The Freedom of Establishment in France from abroad

The principle of Freedom of Establishment:

The principle of Freedom of Establishment allows companies based in different European Union member states to develop their cross-border activities. Thus, it makes it possible for a foreigner to invest in France in our case. The law does not reserve real estate ownership to nationals only. Therefore, whether you are a resident of the European zone or not, you can buy real estate in France. In fact, the official investment system in France is one of the least regulated in the world: only a French bank account and a valid identity certificate are required for foreign investors.

In addition, it is possible for foreign investors to acquire holdings. And if all foreign investments must be declared at the Central Bank of France for statistics, most of them must be notified to the Attorney General who will decide whether prior approval is required or not.

Even though the scope of protection offered to foreign investors by EU law has become a matter of intense political debate, the “filtering” of direct investments made by non-European operators was validated by the Regulation (EU) 2019/452 of the European Parliament and of the Council of 19 March 2019. The FDI screening mechanism is based on the prior authorization of the Minister of Economy for any foreign investment in an activity that involves “sensitive industries”, as specified in Article L151-3 of the French Monetary and Financial Code and completed by the PACTE law, supplemented by a decree and an order of 31 December 2019.

Fundamental Principles of Foreign Investment Protection:

The Fundamental Principles of foreign investment protection ensure that all foreign investors are treated fairly and equally. This principle is important because it ensures that all investors are given the same level of protection. France has signed bilateral investment treaties with 115 different countries, ensuring to foreign investors in France an investment-friendly climate, as well as a legal framework that is relatively stable and transparent.

Recently, several reforms aimed at reviving the national economy and attracting foreign investors, have emerged. Per say, the charge of administrative formalities for the establishment of foreign companies was reduced. Foreign companies have had access to the same subsidies as French companies. And the corporate income tax rate has been reduced from 33% to 25% in 2022.

Office Real Estate and Land Ownership:

If Instant Offices or Regus could constitute temporary solutions, there is a possibility of buying land, industrial, and commercial buildings. In fact, companies controlled or registered abroad are free to invest in real estate in France, and can buy freehold or leasehold, to develop industrial and commercial sites or to buy through a real estate agency.

In real estate matters, it is the law of the property that applies, in this case French law. Our experienced team of lawyers and tax professionals have a wide range of legal expertise in this matter. Any foreigner is therefore subject to the French tax system for the taxation of rental income and real estate capital gains, and rules of ownership are effectively binding.