Credit Management July and August 2020

COUNTRY FOCUS
AUTHOR – Adam Bernstein
GDP but the most generous is that given by
the IMF at $2.7 trillion.
Having the largest landmass in Europe
it follows that there are disparities between
the regional economies. Ile de France,
for example, contributes 30 percent of
GDP through services, electronics and
ICT, agro-food, construction, automobile,
pharmaceuticals, culture and aerospace.
In contrast, Bassin Parisien adds less than
three percent to GDP even though it has
some manufacturing, agriculture and
service industries.
Of course, statistics and data can be used
to prove almost anything, but reading with
a pinch of salt and common sense, a June
2019 report on ceoworld.biz detailed the 100
best performing businesses in the world.
The majority were American with Apple in
first place, but France took three positions
with cosmetics firm L’Oréal at 53, oil
company Total at 55 and Sanofi, a pharma
firm, in 93rd position.
When it comes to the 10 largest European
companies by revenue, Business Chief
listed – in 2018 – a number of French firms:
Insurance giant AXA was in 7th position
($143.7bn), Total ($127.93bn) was 8th while
banking conglomerate BNP Paribas came
in 10th ($109bn). First, by the way, was
Germany’s Volkswagen ($240.4bn).
And yet another list, albeit from 2015,
shows how wide a net France fields her
businesses. The list notes firms in retail
(Auchan), construction (Vinci), Veolia
(environment), Orange (telecoms), Credit
Agricole (financial services) Group PSA
(automotive), and Lafarge (building
materials).
By extrapolation, these industries make
France a large importer, one that marginally
takes in more than it exports. Key
categories include machinery, including
computers; vehicles; electrical machinery,
equipment; mineral fuels including oil;
aircraft, spacecraft; pharmaceuticals;
plastics; optical, technical, medical
apparatus; organic chemicals; and clothing,
accessories.
Europe supplies 60 percent of French
imports, Asia 20 percent, North Amercia
eight percent and Africa four percent.
SETTING UP SHOP
It’s interesting to note how ‘easy’ it is to
do business in France in relation to other
countries. New Zealand is consistently
placed first on the World Bank’s list with
Singapore in second place. The UK is placed
8th, Germany 22nd, but France comes 32nd.
That’s not great but is clearly much better
than Eritrea at 189th and Somalia at 190th!
Opening up for business in France
requires, as in other jurisdictions,
forethought as to the entity traded through;
and France has a number to choose that
include Société à Responsabilité Limitée
(with between two and 50 shareholders),
Entreprise Unipersonelle à Responsabilité
Limitée (a single shareholder), Société
Anonyme (at least seven shareholders) and
Société en Nom Collectif (a partnership).
There is too much detail to list here, but
more can be read at Cabinet Roche & Cie via
https://tinyurl.com/uglsry3.
Workers in France are highly skilled
and see value in education. However,
unemployment in France is high, especially
among those under 25; Trading Economics
quotes a current rate of 7.9 percent in
the last quarter of 2019. Further, France
generally operates on a 35-hour week basis
and workers tend to get both five weeks of
holidays and a good work/life balance.
As for taxation, company tax rate was
recently 28 percent on the first €500,000 and
33.33 percent above that (with lower rates
for new-starts and SMEs), but for profits
made in the 2020 tax year the rate is 28
percent.
The standard rate of VAT is 20 percent
with reduced rates of 10 percent, 5.5 percent
or 2.1 percent depending on the nature of
the goods (such as food, utility, passenger
transport, accommodation, cultural
activities, certain works on a principle
home, TV licences and socialised medicine).
Personal tax rates range from zero
percent to €10,064, 11 percent between
€10,064–€25,659, 30 percent between
€25,659–€73,369, 41 percent between
€73,369–€157,806, and 45 percent on
anything above €157,806.
As from the beginning of 2019, a Pay-As-
You-Earn system was introduced universally
throughout France. Instead of filing an
income tax and paying whatever taxes were
owed for the prior year, workers are taxed
at the source of the income, in monthly
payments.
And non-residents of France are taxed
on income earned from French sources.
However, France does have tax treaties with
a number of countries that enables residents
of certain countries to avoid dual taxation.
France is also signed on to the Automatic
Exchange of Information, which seeks to
fight tax evasion by requiring financial
intermediaries to be transparent about their
clients’ tax residence in signatory countries.
ONGOING CHALLENGES
Every country has its own challenges and
France is no different.
Working
First off, while EU citizens don’t require a
permit to work in France, non-EU/EEA and
Swiss citizens must apply for both a work
and residency permit. There are several
types including the Carte de Séjour, a
residence permit for those who are coming
The Eiffel Tower is a
wrought-iron lattice tower on
the Champ de Mars in Paris,
France. It is named after the
engineer Gustave Eiffel, whose
company designed and built
the tower.
Advancing the credit profession / www.cicm.com / July & August 2020 / PAGE 34