Feature : Investing in France

For the past several years the French Administration, local communities and France’s financial institutions have been taking steps to promote an environment favourable to international investment.

Because international investment creates jobs and this field is particularly diversified and very competitive, attracting investment from elsewhere has become a priority of French economic policy. President Jacques Chirac himself does not hesitate to promote « economic diplomacy ». In 1995, during the annual meeting of French ambassadors in Paris, he invited representatives of France abroad to focus on this subject, and did so again several times during meetings with businessmen in both Chicago and Singapore.

Two government departments have been given special responsibility for coordinating and implementing the policy of attracting international investment to France and promoting it: the International Investment Delegation (DII) of the French Ministry of Finance and DATAR (Délégation à l’aménagement du territoire et à l’action régionale - Delegation for National and Regional Planning and Development ), which comes under the Ministry of National Development and the Environment.

Created in 1992, the DII is a small organisation with a staff of about ten, whose job it is to analyse international investment trends, to propose measures to improve the fiscal and regulatory environment and run canvassing drives. This activity prepares the ground for DATAR whose activities it complements.

Much older, DATAR, which was set up in 1963, is well established in the country with industrialisation commissions and acts as the spearhead of local economic development. In 1992, it took the initiative to found the association Invest in France Network (IFN), which brings together local bodies (both industrialisation commissions and local development agencies), public and private sector companies, local and central governments and the financial institutions concerned. With DATAR, it forms a promotional, canvassing and reception tool for foreign productive investment in France.

DATAR has eighteen offices in other countries

(eight in Europe, four in the United States and six in Asia). This network is supplemented by the economic expansion units (PEE), answerable to the Ministry of Finance and Industry, which are responsible within embassies for promoting French economic interests. In Paris, DATAR is responsible for the overall management of individual cases, initiates the assembly of financial packages for projects and negotiates state aid*.

Lastly, the mobilisation of public resources occurs at the local level, where, alongside the local councils, which are very active through their development agency, the préfets - representing the State in the départements - endeavour to coordinate the response of the authorities to international investment projects. However, progress is still to be made in the matter of coordination. Dominique Voynet, the Minister of National Development and the Environment, advocates « the creation of a national agency which would provide better support and coordination of the resources of state, local council and business organisations interested in looking for foreign investors ». She also proposes to « rationalise administrative procedures » and to monitor newcomers to «encourage companies to become firmly settled in the country » and « maximise the benefit of their integration into the fabric of the local economy ».

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An attractive mechanism

France has set up a wide range of aids and fiscal advantages designed to encourage foreign investment. The Government and the local authorities offer both fiscal and financial incentives supplemented by various European programmes and a good number of attractive legal and fiscal mechanisms.

Companies that make industrial or service

sector investments benefit not only from financial assistance but are also offered advice by the State, local authorities or French companies with experience of redeployment. These financial aids have been implemented with the consent of the European Commission. Thus the objective of the development grant (PAT), awarded at DATAR’s discretion, is to stimulate the creation of jobs in the most deprived regions of France. Local grants and fiscal exemptions together with loans at preferential rates are also possible. Investors can also benefit from tax credits for research or training grants...

The rate of corporation tax (IS) in France, at 33.33%, is one of the lowest in Europe. In addition, since 1997, new fiscal arrangements have been put in place which aim to create a framework to encourage international companies to set up their head offices and logistical centres in France. In particular, this means the creation of an individual tax regime for such companies (« costplus ») designed to make their tax liability more predictable. This measure also affects companies in the banking and financial sector in respect of their advisory and financial analysis functions (especially « backoffice » functions). France is, moreover, one of the most attractive countries from the fiscal point of view for setting up a holding company. It is worth noting that an advantageous fiscal status has been put in place for expatriate executives temporarily working in France.

Finally, alongside the introduction of customs policies common to all member countries of the European Union, the French authorities have instituted advantageous customs regimes designed to promote international economic activity from France and have reformed customs clearance procedures from top to bottom in order to suit the needs of business. Anxious to adapt to individual requirements, French customs provide both information and advice to companies involved in international trade.

* All the aid schemes mentioned are available to both domestic and foreign companies.

• [DATAR, Ministry of National Development and the Environment] La DATAR, ministère de l’Aménagement du territoire et de l’Environnement 1, avenue Charles-Floquet, 75343 Paris cedex 07. Tel.: (33-1) 40 65 11 73.

• Invest in France: 28, rue du Docteur Finlay, 75015 Paris. Tel.: (33-1) 44 37 05 80.

• [International Investment Delegation (DII), Ministry of Finance and Industry] Délégation aux investissements internationaux, ministère de l’Economie, des Finances et de l’Industrie, Télédoc 334, 139, rue de Bercy, 75572 Paris cedex 12.

On the Internet,
a joint site for all these bodies : http://www.investinfrance.org