AC Legal Blog Post What's next after you have set up your Limited Liability Company in France? The French Corporations Annual Legal and Tax Obligations

French Corporation’s Annual Legal and Tax Obligations

In our previous guide, ‘EURL vs SASU: Ultimate Guide to Starting a Business in France‘, we explored the initial steps of setting up a Limited Liability Company in France. Now, as your journey progresses, it’s crucial to respond to the question ‘What’s Next After Setting Up Your Limited Liability Company in France?

This post delves into the essential legal and tax obligations that your French Corporation must adhere to annually. From holding Annual General Meetings to filing tax returns, we cover the critical steps to ensure your company remains compliant and thrives in the French business environment.

Once you have set up your business in France by creating a French Limited Company, as of the following year of the creation you will have a few legal and tax obligations to comply with:

I) Hold an Annual General Meeting (Assemblée Générale Ordinaire – AGO)

Each year, a General Meeting shall be held in order to approve the Company accounts (Comptes annuels) of the previous year

Accounts shall be drawn up and approved within 6 months since the closing of the accounting year of the Company, usually 31st December of the previous year*.

A further General Meeting can be requested over the year by the partners or the management; in this case, it is denominated  “Extraordinary General Meeting” (Assemblée Générale Extraordinaire – AGE). 

The AGE may be required by a statutory provision or by the articles of association (Statuts) when the following subject matters need to be discussed and approved, namely:

  1. Change in the Legal Form of the Company
  2. Change of the Object Clause of the Company
  3. Relocation of the Business Headquarters of the French Company
  4. Change of nationality of the Company
  5. Increase or reduction of the Company Share Capital amount
  6. Dissolution or Wind-Up of the Company

* In case you have opted for an EURL or SASU where the only shareholder is yourself, the Annual General Meeting for the approval of the accounts consists of a simple statement of the sole-shareholder and manager (Associé unique gérant of the EURL or Président of the SASU), that shall be filed along with the Corporation accounts with the Company Registrar. 

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II) Filing of the Accounts and Tax return

The previous year’s approved accounts shall be filed with the competent Company Registrar (Greffe du Tribunal de Commerce) within 1 month from the their approval. 

In Paris, the Company Registrar fee for the filing of the accounts is 45,34 €.

III) File a Tax Return

The Limited Company’s Tax return based on the previous year’s approved financial statements shall be filed with the Tax authorities by May 15th of each year.

Accounting aspects

Accounts include Financial Statements such as the 1) Balance Sheet (Bilan), the 2) Income Statement (Compte de résultat) and, when the firm’s figures are over certain thresholds*, also the 3) Appendix (Annexe comptable). 

The Business Report (Rapport de gestion) is not required for Corporations that fall under the definition of “Small Entreprises” (Petites Entreprises) such as those with a Balance Sheet value  4M € and Income Statement ≤8M €.  In any case, unlisted companies are not required to file the Business Report with the Company Registrar. 

You may choose to have the first Accounting Year to end on 31st December of year N+1 from the creation of the company (e.g. if you create a company in 2022, you may have the first accounting year to end on Dec 31st 2023. First accounts will then be filed in 2024).

Unless you are admitted to use the simplified regime of the Micro-Entreprise (Auto-Entrepreneur) where no financial statements are required, it is best to use the services of a Certified Chartered Account (Expert Comptable) in order to prepare the Annual accounts and the Tax return of the Company.

* Enterprises that meet at least 2 of the following 3 thresholds :  i) Balance sheet ≤350K € ii) Turnover  ≤ 700K € iii) employees ≤ 10 are not required to file an appendix (Annexe comptable).

Financial aspects

Besides approving the accounts, the Annual General Meeting is also usually the place where further, ordinary decisions relating to the Company’s course of business are proposed and approved and where the decision is made on how to distribute the Profits (if any) in the form of Dividends (Dividendes), Profits Deferral (Report à nouveau), Placement in the Reserve Fund (Affectation en réserve), among others.

Limited Liability Companies are required to allocate at least 5% of their profits to their Reserve Fund. This mandatory requirement ends as soon as the reserve fund is equal to 10% of the share capital of the Corporation. 

Do not hesitate to get in touch with us if you have any questions about setting up a business in France and if you wish to know how everything works. 

We are an independent, boutique-size and acclaimed International Corporate and Tax Law firm working closely with excellent International Accounting firms in Paris, New York and London.

The opinion expressed in this article is for informational purposes only.

This article does not constitute legal advice.

In addition, it is important to remind that each client’s tax issue is different because each client’s personal situation is different.

Should you have a similar tax issue, please contact us for an initial discussion of your case.

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Do not hesitate to contact us in order to clarify your situation on these issues; we will be happy to help you.