Notes on Foreign Investment in France

Introduction to Foreign Investment in France

• Over 20,000 foreign companies in France, representing 2 million jobs and a third of exports.
• France is attractive due to quality infrastructure, competitive energy markets, skilled workforce, and conducive environment for research.
• Recent reforms in contract, employment, commercial, and tax law.

McDermott Will & Emery Firm Overview

• Leading international law firm with over 1,100 lawyers and 19 offices worldwide.
• Recognized for client service and representation of large corporations.
• Paris office specialized in various fields, including competition, tax, corporate/M&A, public law.

Regulatory Aspects of Foreign Investment

• Generally unrestricted, but declaration required for statistical purposes.
• Prior authorization needed for investments in sensitive sectors (e.g., defense, national security).
• Failure to comply can lead to fines or annulments.

Corporate Aspects of Foreign Investment

• Types of companies include SA, SARL, and SAS.
• Acquisition processes involve due diligence and adherence to shareholder rights.
• Specific rules for acquiring public companies through tender offers.

Taxation for Foreign Investments

• French corporate tax primarily based on net income from businesses in France.
• Tax losses can be carried forward; standard corporate tax rate is 33.33%.
• Withholding tax applies to dividends; relief possible under certain treaties.
• Transfer pricing rules require documentation of inter-company transactions.

Labor & Employment Laws

• Employment contracts can be indefinite or fixed-term.
• Collective Bargaining Agreements (CBA) influence employment terms.
• Working hours and remuneration governed by French laws; severance and social security contributions are mandatory.

Competition Law

• French competition law targets mergers and antitrust practices.
• FCA enforces rules, and serious breaches can result in heavy fines.
• Leniency programs available for companies self-reporting competition violations.

Intellectual Property

• Strong protection for patents, trademarks, industrial designs, and copyrights.
• Specific provisions for employee inventions.
• Patent registration done through INPI; trademarks require distinctiveness.

Commercial Litigation and Arbitration

• Commercial disputes heard in specialized courts, often involve retired business leaders.
• French courts do not recognize punitive damages; emphasis on compensation.
• International arbitration preferred for neutrality and ease of enforcement.

Summary

This guide by McDermott Will & Emery provides a comprehensive overview of the necessary regulatory, corporate, tax, labor, competition, and IP considerations for foreign investors looking at France.