France is also a world leader in innovation, modern technology and research and development, which is also facilitated by state policy and a highly educated workforce.

In addition to the positive dynamics of the development of modern technologies, France also legalized cryptocurrency. The state is also positive about cryptocurrencies, but only if they are regulated.

State policy in the field of innovation

In 2019, France changed its tax system in relation to intellectual property, which created a favorable regime – Intellectual property box (IP box) or “Patent Box”, “Knowledge Development Box”.

The IP box regime in France is governed by art. 219 and Art. 238 of the Tax Code.

Companies can opt for an efficient tax regime and apply taxation at a rate of 10% on net income from granting licenses to operate the following intangible assets:

• Patents, utility certificates and supplementary protection certificates attached to the patent;
• Variety certificates of plants;
• Copyrighted software;
• Industrial production processes that:
  • represent the result of research activities;
  • are an important accessory to use the invention of patents;
  • are subject to a single license for use with the invention;
• Inventions whose patentability has been confirmed by the National Institute of Industrial Property.

Sophia Antipolis Technology Park plays a key role in the development of innovative technologies. The main investor in the establishment of Sophia Antipolis was the French government. Currently, the walls of the park unite the largest manufacturers of modern technologies, including such holdings as Intel, IBM, Air France and Orange.

Also, another argument in favor of setting up a business in France is that it has the largest startup campus in the world – Station F. This campus brings together the government, investors and startups, making it easier to get information and recommendations for those who want to open a business and legal faces in the country. 

Companies registered in France can submit their startups to Station F, where there are always public or private investors for potential products can be founded.

Cryptoregulation

In order to adapt to the latest market trends and keep pace with the development of technology, the French state has decided to create a legal framework for the regulation of cryptocurrencies and related issues (ICOs, tokens, etc.). This task was implemented within the framework of the Law on Enterprise Growth and Transformation.

DASP stands for Digital Asset Service Providers. The French Monetary and Financial Code (MFC) has established a list of nine “digital asset services”. They are broadly based on investment services subject to European financial regulation and accurately reflect the activities and operations that DASPs carry out as defined by the FATF.

Article L. 54-10-2 of the MFC defines “crypto asset services” as:

1. custody of digital assets on behalf of the client;
2. the service of buying or selling digital assets as legal tender;
3. service of exchanging digital assets for other digital assets;
4. receiving and transmitting orders for digital assets, i.e. receiving and transmitting orders for the purchase or sale of digital assets on behalf of a client;
5. other crypto asset services such as:
   1. portfolio management of digital assets;
   2. advising subscribers to digital assets;
   3. underwriting of digital assets;
   4. guaranteed placement of digital assets;
   5. unsecured placement of digital assets;
   6. operation of a platform for trading digital assets

DASP regulation is based on two modes:

• mandatory registration of service providers 1 – 4, and
• an additional (optional) license from any digital asset service provider that requests it and meets the basic requirements.

To obtain an additional license for DASPs that provide services for cryptocurrencies 1-4, mandatory registration is required.

Taxation

Individuals (French citizens, foreigners who are domiciled in France) are subject to personal income tax (“PIT”) on their worldwide income, unless otherwise specified in a double tax treaty. Non-residents of France pay personal income tax only on income received from a French source.

PIT – paid at a progressive rate from 0% to 45%. When calculating the personal income tax rate, the marital status of the taxpayer is taken into account, depending on which a coefficient from 1 to 6 is assigned, after which the personal income tax rate is determined.

Since January 2022, France has set a flat corporate income tax (“CIT”) of 25%.

From January 2021, a reduced CIT rate of 15% has also been introduced. The reduced CIT rate applies to small companies on the first EUR 38,120 of taxable income.

France has a well-developed social security system, and hence social contributions. Compared to other European countries, the rates are quite high, namely employee contributions: from 21.01% to 26.86%, employer contributions: from 30% to 45%.

Value added tax – basic – 20.6% applies to most goods and services, and there is also the first reduced – 10%; second reduced – 5.5%; the third is reduced – 2.1%, which is applied to essential goods and basic services.

Summary

France is a country with a stable economy and the sixth status in the world in terms of GDP, so a fairly large number of businesses strive to get registered in this country. Also in France, there is a sufficient number of highly educated employees in various fields of activity, which is also a plus when establishing your own company.

The government is fully supporting the development of high technologies in the country, as evidenced by such projects as Sophia Antipolis and Station F.

A properly selected tax regime for business, which is aimed at the development of modern technologies, will help to optimize the taxation of such companies as much as possible.

An important point is also the presence in France of the IP box mode, which attracts many IT specialists.

In addition, France is one of the leaders in Europe in online administration. Most government services are available on the official website.

Cryptocurrency regulation in France creates a favorable atmosphere for the development of crypto exchanges and other innovative platforms that can operate throughout Europe.

If you decide to register your own company in France or get the status of an entrepreneur, Manimama is ready to take on all the legal work.

The content of this article is intended to provide a general guide to the subject matter, not to be considered as a legal consultation. 

---

Photo credits