeing my "net worth" decreasing.

If you live and work in France, your company will be taxed like a French company anyway. You can't just choose how much tax you want to pay.
If you don't like that, you have to move.

Maybe from the income tax perspective and I don't mind paying French corporate tax (between 15 to max 25%). However if pay myself a salary as an employee I don't want to get hammered by the "cotisations sociales" charges which will is responsible for 30-35% of the overall tax impact. If I don't pay myself a salary, then I still need to pay 30% tax on dividends.

Ireland withholds 25% for France btw


Indeed

Right, hence it does not help me. What if I didn't pay any dividends, paid myself as a consultant to my company in Ireland, and paid French income tax on it. Is this doable? is this a way to legally not pay French "cotisations sociales"?

 

[JustAnotherNomad]

Maybe from the income tax perspective and I don't mind paying French corporate tax (between 15 to max 25%). However if pay myself a salary as an employee I don't want to get hammered by the "cotisations sociales" charges which will is responsible for 30-35% of the overall tax impact. If I don't pay myself a salary, then I still need to pay 30% tax on dividends.

Which part of "you can't choose which taxes you pay" did you not understand?

What if I didn't pay any dividends, paid myself as a consultant to my company in Ireland, and paid French income tax on it. Is this doable?

Of course it is doable, your "Irish" company would be taxed like a French company, paying French corporate tax and everything else would be the same.

is this a way to legally not pay French "cotisations sociales"?

No.

Best option: Pay yourself a low salary, so that you pay no tax or only very little. Pay French corporate tax and keep the rest of the money in the company. You live in your mom's basement, so you probably won't need much money anyway. Then figure something else out when you know if the business model works out.

 

[Marzio]

I have my base at my mom's in France for as long as I do not generate stable revenue from this business

You need first to test your business ideas so start small by becoming a micro entrepreneur.

When things will start to take off you will pay all the taxes due in France and move to a lower taxation country.

 

[tomboy]

Living in France and expecting to pay low taxes is as contradictory as attempting to swim without getting wet. The real challenge for you appears to be determining the most suitable place to live.

 

[thomasparra]

You need first to test your business ideas so start small by becoming a micro entrepreneur.

When things will start to take off you will pay all the taxes due in France and move to a lower taxation country.

The issue is that this status would kill me financially there are around 40 to 60% operational expenses to this business, and the micro entrepreneur status takes your revenue as reference (you can't deduct charges) which makes it perfect for businesses with low to no costs but not in my situation

Of course it is doable, your "Irish" company would be taxed like a French company, paying French corporate tax and everything else would be the same.

Best option: Pay yourself a low salary, so that you pay no tax or only very little. Pay French corporate tax and keep the rest of the money in the company. You live in your mom's basement, so you probably won't need much money anyway. Then figure something else out when you know if the business model works out.

My Irish company would not be taxed as a French company on income tax level, if the business is located in Ireland, then it has no connection whatsoever with France. I would need to pay tax on dividends going from Ireland to France though. If I pay myself a renumeration as an overseas consultant, I should not pay tax in Ireland but in France.

 

[DBeker]

My experience with France and owning an SAS is that it's not that bad admin wise. If I break down my costs (accounting + domiciliation), I'm at around 120 EUR a month. Then for Banking another 20 EUR a month. If I were to do this elsewhere, my fixed costs would be higher and so tax savings won't be all that beneficial at the end. I live in France and there are actually a lot of defiscalisation opportunities, so at the end when you factor in your operating costs, it's pretty much in line with other EU states. Don't go by headline rates, you have a lot of opportunities to write things off here. If you intend on having salaried employees, you can also claim some state assistance and other tax credits. If you are a solo operator, and you don't employ yourself, you need not worry about the cost of labour in this case You can easily be a company owner and get your accountant to certify un PV de Non-Remuneration, and you're good to go.

I am implementing a second business at the moment that is purely import/export and I need this to be in the EU and have it owned by my French SAS. BUT banking that has dependencies on Trade Finance is perhaps not as convenient in France hence why I am considering incorporating this in another EU state and not France - but only for this reason. Not because France is a terrible place to do business or anything.

But otherwise tax and operating complexities in France aren't that bad. You are a French national and you speak the language I assume, so you should not have any issues. I can understand foreigners not finding France easy to navigate, but you should not worry about these issues.

France is far from perfect and has its fair share of issues when doing business. But it has improved quite a bit in recent years and I'd say there are some hidden gems of opportunities here, especially for local persons.

 

[JustAnotherNomad]

My Irish company would not be taxed as a French company on income tax level

Alright boss, since you have so much better knowledge, good luck! Please don't come here crying when you have to face the consequences of your ignorance.

https://www.jonesday.com/en/insights/2021/03/france-expanding-tax-permanent-establishment-definition
https://bofip.impots.gouv.fr/bofip/4262-PGP.html/identifiant=BOI-IS-CHAMP-60-10-10-20140627

 

[Marzio]

The issue is that this status would kill me financially there are around 40 to 60% operational expenses to this business, and the micro entrepreneur status takes your revenue as reference

Indeed it's not the ideal way to run a business but it's very unlikely that France is not taking into consideration some fixed deduction. It can't be that they are taxing you on 100% of the revenue.

 

[thomasparra]

My experience with France and owning an SAS is that it's not that bad admin wise. If I break down my costs (accounting + domiciliation), I'm at around 120 EUR a month. Then for Banking another 20 EUR a month. If I were to do this elsewhere, my fixed costs would be higher and so tax savings won't be all that beneficial at the end. I live in France and there are actually a lot of defiscalisation opportunities, so at the end when you factor in your operating costs, it's pretty much in line with other EU states. Don't go by headline rates, you have a lot of opportunities to write things off here. If you intend on having salaried employees, you can also claim some state assistance and other tax credits. If you are a solo operator, and you don't employ yourself, you need not worry about the cost of labour in this case You can easily be a company owner and get your accountant to certify un PV de Non-Remuneration, and you're good to go.

I am implementing a second business at the moment that is purely import/export and I need this to be in the EU and have it owned by my French SAS. BUT banking that has dependencies on Trade Finance is perhaps not as convenient in France hence why I am considering incorporating this in another EU state and not France - but only for this reason. Not because France is a terrible place to do business or anything.

But otherwise tax and operating complexities in France aren't that bad. You are a French national and you speak the language I assume, so you should not have any issues. I can understand foreigners not finding France easy to navigate, but you should not worry about these issues.

France is far from perfect and has its fair share of issues when doing business. But it has improved quite a bit in recent years and I'd say there are some hidden gems of opportunities here, especially for local persons.

Sounds good. Do you use an online accounting company, as it seems to be a very attractive rate for both accounting and address domiciliation.

You can deduct costs but in the end you still need to pay 15 - 25% corporate tax plus the mandatory 30% dividend tax when you redistribute it to yourself. Does this affect your business rentability a lot? That's roughly 50% tax in the end. Same issue if you pay yourself a salary due to URSAAF.

I don't think there are better options anyways, as others have said here the Ireland option might not be worth it unless you become a resident of the country..

 

[DBeker]

So firstly I am using an online accounting company and a totally different/separate company for domiciliation. I have a central, prestigious Paris location too (SeDomicilier), with an option to book physical offices whenever I have client meetings. I paid 2 years up front though that's why I got a discount on the pricing. For the accounting, if your business is simple, then there are even less expensive online accounting options, than what I am using. But I am using an option that includes some legal support, given the type of business that I run. So if you have a simple business with simple accounting, I would suggest using a company like Dougs, Keobiz etc. and use their entry level offer.

As for your assessment on the deductions etc. I suggest a different way of looking at it:

1. Your taxable income is whatever is after your expenses. So you can for example take on a company car and write it off from your corporate income. Likewise VAT on various purchases are deductable too. Of course if you abuse either of these, you could get audited. But if you are reasonable, you can get away with a lot
2. If you chose to domicile your business in your home, you can deduct some of our housing costs from your income and reduce your tax obligations.
3. As for the divdend tax at 30%, yes its a bit on the high side, but with all the various deductions that will be spent on things you are likely going to be consuming for personal use, it is not so bad. Your aggregate dividend won't feel so painfully bad. At least this includes both tax and social contributions.
4. You don't have to draw a salary if you don't want to (or don't need to), from your company. If your accountant gives you a PV de Non-Remuneration and you only take out dividends and be subject to the flat tax of 30%. Of course this means you aren't contributing to the system neither, so you won't be entitled to various social benefits that you'd get otherwise. This may not be too important for you anyways. In theory you can take out dividends monthly, but this will likely increase your accounting costs (especially if you are using a low-cost provider on an entry-level package). So you may be better off doing this quarterly if you can. Your day-to-day expenses (within reason of course) may be coverable by your company.

 

[thomasparra]

So firstly I am using an online accounting company and a totally different/separate company for domiciliation. I have a central, prestigious Paris location too (SeDomicilier), with an option to book physical offices whenever I have client meetings. I paid 2 years up front though that's why I got a discount on the pricing. For the accounting, if your business is simple, then there are even less expensive online accounting options, than what I am using. But I am using an option that includes some legal support, given the type of business that I run. So if you have a simple business with simple accounting, I would suggest using a company like Dougs, Keobiz etc. and use their entry level offer.

As for your assessment on the deductions etc. I suggest a different way of looking at it:

1. Your taxable income is whatever is after your expenses. So you can for example take on a company car and write it off from your corporate income. Likewise VAT on various purchases are deductable too. Of course if you abuse either of these, you could get audited. But if you are reasonable, you can get away with a lot
2. If you chose to domicile your business in your home, you can deduct some of our housing costs from your income and reduce your tax obligations.
3. As for the divdend tax at 30%, yes its a bit on the high side, but with all the various deductions that will be spent on things you are likely going to be consuming for personal use, it is not so bad. Your aggregate dividend won't feel so painfully bad. At least this includes both tax and social contributions.
4. You don't have to draw a salary if you don't want to (or don't need to), from your company. If your accountant gives you a PV de Non-Remuneration and you only take out dividends and be subject to the flat tax of 30%. Of course this means you aren't contributing to the system neither, so you won't be entitled to various social benefits that you'd get otherwise. This may not be too important for you anyways. In theory you can take out dividends monthly, but this will likely increase your accounting costs (especially if you are using a low-cost provider on an entry-level package). So you may be better off doing this quarterly if you can. Your day-to-day expenses (within reason of course) may be coverable by your company.

Thank you so much. SeDomicilier looks great. How much is the physical office rental price for your location (per hour I suppose)?

My business would involve some legal elements as well as it is in the financial industry but I could have the contract template for clients and third parties reviewed by a lawyer. I will meet a cabinet this week and see how their service level and price stack up against the low cost online options you provided.

Assuming the business takes off in the next 2 years, do you know if I would need to pay anything besides 30% on dividends/"plus value sur augmentation de titre mobilier"? I assume it would be easier to close the business in France and transfer everything overseas. At the end of the day I hope I don't put myself roadblocks in the future by starting it in France

 

[isyet]

Neverland...

 

[treasureinyou]

Depending on gross income you can look at micro entrepreneur.

Even better get a real job, get on chomage briefly and get ACCRE , BEFORE becoming micro entrepreneur and then no charges sociales if you're single you'll have impots which you can most likely erase by investing in PEL and similar saving accounts.

 

[mud]

My experience with France and owning an SAS is that it's not that bad admin wise. If I break down my costs (accounting + domiciliation), I'm at around 120 EUR a month. Then for Banking another 20 EUR a month. If I were to do this elsewhere, my fixed costs would be higher and so tax savings won't be all that beneficial at the end. I live in France and there are actually a lot of defiscalisation opportunities, so at the end when you factor in your operating costs, it's pretty much in line with other EU states. Don't go by headline rates, you have a lot of opportunities to write things off here. If you intend on having salaried employees, you can also claim some state assistance and other tax credits. If you are a solo operator, and you don't employ yourself, you need not worry about the cost of labour in this case You can easily be a company owner and get your accountant to certify un PV de Non-Remuneration, and you're good to go.

I am implementing a second business at the moment that is purely import/export and I need this to be in the EU and have it owned by my French SAS. BUT banking that has dependencies on Trade Finance is perhaps not as convenient in France hence why I am considering incorporating this in another EU state and not France - but only for this reason. Not because France is a terrible place to do business or anything.

But otherwise tax and operating complexities in France aren't that bad. You are a French national and you speak the language I assume, so you should not have any issues. I can understand foreigners not finding France easy to navigate, but you should not worry about these issues.

France is far from perfect and has its fair share of issues when doing business. But it has improved quite a bit in recent years and I'd say there are some hidden gems of opportunities here, especially for local persons.

Sadly, my experience in France (as an invited foreign entrepreneur) has been nothing like this.

Business matters are super expensive for sure. Eg, bookkeeping starts at €350 a month (I don't pay €350 a year in other countries). Administration is over the top. Another example, there are 145 lines of information required to send on each salary, every month to the authorities. And none of the affordable accounting systems have integration with the tax authorities so you have to spend weeks debugging tiny amounts of irrelevant information to upload files in their specific formats. Most payroll processing system are €100 a month person understandably for the obsolete. By law you even need to keep electronic copies or receipts as pdfs for 50 years, stored on a French file server, with time stamped data entry logs!

The staffing subsidies do exist, and some are quite good. but take 6 months to arrive. Again not within the promised 6 weeks. Banking is relatively expensive too . Online government support and services are a lot smaller in France than other EU countries. There is a strong tendency to try to get you on the phone. As I don't speak French we hired a local business manager to do this and even he found the system way too cumbersome. The tax office is either aggressively attacking you or friendly as hell. I had to threaten them with another letter to Macron if they didn't remove the €1800 penalty they hit me with for being late with our first €0 payroll report (that couldn't be lodged as they couldn't even open an online account for us)

After dealing with the fiscal authorities together with the immigration admin (18 months instead of the promised 2), health system complexity, even swapping drivers licenses took 2 years (and still no proper motorcycle license), we cut our losses, sacked our local staff, and moved our operations outside of France. I still maintain a company there for now, but it does very little. It is quite useful in Europe to have a European company though.

We plan to use a tech savvy, English speaking country (maybe Ireland or Malta) for lodging our non-treaty taxation reports in the future.

As a digital nomad I'm rarely in France anyway so the personal taxation issues aren't a major consideration.

I agree that French taxes are pretty much in alignment with many OECD countries, but the admin overhead is over the top for me.

 

[DBeker]

Sadly, my experience in France (as an invited foreign entrepreneur) has been nothing like this.

Business matters are super expensive for sure. Eg, bookkeeping starts at €350 a month (I don't pay €350 a year in other countries). Administration is over the top. Another example, there are 145 lines of information required to send on each salary, every month to the authorities. And none of the affordable accounting systems have integration with the tax authorities so you have to spend weeks debugging tiny amounts of irrelevant information to upload files in their specific formats. Most payroll processing system are €100 a month person understandably for the obsolete. By law you even need to keep electronic copies or receipts as pdfs for 50 years, stored on a French file server, with time stamped data entry logs!

The staffing subsidies do exist, and some are quite good. but take 6 months to arrive. Again not within the promised 6 weeks. Banking is relatively expensive too . Online government support and services are a lot smaller in France than other EU countries. There is a strong tendency to try to get you on the phone. As I don't speak French we hired a local business manager to do this and even he found the system way too cumbersome. The tax office is either aggressively attacking you or friendly as hell. I had to threaten them with another letter to Macron if they didn't remove the €1800 penalty they hit me with for being late with our first €0 payroll report (that couldn't be lodged as they couldn't even open an online account for us)

After dealing with the fiscal authorities together with the immigration admin (18 months instead of the promised 2), health system complexity, even swapping drivers licenses took 2 years (and still no proper motorcycle license), we cut our losses, sacked our local staff, and moved our operations outside of France. I still maintain a company there for now, but it does very little. It is quite useful in Europe to have a European company though.

We plan to use a tech savvy, English speaking country (maybe Ireland or Malta) for lodging our non-treaty taxation reports in the future.

As a digital nomad I'm rarely in France anyway so the personal taxation issues aren't a major consideration.

I agree that French taxes are pretty much in alignment with many OECD countries, but the admin overhead is over the top for me.

This is an interesting perspective and thank you for this. While France is not easy for anyone, local or foreign, I do think if you are local (or at least an EU national), you speak French etc. your experience would be different and your costs would be lower. The OP as far as I know is French, so less likely to have the obstacles you are facing - especially with regards to payroll solutions and the likes. That said it is cheaper and better to outsource to local specialized companies rather than hiring a local manager for these sorts of things. But I admit not all local companies will have English speaking staff and the ones that do, likely charge a premium.