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: 2021-10-12

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 2020, the United States was the leading foreign investor in France with a stock of foreign direct investment (FDI) totaling over $91.1 billion (FDI stock in France as an immediate investor as of December 31, 2019).  More than 4,600 U.S. firms operate in France, supporting nearly 480,000 jobs.  A total of 204 investments were recorded from the United States in France in 2020, creating or maintaining 8,286 jobs, 5 percent more than in 2019.   In 2020, U.S. exports of goods and services to France were $42.9 billion, down 28.8 percent from 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.   The government initially enacted a gradual reform of France’s Unemployment Insurance scheme in July 2019 but suspended it during the pandemic. Despite labor union opposition, a government decree due to be published on April 1, 2021, will change the way benefits are calculated from July 1, 2021, to ensure that unemployment benefits never exceed the amount of the average monthly net salary, as has sometimes been the case in the past.  Other changes, such as stricter rules for accessing unemployment benefits and the reduction in benefits for high earners will go into effect “when the economic situation allows.”  The introduction of financial sanctions to limit the use of short-term contracts has been pushed back to after the May 2022 presidential elections.  Pension reform has also been suspended until 2022.   

To further boost the competitiveness of French companies, the French Government will reduce three local taxes on production, which represent €10 billion ($11.77 billion) in production tax cuts from 2021, affecting some 600,000 companies.  The government will also lower the rate of corporate tax to 25 percent by 2022, compared with 28 percent in 2020.

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 2021.  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 2021.

The 2021 tax law confirmed the path of reducing corporate tax on profits over €500,000 ($550,000) to 26.5 percent in 2021 (instead of 28 percent in 2020) and 25 percent in 2022.  However, for companies having a turnover about €250 million ($292 million), corporate tax is reduced to 27.5 percent in 2021, and should reach 25 percent in 2022.

In 2020, French GDP fell by 8.2 percent, a bigger economic contraction than the 2008-2009 crisis, because of the COVID-19 pandemic and 2021 forecast depends heavily on the health situation.  Still, the French central bank estimated on September 13 that France’s economy will pick up 6.3 percent in 2021 while the French government expects a 6 percent GDP growth.  The rebound should extend into 2022, with growth remaining very vigorous at around 4 percent, and activity is projected to return to its pre-Covid level by the end of 2021. France’s official statistical agency INSEE estimated that the first quarter of 2021 will settle at around 4 percent below its pre-crisis level, meaning a quarterly growth of about +1 percent.  The unemployment rate decreased in the second quarter of 2021, to 8.0 percent, which was linked more to the relatively good performance of employment than to the contraction of the labor force as a result of the second lockdown.   

In response to the economic impact of the pandemic, the government launched a two-year €100 billion ($116 billion) recovery plans in September 2020.  Emergency measures rolled out as from March 2020 safeguarded households’ income and drove the uptick in consumption in recent months. However lasting economic impacts on the productive capital and the deterioration of skillsets of employees could compromise France’s growth potential.  The bulk of the recovery plan aims to support employment in the short-term and to pave the way for the French economy of 2030 which will be greener, more competitive, and more inclusive.  Concretely, the plan is part of the government’s reform agenda to bolster competitiveness, economic appeal, and productivity, and aim at strengthening France’s industrial leadership and resilience.  The European Union is set to contribute approximately €40 billion ($47.2 billion) to the plan following the agreement reached by EU heads of state and government in July 2020.

The 2021 finance law also implements a significant production tax relief.  There would be structural decreases to both the territorial economic contribution (Contribution économique territoriale—CET) and the company’s property tax (taxe foncière) for 2021, the impact of which would be a decrease of the production taxes by €10 billion ($11.8 billion) in total and with the main beneficiaries being entities in the industrial and retail sectors..