France is a great country to live in, and I’m very happy to be here. But there are issues to do with running a company that are, to say the least, challenging.
It’s not unheard of for me to grumble about the bureaucracy and costs involved with running a business in France, usually while I dream about what I will do when I need to find a tax exile. Happily it’s not a pressing problem and the apartment in Monte Carlo can wait, but I was interested to see a report on the relative costs of running a business in 181 countries around the world – including France of course.
First a question - guess the answer and I’ll tell you at the end. The question is: ‘The overall average % of a company profits that gets paid in taxes in the UK is 35%, and 42% in the US. What would you guess the same percentage is for France?”
It’s pretty clear to everyone working in France that one of the big issues is employing people, where staff have substantial rights and are both very difficult and very expensive to get rid of if they turn out to be poor workers, or surplus to requirements in a downturn. Hence most of the artisans who have worked on our property over the years have tended to be sole traders – the potential risks of employing someone are very serious if you make a mistake and need to get rid of them, so they prefer to work long hours themselves than take a risk.
Stories of being forced to carry on paying people for years on end, even if they only do a couple of weeks work before going off on long-term sick leave, are commonplace. These difficulties are not good for the unemployment rate, of course.
So of course I was interested to see if things were really as bad as people make out.
It took a while to track down France in the league tables for ‘employing workers’, but I eventually found them – between Iran and Peru, at position 148/181. To keep things in perspective, Spain and Portugal were even further down. Singapore and the US came first, with the Maldives at number 4.
I won’t bore you with a detailed analysis of the whole report. The top 5 overall were: Singapore, New Zealand, USA, Hong Kong and Denmark with the UK coming in at number 6 so any of those will do nicely if you are about to launch the next google or microsoft. (France were at number 31 overall, scoring highly for ‘starting a business’ and ‘enforcing contracts’). You can see the full report at doingbusiness.org.
Of course, if you have no great ambitions to start a successful corporation, preferring to live a quiet life, appreciating great natural beauty and watching the sunflowers blow in the wind, then France will be ideal. Hence why we are here!
And the answer you’ve been waiting for. The overall tax burden on company profits in France is 65.4% – more or less exactly twice the level of the UK. Now how popular would Gordon Brown be, I wonder, if he announced in the next budget that all taxes were to be doubled, to be brought in line with France?
The country of your dreams, by the way, is the Maldives where your company will escape with more than 90% of its profits
The Maldives are all very well, but the whole place will be under water in a few years anyway. Besides, France is worth the huge expense.
You have what it takes to be a successful entrepreneur. Whatever your dreams are, don’t be afraid of the risk involve. It’s but natural. If you will not take the dip, how will you know if success is within your reach? taxes can be a relief if you will just follow the rules.
I agree with you, in principle, just not when the tax bill arrives! ‘Don’t worry, I’m happy!’