France

France has been ranked among the most attractive countries for foreign investment in the world, which has allowed it to position itself as the seventh largest economy on the planet and the second in Europe. France is a strategic point for international investors due to its highly qualified and productive workforce, support for innovation projects, profitable implementation costs, as well as an extensive network of land, road and river infrastructures.

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FRANCE PROFILE

Description of the country's economic outlook

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There are many reasons to invest in France, such as its innovative and strong economy, its competitive implementation and taxation costs, as well as being an important gateway to the vast expanding market of the European Union, among others.

This nation has been ranked among the most attractive countries for foreign investment in the world. This has allowed it to position itself as the seventh largest economy on the planet and the second in Europe. France is a strategic point for international investors due to its highly qualified and productive workforce, its support for innovation projects, its profitable implementation costs, an extensive network of land, road and river infrastructures through which all the products of its trade inside and outside the country, among others.

With an area of 551,500 km2, the French territory occupies the largest area in Western Europe and also has a large maritime zone that represents a privileged economic area that extends along 11 million km2 of coastline. This strategic geographical position in the center of the eurozone gives it immediate access to the single market of the European Union, which concentrates nearly 500 million consumers.

Additionally, according to data from the National Institute of Statistics and Economic Studies (INSEE), last year the country had 67.1 million residents in its metropolitan area and overseas departments, which makes it the second largest European market, made up of a population that enjoys a good standard of living and a high purchasing power.

France has been classified as the economic engine of the European Union (EU), thanks to its wide range of business opportunities in highly productive and technical sectors such as the agri-food industry, clean technologies, the automotive and pharmaceutical industries, the banking sector, transportation, telecommunications, tourism and luxury products, among others.

Likewise, according to the Ministry for Europe and Foreign Affairs (MEAE), France has established an important network of conventions and international trade agreements and tariff regimes with organizations that include: The European Union (EU), Economic and Monetary Union (EMU), the Organization for Economic Cooperation and Development (OECD), the World Trade Organization (WTO), the International Monetary Fund (IMF), the ITC European Economic Area, G-5, G-7, G-8, G-10 and G-20.

In this way, doing business in France, a competitive economy in the heart of Europe, in addition to guaranteeing investors a broad, stable, secure and government-backed market, allows them to manage truly profitable and long-lasting investments.

FRANCE PROFILE

Why invest in France

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Strategic geographic location

France is the seventh largest economy in the world and the second within Europe, which represents a share of 20% of the EU's GDP. An aspect that has undoubtedly contributed to this positioning is its strategic position, since being located in The center of the Eurozone has first-hand access to the single market of the European Union, which concentrates more than 500 million consumers, as well as to all the partners with which it has commercial relations.

This nation is the second largest market in the world and its location in Central Europe allows it easy access to markets in Europe where it has a larger share, as well as in the Middle East and Africa (EMEA).

On the other hand, France has an important interconnection of relations with the most important organizations worldwide where France is a founding member of the United Nations Organization and one of the five permanent members of its Security Council and is a member of NATO.

Let us remember that this country located on the Atlantic coast of Western Europe also has an area of 549,087 km² and a total coastline of 3,427 km, which makes it the third largest country in Europe, where 81% of its inhabitants belong to the urban population.

Modern infrastructure

France is one of the main infrastructure centers in all of Europe and has the first road network and the first leading business aviation airport in the European region (Le Bourget) and the main cargo airport.

The French road network is the longest in the European Union since it has 1,303,000 kilometers distributed in departmental roads, national roads and motorways, of which 12,000 kilometers are motorways, which puts it in second place in Europe. Although shipping by road represents 85.9% of freight transport, the intermodal system is gaining ground every day in the country.

France has a railway network of 30,000 kilometers of railways, together with an additional special network of more than 13,000 kilometers through which the high-speed train (TGV) circulates, which allows it to travel at a commercial speed equal to or greater than 270 km/h. Through this system, the connection with the main French cities is integrated and reaches Geneva, Brussels and London.

Equipped with three international airports such as Roissy-Charles de Gaulle, Orly and Beauvais (for low-cost airlines) that handle 50% of domestic flights, this sector, which is generally used by more than 200 million passengers per year, generates approximately 300,000 jobs direct and indirect work, according to data from the French Ministry of Transport. This sector was covered by a government support program of 15,000 million euros, about US $16,900 million to help it recover after the crisis in Syria.

For its part, the French commercial fleet is made up of 66 maritime trading ports, where 11 belong to Dunkirk, Le Havre, Rouen, Nantes Saint-Nazaire, La Rochelle, Bordeaux, Marseille, Guyane, Martinique, Guadeloupe, Port-Reunion. Through this maritime trade, approximately 35 million tons of merchandise and 32 million passengers circulate annually.

Currently, the French Ministry of the Sea (CIMer) has proposed the implementation of a new French maritime and port policy, where three major initiatives are sought. First, there is the application of a national port strategy, which promotes an increase in the volume of container cargo moved and created by French companies, through the country's ports, between 60 and 80% by 2050.

As a second measure on the issue of draft, there is the merger of the ports of the Seine, Le Havre, Rouen and Paris, remaining under Le Havre Port Authority. The CIMer carried out a study to establish fiscal measures that promote the attractiveness of port industrial zones in the world to implement them.

Finally, the ministry has established a marine renewable energy strategy, as well as a change in practices in fishing, aquaculture and coastal protection. This transformation also seeks to generate more than 350,000 jobs.

Important leader in world trade

According to the World Trade Organization (WTO), France is a major player in world trade. This nation is the sixth largest exporter and importer of merchandise, the world's leading port for the export of wine, aircraft, vehicles, pharmaceutical products, hydrocarbons and electronic components. The World Bank estimated that the nation's trade represents more than 65% of the country's GDP.

Despite the impact of the health crisis in the world, the International Monetary Fund (IMF) forecasts that the volume of exports will rebound in 2022 by 5.4%. Among its main trading partners are the other countries of the European Union (Germany is the leading consumer and supplier), the United States and China.

France is currently undergoing a process of reforms, promoted by the current government, with which the modernization of the economy and the State, ecological adaptation and technological updating are sought.

Qualified human talent

According to data from the National Institute of Statistics and Economic Studies INSEE, last year the French population was made up of about 67.1 million people, including both citizens of the metropolitan area and those from overseas.

The French citizenship that is recognized worldwide for its great productivity per hour, surpassing even Germany and the United Kingdom, also has a high-quality educational system, in fact, here are some of the best schools and masters in business and administration of the planet. They are about 50% of students between 25 to 34 who have a higher education degree. Here the academic training of its population is considered essential, which is why the schooling rate reaches 99%.

Leader undergoing renewal

France is a power and a world leader par excellence, which in this post-pandemic scenario has achieved, in the third quarter of this year, a growth in Gross Domestic Product of 3%, approximately 626,988 million euros, which places it as the fifth economy in the world in this concept.

With the aim of strengthening the recovery, achieving reindustrialization and making France a leader in innovation, finance and cutting-edge technology, President Emmanuel Macron will allocate 30 billion euros, some 35 billion dollars, which will be invested in sectors such as nuclear energy, clean hydrogen, clean agriculture, bio-medicines and in the space sector.

According to the president, through small nuclear reactors his country will be able to achieve energy independence. Additionally, in the next 10 years, France plans to build an ecological aircraft and almost 2 million electric and hybrid vehicles.

In this way, it decisively and ambitiously aims to encourage and increase the capacity of its economy to grow through innovation, especially with a view to financing its social model.

Main taxes

Below you can find some of the main taxes in France, if you want to know in detail the country's tax information you can download our Global Taxes App.

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25%

Corporation Tax

25%

Tax on capital gains and dividends

5% al 45%

Donations Tax

60%

Inheritance tax

20%

Value Added Tax / VAT

4,5% al 20%

Employment taxes

0% al 45%

Personal taxes

5,8%

Transfer taxes

Sectors of interest and market opportunities

These are the sectors that offer the most investment opportunities in the country and that have the support of the government for their development.

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Automotive section

The French automotive sector is traditionally recognized for its global excellence, which has allowed it to position itself as the preferred European destination for foreign industrial investment and is the second largest automobile industry in Europe. Also, this nation is one of the main countries in Europe in electric light commercial vehicles and its second market for hybrid vehicles.

This segment of the French economy generates approximately 400,000 jobs in the 5,000 companies directly or indirectly related to the French automotive sector, generating 43% of its revenue from export sales and is the leading sector in the country for applications for patents.

Because the health crisis affected automotive production in much of the world and given the importance of the sector for the French economy, its president Emmanuel Macron implemented a rescue plan for automotive companies for 8,000 million euros. The resources were delivered directly to the Renault and PSA companies, the main automakers in the country. With the help also came the request to manage the transition to cleaner vehicles.

This requirement is part of the new goals of the European Union to reduce its CO₂ emissions and achieve climate neutrality by 2050 and to achieve this requires that by 2030, 30 million zero-emission electric cars be circulating on all its roads, since The aim is to eradicate fossil fuel-based transport within the EU member countries.

This opens up a wide range of investment possibilities for research, supplies, recharging points and the implementation of this system in the European automotive fleet.

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Leader in clean technology

For France, the implementation of clean technologies is a priority issue since it aims to achieve climate neutrality by 2050. In fact, this nation is the leader in hydroelectric capacity in Europe and the second largest wind energy market. According to the ElectricityMap index, France is the only country in Europe that leads in production and reduction of emissions, followed by countries such as Switzerland, Belgium, Austria, Norway and Sweden.

At the moment, The country produces enough energy to export carbon-free energy to all European neighbors, in fact, it is producing more than 40 GW, with a footprint of 40 g CO₂ eq/kWh. Among the main sources for the production of electricity are nuclear, biomass, hydraulic and solar energy. After China and the United States, France is the third most attractive country in the world for the development of renewable energies, according to Business France.

Hydroelectric power in the nation accounts for about 60% of the renewable energy produced and 12% of all electricity generated in the country. Due to the 11 million square kilometers of French ocean, companies in the sector have access to one of the largest potential sources of renewable marine energy in the world.

In fact, the French Ministry of Ecological Transition increased spending on renewable energy to 6,000 million euros for this year. The resources will be used to diversify the country's energy potential to continue on the route of decarbonizing heating and transportation systems. By 2028 France wants to double the installed capacity of renewable electricity to 113 GW. This is how onshore wind energy will generate up to 34.7 GW, offshore wind energy 6.2 GW, solar energy 44 GW and hydroelectric energy 26.7 GW.

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France leader in ecological hydrogen

Lighting the emblematic monument of the Eiffel Tower with carbon-free hydrogen is a clear and forceful message of the need to implement renewable energies. With this, France ratifies its commitment to the development and adoption of this technology as an important source of clean energy, since the Government wants to reach 6.5 GW of hydrogen generation capacity by 2030.

The foregoing is also part of the European Union's policy of establishing innovative industrial value chains that contribute to the decarbonisation of the economy. With ecological hydrogen, we want to achieve climate neutrality in 2050 outlined by the EU, as well as create an efficient green economy.

In this way, the French Government established within its France Relance programme, the hydrogen plan, with which it will allocate resources of 7,200 million euros, with the aim of promoting the development of profitable production of green gas. In this way, it is expected to reach 6.5 GW of hydrogen generation capacity by 2030. The resources will be allocated mainly to the sectors of industry, transport and scientific research and technological development (R&D).

In fact, in various speeches, French President Emmanuel Macron has highlighted that the program wants to make his nation a leader in green hydrogen in the next 10 years, managing strategic areas ranging from automobile manufacturing to innovation in biomedicine.

Following this line, the country seeks as a first step the decarbonization of the industry, through the adoption of carbon-free fuel electrolysis, to eradicate the generation of hydrogen from fossil fuels. On the other hand, it is necessary to achieve the manufacture of public transport vehicles and commercial goods powered by hydrogen, also extending it to trains and garbage trucks. According to the French Environment and Energy Management Agency, €275 million is earmarked for large-scale innovative industrial ecosystem facilities.

Finally, the French Government will allocate a budget of 65 million euros to promote a program of scientific research and technological development (R & D), as well as the development of skills in its research institutes, universities and engineering schools.

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Agrifood Center of Europe

In France, agriculture and the agri-food industries (IAA) are traditionally important activities for the national economy and the country's international trade. Likewise, French gourmet food has been listed by UNESCO as part of the intangible cultural heritage of the planet.

Business France maintains that the agricultural sector has a share of 1.7% of GDP and that it is the largest agricultural producer in the European Union. The main crops are cereals, where the production of wheat and corn stands out; sugar produced from overseas territories; the famous wines, dairy products, fruits and vegetables; livestock production and meat products.

Likewise, Team France Invest maintains that this nation offers an attractive market with great international potential, for example, it is the leading agricultural producer in Europe, with 19.3% of vegetables; It is the second livestock nation and the first European producer of beef with 14.8%, it is the second European nation that produces cow's milk, butter and cheese, the latter made up of some 1,200 varieties, and it is the first exporter of wine in the world, among others.

Another attribute that this sector has is its robust scientific research and technological development (R&D) ecosystem, since it has the National Research Institute for Agriculture, Food and the Environment (INRAE), the Agricultural Research Center for International Development (CIRAD), along with 15 other agro-industrial technical institutes. This allows 69% of agri-food industries to innovate, placing them 9 points above the average for manufacturing industries.

Among the nations to which its products are exported are Germany, the USA , Italy, Belgium, Spain, the United Kingdom, China and Japan, mainly. 

Our advisors in France

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XSG Avocats

XSG Avocats is a multidisciplinary law firm with a team of professionals who combined their skills and experience to specialize in business and corporate law.