Choose to stay in the European market! How to do professional tax planning?

How to do professional tax planning for staying in the European market?

With the explosion of more and more blue ocean markets, cross-border e-commerce companies are gradually shifting their focus to many niche markets. Europe, an old-fashioned red ocean market, seems a bit quiet. However, in fact, many sellers still choose to stick to their positions and cultivate Europe. So, under the trend of tax reform, rising logistics costs, and strict product compliance policies in Europe, what plans can sellers make? Registering a local company in Europe is a good choice. Most sellers think that registering a local company is very expensive and has a high threshold, but compared with other EU countries, the registration fee of a French company is relatively low, the procedures are relatively simple, and the local tax rate in France is lower than other countries, which can help sellers save a lot of costs and operate in the long term. On the other hand, France has a high international legal status, and the credibility and reputation of enterprises are recognized worldwide. Its high imitation daily consumer goods brands such as cosmetics and perfumes are highly acclaimed internationally, making it a good choice for sellers to register overseas companies.

Types of French Companies

✔French Public Limited Company (SA)

The minimum registered capital of a French public limited company is 37,000 euros. ✔French Simplified Joint Stock Company (SAS) This is a type of stock company suitable for small and medium-sized enterprises, which only requires one shareholder at least and is generally suitable for companies that are about to go public in the short term. ✔Limited Liability Company (SARL) There is no minimum limit on the registered capital of a French limited liability company, which can be in cash, physical assets, or industrial investment. ✔Individual Enterprise (EURL) This type of company is suitable for engaging in commercial activities of a certain scale, similar to our current one-person limited company in China.

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French Company Registration Conditions

⭕At least one shareholder ⭕At least one director ⭕Registered capital: no capital contribution requirement ⭕Local secretary required

Registration information

1️⃣Valid passport + handwritten declaration

2️⃣Valid ID card

3️⃣Client signature

4️⃣Address proof (water, electricity, internet bill, bank statement, etc.)

(For details, please consult Shazhixing Cross-border)

Basic taxes related to French companies

In general, the main taxes related to French companies are: corporate income tax, value-added tax (VAT), and other taxes such as annual audits.

✅Corporate income tax This is the income tax levied on legal entities. All joint-stock companies and limited liability companies operating in France, regardless of the type of business they engage in, generally need to pay corporate income tax. Currently, the tax rate for French corporate income tax is relatively low among European countries. *The corporate income tax adopts a gradient tax rate, and companies that meet specific conditions can enjoy preferential tax rates. The preferential tax rate here refers to the portion of annual profits of companies with less than €38,120, which is subject to a 15% tax rate. *Since 2018, the French government has introduced a series of positive policies to stimulate the economy and encourage entrepreneurship, and has introduced preferential tax rates for corporate income tax, gradually reducing the highest tax rate from 33.3% to 25% by 2022. ✅Value-added tax (VAT) Value-added tax is a tax that cross-border sellers need to pay special attention to. The VAT tax rate is mainly divided into four types: basic tax rate: 20% (most sales of goods and services); intermediate tax rate: 10% (primary agricultural products, some animal food, drugs that cannot be reimbursed by social security, transportation of certain works of art, takeaway, ticket income from theaters, zoos, museums, grottoes, cultural exhibitions, passenger services, some renovation and maintenance projects, etc.); low tax rate: 5.5% (water and non-alcoholic beverages, products for disabled people, theater operations, student cafeterias, etc.); super low tax rate: 2.1% (drugs that can be reimbursed by social security, registered news publications, public television taxes, some performances, etc.).

✅Annual Audit French companies have relatively strict management systems. According to the provisions of French company management laws, the legitimacy of French companies is mainly maintained through annual inspections. Companies that meet two of the following three conditions must appoint an external auditor to conduct an annual audit: Company’s annual turnover exceeds €8 million (excluding VAT); the company’s total assets exceed €4 million; the number of enterprise employees exceeds 50.

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