France has complex laws for just about everything that concerns expatriates. Rob Hyde guides you through the jargon and bureaucracy.

• Setting up a company
• Passports and travel docs
• Residence permits
• Work permits
• Schengen visa
• Taxes
• Health care and social security

Like Britain, France was an allied force in both World Wars, yet has seen its empire and international domination since diminish.

But today France is a key play within the European Union, a participant in the euro, and a strong advocate for further European integration and co-operation.

In 2000, France attracted the highest share of foreign investment in the euro zone.

Over 8,000 international businesses have been enticed by the impressive transportation system, the telecommunications infrastructure and comparatively cheap utility networks.

The country also shows both one of the highest rates of economic growth in Europe and one of the lowest rates of inflation.

SETTING UP A COMPANY

All companies set up in France must declare the existence of their company to the tax authorities within 15 days of beginning activity if the company is subject to Value-Added Tax (TVA). If it is not subject to TVA, this can be done within the following month.

France is located in Western Europe, bordering the Bay of Biscay and English Channel, between Belgium and Spain, south-east of the UK; bordering the Mediterranean Sea, and between Italy and Spain GOVERNMENT: Republic CAPITAL: Paris POPULATION: 59.5 million (July 2001 est.). Ethnic groups: Celtic and Latin with Teutonic, Slavic, North African, Indochinese, and Basque minorities. ECONOMY: The French economy is developing from former government ownership to a more market-oriented structure. The French government still operates a degree of strength in the power, public transport and defence industry sectors. Industries include machinery, chemicals, automobiles, metallurgy, aircraft, electronics; textiles, food processing; tourism. Agricultural products are wheat, cereals, sugar beets, potatoes, wine grapes; beef, dairy products; and fish. KEY TRADING PARTNERS Export partners: EU 63 percent (Germany 16 percent, UK 10 percent, Spain 9 percent, Italy 9 percent, Belgium-Luxembourg 8 percent), US 8 percent (1999). Import partners: EU 62 percent (Germany 16 percent, Belgium-Luxembourg 11 percent, Italy 9 percent, UK 8 percent), US 7 percent (2000 est.) LANGUAGES French 100 percent, rapidly declining regional dialects and languages (Provencal, Breton, Alsatian, Corsican, Catalan, Basque, and Flemish. Source: CIA World Factbook

These business declarations are to be carried out via the Business Formalities Centre (CFE - Centre de Formalités des Entreprises) set up by the Chamber of Commerce and Industry of the venue concerned.

PASSPORTS AND TRAVEL DOCUMENTS

All EU citizens can enjoy a stay of at least three months in France without requiring a work or residency permit (see more details below).

This also applies to certain non-EU nationals who have certain agreements or historical ties with France, such as Andorra, Liechtenstein, Monaco, San Marino and Switzerland. However, citizens from these countries must always bring valid national identification cards.

Non-EU nationals who have been residing in France for more than three months must apply for residency permits via their local French Consulate.

If their application is successful, they can then apply for temporary work in France and residency permits (autorisation provisoire de travail / salarie) for a one-year maximum providing they are earning a salary (salarie).

Transit passengers

Another example of strict French law is that nationals of certain countries always require a transit visa, even when they do not leave the airport (contact the embassy or consulate for further details).

Transit visas are valid for single or multiple entries of a maximum five days per entry, which includes the day of arrival.

Visas cannot be extended and a new application must be made each time and reviewed on a case-by-case basis.

RESIDENCE PERMITS

Under EU law, no prior visa is required for EU nationals entering France as citizens of member states are free to travel and live anywhere in the European Union.

EU nationals who are salaried employees and who intend to stay in France for longer than three months must obtain an EU resident's permit (carte de séjour de l'Union Européenne) on arrival.

If the EU national has a contract of at least one year, then he can obtain a residence permit valid for 10 years. It then becomes permanent on first renewal providing there are reciprocal provisions in the applicant's home country.

If the assignments lasts for more than three months but less than one year, then a residence permit is issued that is valid for this period.

How to obtain the EU resident's card

The following documents must be presented within three months of the applicant's arrival in France, in person, to the local authorities (Préfecture or Sous-préfecture) of the applicant's place of residence.

• the document used to enter France (a passport or a national identity card)
• proof of employment or a job offer letter.
• proof of personal status and domicile.
• a completed CERFA questionnaire (contact a French Consulate to obtain this).
• a medical certificate issued by an accredited physician.

Expatriate's working rights

Under French law, foreign salaried employees, (both EU and non-EU nationals) are entitled to the same rights on the job as their French counterparts.

Obtaining a residence permit

In addition to documents required for a long-term visa, applicants for a resident permit must submit the following documents to their nearby authorities (Préfecture or Sous-préfecture).

• proof of status, obtained at the local town hall (including place and date of birth, citizenship and marital status). Those with spouses and dependants must also provide this information.
• three photos.
• proof of financial resources. This can be proof of the applicant's professional activity and reasons for long-term residence in France.
• documents certifying legal entry into France (passport, visa).
• documents certifying that the applicant lives in France, except in cases where French residence is not required
• medical certificate (although this does not apply to non-French citizens who have held a resident permit for over 10 years).
• proof of address via an invoice from the electric company EDF or a property lease.

Resident permit holders are entitled to renewal providing they have not left France for a period of more than three consecutive years. Technically this means a country-hopping expat could still be legal with the French authorities provided he watches his timing.

Obtaining a temporary residence permit

The temporary residence permit is valid one year but can be renewed. In addition to documents required for a long-term visa, applicants for a temporary residence permit must submit the following documents to Préfecture or Sous-préfecture.

• personal-status attestation (état civil, including place and date of birth, citizenship and marital status). If applicable, corresponding information for spouse and dependants also.
• documents certifying legal entry into France (passport, visa) in cases where illegal entry would preclude issuance.
• a visa valid for more than three months. (unless rendered redundant via an international agreement).
• an accredited medical certificate.
• three passport photos.
• a provisional work permit (autorisation préalable de travail) in the case of salaried employment.
• a business permit (carte de commerçant étranger) for business people, legal representatives, senior management (not needed by EU citizens).

WORK PERMITS

Note: some foreigners may fall into occupation categories that are more easily granted temporary work permits. These include professionals in science, culture and the arts.

Business permit (carte de commerçant étranger )

There are three main categories of people who require a business permit:

• all non-French nationals exercising in their own name any commercial, industrial or trade activity in France requiring registration on a trade register (Registre du Commerce et des Sociétés or Répertoire des Métiers), including sales agents.
• foreign citizens empowered to manage, administer or commit a foreign entity through its business establishment, branch or sales office in France.
• those who have authority over a business entity as the manager of a limited company, société à responsabilité limité.

A business permit is not required for citizens of a country in the European Economic Area, citizens of countries party to a treaty providing for exemption, and holders of a residence permit.

Obtaining a work permit

This is yet another complicated process, which takes around three months.

First, the France-based employer must inform the national employment agency (ANPE) of the job opening. After three weeks he can apply to the local labour authorities (DDTE)

If the DDTE's decision is favourable, it sends the application on to the Immigration Office (Office des Migrations Internationales).

The OMI then files an application with the Ministry of the Interior, for issues of public order, after which it forwards the file to the French consulate of the country in which the potential employee is based.

The OMI then contacts the employer and the foreign employee in writing. The letter asks the employer to contact the French consulate to make arrangements for a medical certificate.

Once the medical certificate has been arranged and supplied, the process is finally over. The consulate will issue a visa to the foreign employee and he is free to enter France.

Within eight days of arrival in France, the foreign employee can apply to the nearby Prefecture for a resident card. This type of residence card he applies for will depend on the length of employment in France. He can also apply to the DDTE for a work permit.

Within one month of the foreign employee's arrival in France, the employer must pay a license fee to the OMI. He is also obliged to pay the flat fee payable for taking on a foreign worker under a permanent contract (contrat à durée indéterminée).

Documents required for work permit

• photocopy of passport
• proof of status
• photocopy of qualifications (with a certified French translation).
• job description and title
• real or photocopy of birth certificate (with certified French translation).
• details of French salary
• address for Consulate's to reply to
• four black-and-white passport photos (with a white, not grey, background)
• proof of French address, rent, type of housing and number of people in the household

Family members

• photocopy of marriage certificate (with certified French translation).
• four black-and-white passport photos (with white, not grey background) for spouse and children under 18.
• photocopy of passport and photocopy of birth certificate (spouse and children under 18).

Temporary work permits

Temporary work permits are issued for activities run for less than one year.

The employer sends a job description to the national employment agency, (ANPE).

ANPE then checks that none of the job applicants on its books have the relevant profile and issues a certificate to this effect. This means it has been officially proven that no French citizen is available to do the work in question.

The French company who seeking to employ the foreign candidate then applies to the local labour authority (DDTE), providing the following:

• certificate issued by ANPE (see above)
• an official undertaking to pay the license fee and the flat fee to the Immigration Office (Office des Migrations Internationales)
• a letter certifying the arrangement from the foreign company (three originals)
• letter from the French company undertaking to hire the foreign employee in France (three originals)
• an undertaking from the foreign employee (the applicant) to leave France at the end of his or her assignment
• three copies of the employment contract in French
• a document describing the employee's accommodation in France
• a completed questionnaire containing personal information about the identity, family situation and address of the foreign employee (with ID photos and photocopy of his passport)

Employment contracts authority

According to international private law, the employment contract of the salaried expatriate employee on assignment in France is international.

However, parties are free to choose a jurisdiction for the contract providing it does not conflict with French law. If no other jurisdiction is specified, French law applies.

SCHENGEN VISA

The Schengen Agreement was signed in 1985 in the village of Schengen, on the borders of France, Germany and Luxemburg.

Twelve other countries - not all EU member states - have since joined, and the Schengen agreement now includes Austria, Belgium Denmark, Finland, France, Germany, Greece, Iceland, Italy, Luxembourg, The Netherlands, Norway, Portugal, Spain and Sweden.

The Schengen visa is necessary for any person who is not a citizen of a Schengen visa state nor one of the following countries: Andorra, Argentina, Australia, Bolivia, Brazil, Brunei, Bulgaria, Canada, Chile, Croatia, Costa Rica, Cyprus, Czech Republic, Ecuador, El Salvador, Estonia, Guatemala, Honduras, Hungary, Iceland, Ireland, Israel, Japan, South Korea, Latvia, Liechtenstein, Lithuania, Malaysia, Malta, Mexico, Monaco, New Zealand, Nicaragua, Norway, Panama, Paraguay, Poland, San Marino, Singapore, Slovak Republic, Slovenia, Switzerland, Uruguay, USA, Vatican City, Venezuela.

Citizens of countries not listed about who are entering only one Schengen country should apply to this country's consulate.

Those visiting more than one Schengen country should apply to either this country's consulate or the consulate of the country they will enter first if they are just travelling around.

The Schengen Visa is issued for tourist, business and private visits at GBP 15 to GBP 20 for one to 30 days (single- or multiple-entry); GBP 17 to GBP 29 for 31 to 90 days; and GBP 5 to GBP 8 (single-, double- or multiple-entry) for transit passengers.

Documents necessary for a Schengen Visa include

• a passport valid for at least three months longer than validity of the visa with one blank page to affix visa stamp
• up to three application forms.
• up to three passport-size photos.
• evidence of sufficient funds for stay.
• letter from employer, accountant, school or university.
• return ticket to country of residence.

On the grounds of terrorism fears, the UK and Ireland have remained outside the agreement.

The agreement was initially made outside the framework of the European Union, however the Treaty of Amsterdam agreed to incorporate Schengen into EU law.

TAXES

All forms of income, derived from whatever source, are subject to French tax if received by a person residing in France.

A non-resident who earns money from a French source must also pay French tax on this earning.

However, France recognises over 100 tax treaties to prevent expatriates from double taxation. These include long-established tax treaties with Canada and the US.

Under most of these treaties, individuals are subject to tax if they have "fiscal residence".

This status means in terms of paying tax, they are officially residing in France and so are subject to French tax.

This is irrespective of whether they still consider themselves foreigners and even if they do not intend to stay in the country for long.

Fiscal residence is determined by the following criteria:

• If France is the habitual place of residence of the person and his family.
• In cases of residence in two or more countries (for example a French border worker who regularly crosses the border to work in Germany. To achieve French fiscal residence, France must be his main place of occupation.
• If the above criteria are too open to dispute, then the individuals' citizenship may prove the determining factor.

Income tax (Impôt sur le revenu)

Employers withhold social security contributions but none of their income tax. This places the obligation of employees to the pay the entire amount of their income tax to the French tax authorities.

The French tax year runs from 1 January to 31 December. French income declarations for the previous calendar year's income must be filed before 28 February each year.

France is rather strict and rigid in its tax laws compared to other EU states. For instance, in the UK, individuals have traditionally been allowed to correct their tax income liability within six years of the of the tax year in question. In France, however, such corrections can only be made within three years of the tax year in question. Not only that, those who pay taxes late face a 10 percent fine.

The taxable amount of wages and salaries is calculated after deduction of:

• social security (refer to 'Health and Social Security' section).
• a 10 percent allowance for professional expenses or the real amount of related expenses if this is higher, plus a 20 percent general allowance.
• contributions to certain private pension schemes and personal insurance premiums. These are only deductible to a certain degree.

Reimbursements of professional expenses are not taxable. However, do not therefore see this as a chance to save some money - the tax authorities are one step ahead. These expenses reimbursements are not taxable only if the full amount of these expenses has not been officially claimed as a deduction.

Local taxes (taxe d'habitation):

Any person (owner or tenant) officially residing in France on 1 January must pay the Taxe d'habitation by 15 November. Those who move in after 1 January thus escape this tax for that year.

The amount of tax charged is based on the rental value of the property along with the number of dependants.

The local French authority Centre d'Impôts sends those residing in France a form that lists the size of the property. The number of rooms in the building then helps them decide how many people (dependants) are living there.

Tax for expatriates

Those who do not officially live in France but who receive an income from a French source are still subject to withholding tax. However, this rate is often far lower than the income tax rate for residents.

Expatriates' tax and social security situation is best arranged before they arrive in France.

Success of international companies in France
Annual Sale in billions of Euro		Number of employees
Daimler-Chrysler	2.6	1,751
Exon Chemical/Esso	4.3	3,668
Ford	3.1	4,935
Henkel	1.3	3,302
Hewlett-Packard	5.2	5,310
IBM	4.5	17,700
Kodak	1.4	4,400
Motorola	1.5	3,244
Novartis	1.7	4,340
Philips	4.2	12,000
Shell	5.3	4,511
Siemens	2.9	10,000
Sony	1.7	2,945
Unilever	3.1	9,750

The key to organising a good deal is to pay particular attention to the "temporary assignment" clause in the employment contract. This tends to deal with split salaries, expatriation bonus, and, moreover, compensation.

The tax officially deducted from an expatriate worker's compensation can be significantly lowered if they conduct some of their business activities outside the country.

Better still, they can also receive either a bonus for these activities outside France, or, again, non-taxable reimbursements of expenses.

Taxes relating to business (taxe professionnelle)

This is a form of local tax charged on behalf of the local municipalities and départements.

The charge is based on the rental value of the company-owned fixed real estate assets along with 18 percent of the total salaries paid.

All those exercising some form of independent activity on 1 January of the tax year are subject to this tax.

Some exceptions are made for companies setting up in certain areas of France.

Taxation on profits - IS (Impôt sur les Sociétés)

France-based business people, regardless of their nationality, must pay French Company Tax (IS) on the profits made by their companies in the country.

The term "company" is often determined by whether a tax convention or treaty exists between the State of the foreign company and France.

Well-established treaties already exist and can prove highly beneficial for certain expats, such as Canadians and US citizens.

However, the French also operates various forms of tax treaties with a large number of countries, from Argentina to Zimbabwe. Click on the link for the full list provided by the French tax portal, TaxUp. www.francetresor.gouv.fr/oat/us/conv.html

Miscellaneous taxes

Do bear in mind that the taxes never seem to stop in France, and certain areas, such as Ile-de-France region, will charge a regional tax on things like office space.

Tax system for company headquarters

France has provided a digressive tax scheme that can prove a favourable deal for international companies with headquarters in France.

Here, a "headquarter" does not have to be the company's official "base", but rather is a centre were management decisions about operations in that country are made.

The tax authorities set a flat rate tax base on which the French Company Tax is then calculated.

Company headquarters' management can also apply to have their personnel who are temporarily residing in France placed on a lightened tax system.

Designation of a tax representative

When a foreign company exercises an industrial or commercial activity in France without a headquarters, the tax authorities may order it to designate a France-based tax representative.

The authorities will liase with this representative on various aspects on the calculation, the payment and the litigation of the company taxes.

HEALTH CARE AND SOCIAL SECURITY

France's social security system covers health care, family benefits and pensions.

It is designed to ensure that foreign salaried employees working in France are covered by the French health care system, regardless of nationality or country where their employer is based.

Social Security payments (cotisations)

Officially this is not a tax, but it functions as one and thus is easiest to comprehend by viewing it as a tax.

In return for paying cotisations, an employer receives free hospitalisation, 70 percent reimbursement of doctor fees and most medicines and 16 weeks of maternity leave.

HR managers sending workers to France can register their home-salaried employees with the French social security system but should make sure that it is done via the régime de l'expatriation scheme.

Under this procedure, the expat worker will receive some level of health care, providing the foreign employer pays into optional supplementary systems in their home country that make up for the differences which the expatriation causes.

Another option for foreign HR managers is to continue to pay into home-based social security systems for the maximum time allowed by legislation and/or international agreements. This scheme is recognised in France as the régime du détachement.

Theoretically, they can also exploit certain European regulations. According to EEC Regulation no. 1408/71, EU nationals who are salaried employees may request temporary exemption from the French social security system.

This would mean they are still subject to the tax/social security system in their home country, and therefore need not pay into the French system for a limited period, which tends to be around 12 months.

The form E111 (available from Post Offices in most EU member states) is designed to allow an EU national free, basic health care in a foreign EU country.

An example of an international agreement is the Franco-American one, which provides a five-year exemption period for expatriates social security in France. To find out about other arrangements refer to www.francetresor.gouv.fr/oat/us/conv.html

February 2002