France - Country Commercial Guide
Investment Climate Statement

The Investment Climate Statement Chapter of the CCG is provided by the State Department. Any questions on the ICS can be directed to EB-ICS-DL@state.gov.

Last published date: 2021-03-04

The U.S. Department of State Investment Climate Statements provide information on the business climates of more than 170 economies and are prepared by economic officers stationed in embassies and posts around the world.  They analyze a variety of economies that are or could be markets for U.S. businesses.

Topics include Openness to Investment, Legal and Regulatory systems, Dispute Resolution, Intellectual Property Rights, Transparency, Performance Requirements, State-Owned Enterprises, Responsible Business Conduct, and Corruption.

These statements highlight persistent barriers to further U.S. investment.  Addressing these barriers would expand high-quality, private sector-led investment in infrastructure, further women’s economic empowerment, and facilitate a healthy business environment for the digital economy.  To access the ICS, visit the U.S. Department of State Investment Climate Statement website.

Executive Summary

France welcomes foreign investment and has a stable business climate that attracts investors from around the world.  The French government devotes significant resources to attracting foreign investment through policy incentives, marketing, overseas trade promotion offices, and investor support mechanisms.  France has an educated population, first-rate universities, and a talented workforce.  It has a modern business culture, sophisticated financial markets, a strong intellectual property rights regime, and innovative business leaders.  The country is known for its world-class infrastructure, including high-speed passenger rail, maritime ports, extensive roadway networks, public transportation, and efficient intermodal connections. High-speed (3G/4G) telephony is nearly ubiquitous. 

In 2019, the United States was the leading foreign investor in France with a stock of foreign direct investment (FDI) totaling over $87 billion.  More than 4,500 U.S. firms operate in France, supporting nearly 500,000 jobs.  The United States exported $59.6 billion of goods and services to France in 2019. 

Following the election of French President Emmanuel Macron in May 2017, the French government implemented significant labor market and tax reforms.  By relaxing the rules on companies to hire and fire employees and by offering investment incentives, Macron has buoyed ease of doing business in France.  However, Macron will likely delay or abandon the second phase of his envisioned reforms for unemployment benefits and pensions due to more pressing concerns related to the COVID-19 crisis. 

Business France, the government investment promotion agency, recently unveiled a website in English to help prospective businesses that are considering investments in the French market (https://www.businessfrance.fr/en/invest-in-France). 

Recent reforms have extended the investigative and decision-making powers of France’s Competition Authority.  France implemented the European Competition Network or ECN Directive on April 11, 2019, allowing the French Competition Authority to impose heftier fines (above €3 million / $3.3 million) and temporary measures to prevent an infringement that may cause harm.

On December 31, 2019 the government issued a national security decree that lowered the threshold for State vetting of foreign investment from outside Europe from 33 to 25 percent and enhanced government-imposed conditions and penalties in cases of non-compliance.  The decree further introduced a mechanism to coordinate the national security review of foreign direct investments with the European Union (EU Regulation 2019/452).  The new rules entered into force on April 1, 2020.  The list of strategic sectors was also expanded to include the following activities listed in the EU Regulation 2019/452:  agricultural products, when such products contribute to national food supply security; the editing, printing, or distribution of press publications related to politics or general matters; and R&D activities relating to quantum technologies and energy storage technologies.

Economy and Finance Minister Bruno Le Maire announced on April 29, 2020 that France would further reinforce its control over foreign investments by including biotechnologies in the strategic sectors subject to FDI screening, effective on May 1, 2020 and through the end of the year.  This includes lowering from 25 to 10 percent the threshold for government approval of non-European investment in French companies, which was implemented in response to the COVID-19 crisis to limit predatory acquisitions of distressed assets and is valid at least until the end of 2020.

In 2019 France passed a digital services tax.  The 2019 tax law reduces corporate tax on profits over €500,000 ($550,000) to 31 percent for 2019, 28 percent in 2020, 26.5 percent in 2021 and 25 percent in 2022.

In 2020, the impact of the COVID-19 pandemic on France’s macroeconomic outlook will be severe.  GDP shrank 5.8 percent in the first quarter of 2020 compared to the previous quarter, the sharpest economic contraction since 1949.  France’s official statistical agency INSEE attributed this fall to the government’s restrictions on economic activity due to the pandemic.  However, the GDP figure incorporates only two weeks of France’s confinement, which began March 17, leading economists to predict that second quarter figures will be significantly worse.  The Q1 figure marks the second consecutive quarter of economic contraction, after shrinking 0.1 percent in Q4 of 2019, meaning France has officially fallen into a technical recession.  Finance Minister Bruno Le Maire announced in April 2020 that he expects economic activity to decline by 8 percent in 2020, the public deficit to increase to 9 percent of GDP, and debt to rise to 115 percent of GDP.  

In response to the economic impact of the pandemic, the government launched a €410 billion ($447 billion) emergency fiscal package in March 2020.  The bulk of the package aims to support businesses through loan guarantees and deferrals on tax and social security payments.  The remainder is allocated to stabilizing households and demand, largely through its €24 billion ($26 billion) temporary unemployment scheme that allows workers to stay home while continuing to collect a portion of their wages. 

Although France’s emergency fund is sizeable at 16 percent of GDP, it is not sufficient to fully absorb the economic impact of the pandemic.  Key issues to watch in 2020 include: 1) the degree to which COVID-19 continues to agitate the macroeconomic environment; and 2) the size and scope of recovery measures, including additional fiscal support from the government of France, a broader EU rescue package, and the monetary response from the European Central Bank.