Starting a business

[nemltd]

Hi,

We have just finished the renovations on our house in the Gers and are really getting fed up with life in the UK. We have 2 years left until our 3rd child goes to University and we are able to think seriously about moving to France to live.

I have a small Limited Company in England and would like to set up doing the same in France. The problem is I cannot find any 'Industry Specific' information anywhere.

Does anybody know where I find out about TVA payments, P.A.Y.E., Corporation tax for specific areas in business. And also what the outline regulations are around the 'sale of goods act' or the equivilant.

It may sound a long way off but 2 years wil fly by, and I really want to get the heads up. Maybe if I could get some help from somebody in the same business but maybe miles away from the Gers. That way you wouldn't be 'shooting yourself in the foot' by helping me understand what's what.

Thanks

nemltd

Sorry, my business is second hand car sales

[Albert the InfoGipsy]

Can't really help you with the industry-specific stuff, other than to say that the second hand car market in France seems different from the UK -- higher prices for similar motors.

On the general business front you could do worse than start by viewing the videos here:

http://thenakedaccountant.wordpress.com/

Lisa has moved on to other things but I'm opretty sure most of the info is still valid. At least it will give you a basis to start asking questions.

I've seen people recommending this site too:

http://www.startbusinessinfrance.com/

[Sprogster]

Compared to the Uk, France is not small business friendly, hence the numbers of French business people who set up in the UK. Part of the problem are the very high social security charges levied on businesses in France and the general red tape involved.

Also don't underestimate the difficulties that can be presented by the language barrier, if you are not fluent in French.

Personally, I would consider further afield such as countries like Australia and the USA.

It is often said that France is a great country to retire to, or holiday in, but not to earn a living and that is probably why most members of this forum fit within those two categories.

[LEO]

[quote user="Sprogster"]Compared to the Uk, France is not small business friendly, hence the numbers of French business people who set up in the UK. Part of the problem are the very high social security charges levied on businesses in France and the general red tape involved.

Also don't underestimate the difficulties that can be presented by the language barrier, if you are not fluent in French.

Personally, I would consider further afield such as countries like Australia and the USA.

It is often said that France is a great country to retire to, or holiday in, but not to earn a living and that is probably why most members of this forum fit within those two categories.[/quote]

I agree  with Sprogster;s summation.

[nemltd]

Albert

Thank you very much for the two links, the naked accountant was especially informative, and free! I have just absorbed more knowledge about the various financial business structures available in France in the last hour, than I have in the last 6 years! So thanks once again.

Just contemplating if the 50 euros subscription fee will be value, on the 'starting a french business' site. Will look through the 'post' titles to see if any of the content will be specific to my industry.

Are there terms in French that relate to the English equivalent of 'The Sales of Goods Act', and also I would like to know if there is a VAT 'margin' scheme or similar, as in the UK. Any accountants out there, or car dealers that might have an idea?

Thanks again Albert, a great help to me.

nemltd

[nemltd]

[quote user="Sprogster"]Compared to the Uk, France is not small business friendly, hence the numbers of French business people who set up in the UK. Part of the problem are the very high social security charges levied on businesses in France and the general red tape involved. Also don't underestimate the difficulties that can be presented by the language barrier, if you are not fluent in French. Personally, I would consider further afield such as countries like Australia and the USA. It is often said that France is a great country to retire to, or holiday in, but not to earn a living and that is probably why most members of this forum fit within those two categories.[/quote]

After my newly found knowledge of the tax and cotisation liabilities in France, I have to say they do look higher than that of the UK. Although, it is said a little knowledge can be dangerous, I don't feel yet that its time to give up on our plans. However, I feel like I have made a start in what will be hopefully 18 months to 2 years research and 'business planning'.

It is difficult not to be a bit discouraged by Sprogsters and Leos comments but I am a pragmatist. My wife and I have an idea we would like to change our lifestyle and live in France when the kids have disappeared, by the sounds of it, you guys would discourage anyone from having a go? How do the French do it? I don't believe they have all moved to set up their businesss in the UK.

As for USA or Australia? Just not for me.

I have to say that my daughter has just returned from St.Malo where she was working within a French family for a month. The father, who has his own business, also discouraged the idea of trying to set up in business in France. His exact words were, "It won't work"!

I guess as I turn over more leaves and learn more, I will have to make a judgement on whether or not I think trying to carry on in business in France, as I finish in the UK will be viable. Who knows at this stage?

I wonder what wise words 'mummy salmon' has for her offspring? It's not easy swimming against the flow, but thankfully, some do make it! I love salmon!

 

[Will]

There are a couple of car businesses in our part of France that specialise in the British market. One seems to concentrate on the attraction that 4x4 vehicles have for the British in France and the other on the more general market. Both seems to be doing reasonably well. I would say you, like them, need to offer the full package - not just sales but servicing, getting vehicles through the French registration system, changing lights etc to comply with French rules, on both RHD and LHD vehicles, offering a full package in the English language with British standards of service. You need good French language skills to run any business in France because you will have a lot of dealings with French officialdom most of whom speak only French (and a particular dialect based on jargon and acronyms at that). Another local English-run business, which did seem to concentrate on sales of English and French cars mainly to the expat market, now seems to have failed.

I don't know if the French have any direct equivalent to the sale of goods act. European law applies in France as it does in Britain, and although private sales are 'buyer beware', trade sales are subject to a whole raft of legislation. Any vehicle over four years old, sold as being roadworthy either privately or by the trade, has to have a new or near-new Controle Technique certificate.

Vehicle parts, even for French-made vehicles, seem to be generally expensive in France, although labour costs seem lower than in Britain. Maybe this reflects the fact that although employment costs are high, other overheads such as cost of premises are lower in France.

I think you need to be aware of all your costs from the outset, with a good business plan, and set your charges accordingly. Many British in France fail to do this, they just undercut the competition without realising why the competition is expensive. Then they find they cannot pay the bills, so have to escape to UK or elsewhere - or go into receivership which is certainly not to be recommended in France.

[Albert the InfoGipsy]

I've seen posts that indicate that for a small-ish business the total government take is pretty similar on both sides of the channel. Tax tends to be lower and cotisations (equivalent to NI) higher. A good accountant is probably even more important here than in the UK.

One killer is if you need to have employees. You are likely to pay more than 50% of their salaries to the Govt and permanent employees are seriously protected. There is a version of cheque d'emploi that a small business can use to take on part time staff. My wife worked for an import company for about a year that way.

Once you have your ideas in reasonable order you could try contacting your local chambre de commerce. Mine was prepared to assign a mentor to me, but I decided it wasn't worth it because I was in the process of running my business down and settled for autoentrepreneur instead.

For consumer protection law,

http://www.dgccrf.bercy.gouv.fr/documentation/publications/depliants/garanties.pdf

Or try googling 'protection consommateur France' -- but you're unklikely to find anything in English.

English summary of some EU rules that should apply in France

http://eur-lex.europa.eu/LexUriServ/site/en/oj/1999/l_171/l_17119990707en00120016.pdf

Finally, try contacting the French embassy in London. They used to dish out a useful book on setting up a business in France.

 

[Will]

The book Albert refers to was published by the French Chamber of Commerce in Great Britain (http://www.ccfgb.co.uk/default.aspx) though it may well have been available through the embassy. Unfortunately it doesn't seem to be available any longer. The FCCGB should be able to advise you anyway, but I think the 50€ for a subscription to Albert's link would initially offer excellent value. Getting something wrong will cost you many times that.

Pragmatism is great, but rose-tinted specs are to be avoided at all costs. Remember that even beds of roses contain plenty of thorns; it doesn't make the flowers any less attractive, you just have to watch out for the thorns. Take the advice of those of us who have actually been involved with businesses in France, and follow it up with consultation with a qualified professional because every situation is different. I fully endorse Albert's caution about employing people, and your reference to PAYE (which doesn't exist as such in France anyway) suggests you may be contemplating this. Have you ever seen a French payslip? That should show why a good accountant is essential if you are going to employ staff, or even get involved with TVA issues.

You also say in your original post that you are 'fed up with life in UK'. That's a very common statement, but I think you need to establish exactly what it is that you are fed up with. Somebody who says they are moving to France because they don't like the UK always makes me urge caution; you need to move to France because you want to be there, not because you don't want to be somewhere else. Problems have a nasty habit of following you around, and when you need to deal with them in another language they are magnified several times over.

[nemltd]

Hi Will, thanks for taking the time........

In my minds eye I didn't really think of specialising to the British market, just to have a Second-hand car sales site that anybody could come to, just as they can to www.northendmotors.co.uk

I would be very interested in knowing the name of the British owned businesses you've mentioned, probably a bit of a sauce, but I could ask them a few questions (I will be at the other end of the country) so probably no real threat business wise.

Having a service centre on the site is appealing, I would like to become that local garage that people trust and recommend. Setting up the workshop side of the business would be quite expensive and the need for qualified staff early doors might be more than I want to take on, perhaps later if things go ok.

The language is coming on. There is an Italian owned fish and chip shop near me in Portsmouth. His English is still not great after 35 years in the UK, but his reputation locally for good food is second to none, with various industry awards on his wall! But I do take on board the language thing. With the proviso, good service and good value are more important, especially if you have staff that are either native or fluent.

It does send a shudder down my spine when people mention failure, receivership, bankruptcy. But I do think having a healthy respect of the pitfuls is a good thing, concentrates the mind and helps keep your feet on the ground, especially when you really want something, its easy to sell it to yourself!

Do you know of anybody that has bought a second hand car from a garage in France? Did they get a warranty, like in England, or does everybody rely on existing consumer laws instead?

I'd be interested if anybody knows about consumer credit licences for garage sales and the equivalent, if any to the UK VAT 'margin' scheme.

Thanks

nemltd

[Sprogster]

nemltd, do not under estimate the importance of being fluent in French, as it is not a matter of dealing with customers, but being able to deal with the functionaires.

I think you first need to research the car market in France, as I believe it is quite different from the UK in several respects.

Firstly, you do not get the fleet sales that the UK has and French people keep their cars much longer on average, both of which keeps new and second hand car prices far higher than the UK.

France is far less of a consumer society than the UK and French car buyers are pretty conservative, sticking to the main French brands and tend to buy second hand from the main brand dealerships.

Whilst there are independent second hand car dealerships in France, there seems to be far less than the UK and therefore I would suggest your first priority is to understand why.

Last but not least, I am sure you are aware that statistically the majority of new start up business ventures fail within the first five years and setting up in a foreign country, with a different language and culture, multiplies that risk by many times over. Therefore, if you are not young enough to start over again in the UK, if your French venture does not work out, then think very carefully.

[Will]

Nemltd - these are the two businesses I was thinking of.

http://www.4x4normandie.com/

http://www.voiturenormandie.com/

If the contact person at the first is the person of the same name that I am thinking of, he should have a lot to tell you about the pitfalls of running a business in France, if so it's good to see him apparently doing reasonably well.

We have bought several vehicles in France, most from a local garage which is a Renault dealer (there are far more franchised dealers in France than England, many of them, like ours, quite small, which probably explains the comparative lack of independents). Ours, like most others, deals in and services other makes too as a matter of course, we've taken our Peugeots, Citroen, Alfa Romeo as well as the Renaults to the local guy (in fact we bought some of them, but neither Renault, there).

This is another local French business that I guess is closer to the sort of thing you had in mind:

http://www.smvo-auto.fr/

It seems very well patronised by French customers, and it will give you a good idea of the astronomical prices asked for high-km second-hand vehicles. It has full service, bodywork etc facilities on the premises though the website only mentions sales. We've used them too.

As you will see, warranties are normally three or six months, and there is usually considerable room for manoeuvre on price if the customer foregoes or reduces the warranty. Some vehicles for sale at the garages are 'depot vente', i.e. the garage sells the vehicle on your behalf and takes a commission; these may or may not have a guarantee.

Many French garages are closed on Mondays. A lot of people don't realise that Monday is the day when the auctions are held, which is where most of the stock comes from (apart from part exchange). The French were wise to this, and would generally prefer to buy a car immatriculated in their own, or a neighbouring, département rather than an ex-hire vehicle (the hire companies tended to be based in the cheapest départements for registration). Under the new system with non-departmental numbers things have changed.

I'd also point out that although the French are getting more open-minded, they are still very much creatures of habit, particularly in rural areas, and less open to patronising foreign-owned businesses than you are with your Italian chippie. If you want to attract French customers you have to demonstrate that you are part of the community, offering them something that they want, and doing it much better than they can get elsewhere. So it may be best to start off somewhere where there is an English community, particularly the sort who think that dealing with French people extends no further than swapping courgettes with the neighbours, and have a real horror of dealing with French-speaking people in real life (as they have to do when registering a car for example).

An idea you might like to consider: there is a French garage near us that specialised in imports, mostly from Belgium, that meant it could undercut the other French dealers. It appears to have gone a bit upmarket now, but seemed to be doing very well, particularly among the French, when we bought an ex-Belgium LHD Peugeot at a good saving. http://www.neel-automobiles.com/accueil.htm