Why Do French Entrepreneurs Leave For London Commerce Essay

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Between April 2008 and March 2009, despite the worse recession since the after war, in one year, 101 French projects were created in the United Kingdom, resulting in 2600 jobs, according to UK Trade & Investment, the British government agency which helps the foreign companies to settle in the UK. France is the first European investor in the UK and the third of the world. This shows that France has really strong links with the UK and they are still growing.

Moreover this does not only concern the richest people: only 30% of the people who left France for London are earning more than a million euros per year: all new entrepreneurs are concerned.

If many people actually leave it is because the legal, tax and fiscal and administrative environment is more favorable for entrepreneurship.

After Hollande's election David Cameron and London's mayor Boris Johnson even advertise so that the French come and created their companies in the UK: « You all are welcome ».

Why do French entrepreneurs leave for London?

Economic reasons

A new law passed recently in France, establishing a 75% tax for people earning more than a million euros per year. As for the income tax in the UK, it is calculated according to different income layers, as presented on the next page:


Layers for 2012-2013

10 % (Starting rate for savings)


20 % (Basic rate)


40 % (Higher rate)


50 % (Additional rate)

More than £150,000

So the maximum rate you can encounter in the UK is 50%, which is a lot more advantageous than in France.

Moreover the corporation tax in London is around 24% in 2012 and will decrease to 23% in 2013. Besides small companies pay a 20% corporation tax and it can be reduced to 4% thanks to the creation of a mother company in Gibraltar which enables to keep a great part of the profit: this is called the Agency Agreement Law.

In addition the employer's social security contributions are lower in the UK: they are on average 20 to 30% higher in France.

We can also notice that the Value Added Tax is lower in the UK than in France: about 17% for 19.6%. Furthermore goods bought or sold outside the European Union are zero-rated in the UK, which is not the case in France; on the contrary, France tends to encourage consuming French products, thus it does not hesitate to implement great taxes.

A favorable environment

Creating your company in London is easy and fast. It takes a few minutes to create a limited company in the UK and it is very simple; you can for instance do it using the Internet (a French business man says he had time to do it taking the train from Lille to Paris, which lasts about on hour, on his computer) whereas in France it takes at least a few days. Moreover there is what is called a "Ready-made Company" or a "Off-the-Shelf Company". This consists in buying to a "company registration agent", "solicitor" or a "barrister", or a "Chartered accountant" a "Private Limited Company" already formed by them but not active; you buy the statute. This costs between 110 £ and 170 £.

Secondly you can benefit from help and advice. Organizations like Business Booster can help you in your approach, from the first market study to the contacts and the installation in the UK. Those kinds of services are generally not free, but the British government has put a free service in place so that more French entrepreneurs come.

Then there is a general climate in London: a French entrepreneur explained in an interview that when she was saying she was creating her company to British people, everyone was very enthusiastic, whereas in France, people are more pessimistic. It looks like in France being rich is badly seen, particularly since François Hollande said he did not like rich people. The entrepreneurs are enticed to leave as they feel that they do not share the values advocated by their country.

Besides London is keen of French businessmen, especially if they are graduated from a "Grande Ecole"; the president of the HEC alumni explains that up to 20% of some year classes are working in London.

London : a reference in the world

Business people from other countries have a good image of London, far from tax havens. Indeed the UK is the European country that receives the most foreign investments: 30% of the investors of the City are foreign investors.

A French firm 1000mercis (working in advertising and marketing) had to choose London for commercial necessity, as more and more decision centers are based in this city. For instance Expedia, an online travel agency, grouped its activities and brought its decisions centers back in the UK, explains Dorothée Lacroix, the woman who opened 1000 Mercis in the UK.

Finally when you are French, you can have the headquarters of your company in London and have your other activities in France, as London is two-hours away from Paris by train.

Those are the reasons why French entrepreneurs decide to go and settle to London. But to succeed there, some conditions are required.

The conditions

Types of companies

A business entity is an organization that is formed in accordance with the law in order to engage in business activities, usually the sale of a product or a service. There are many types of business entities defined in the legal systems of various countries. These include corporations, cooperatives, partnerships, sole traders, limited liability company and other specialized types of organization.

In the United Kingdom, there are ten different types of companies.

The first one is the CIC (Community Interest Company): this kind of company was introduced recently by the United Kingdom in 2005 under the Companies Act 2004. In these companies, the social good is the principal objective. It is a business with social interests whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximize profit for shareholders and owners.

The IPS (Industrial and Provident Society): is a legal entity for trading businesses voluntary organization in the United Kingdom, the Republic of Ireland, and New Zealand. Recent UK legal developments include the Co-operatives and Community Benefit Societies Act 2003, which has introduced the concept of an asset lock, which a society registered as a community benefit society (but not one registered as a co-operative) can introduce to prevent specified assets being used for unintended purposes.

The GP (General Partnership): it is the basic form of partnership under common law. It refers to an association of persons or an unincorporated company with the following major features: Created by agreement, proof of existence, formed by two or more persons the owners are all personally liable for any legal actions and debts the company may face.

There are also the LLP (Limited Liability Partnership): it is a partnership where some or all partners have limited liability. They have a form of limited liability as the shareholder's corporations. The board organizes itself and hires corporate officers who then have as "corporate" individuals the legal responsibility to manage the corporation in the corporation's best interest. An LLP also contains a different level of tax liability from that of a corporation.

The LP (Limited Partnership): is a form of partnership similar to a general partnership, except that in addition to one or more general partners (GPs), there are one or more limited partners (LPs). It is a partnership in which only one partner is required to be a general partner. The GPs are, in all major respects, in the same legal position as partners in a conventional firm, it means that they have management control, share the right to use partnership property, share the profits of the firm in predefined proportions, and have joint and several liabilities for the debts of the partnership. As in a general partnership, the GPs have actual authority as agents of the firm to bind all the other partners in contracts with third parties that are in the ordinary course of the partnership's business.

The Private companies limited by shares: it is one of the most famous types of organization. It has shareholders with limited liability and its share may not be offered to the general public. "Limited by shares" means that the company has shareholders, and that the liability of the shareholders to creditors of the company is limited to the capital originally invested, it means that the nominal value of the shares and any premium paid in return for the issue of the shares by the company. A shareholder's personal assets are thereby protected in the event of the company's insolvency, but money invested in the company will be lost. A limited company may be "private" or "public". A private limited company's disclosure requirements are lighter, but for this reason its shares may not be offered to the general public (and therefore cannot be traded on a public stock exchange).

The Public Limited companies:  is a limited liability company whose shares are freely sold and traded to the public, with a minimum share capital of £50,000. A PLC can be either an unlisted or listed company on the stock exchanges.

The Private Limited companies by guarantee: it is an alternative type of corporation used primarily for non-profit organizations that require legal personality. A company limited by guarantee does not usually have a share capital or shareholders but instead has members who act as guarantors. The guarantors give an undertaking to contribute a nominal amount (typically very small) in the event of the winding up of the company. It is often believed that such a company cannot distribute its profits to its members but (depending on the provisions of the articles) this is not actually true. However, a company limited by guarantee that distributes its profits to members would not be eligible for charitable status. Until 1981, it was possible in the United Kingdom to form a company limited by guarantee with a share capital. Like a private company limited by shares, a company limited by guarantee must include the suffix "Limited" in its name, except in circumstances specifically excluded by law. One condition of this exclusion is that the company does not distribute profits.

The Unlimited Companies: it is a hybrid company incorporated either with or without a share capital (and similar to its limited company counterpart) but where the liability of the members or shareholders is not limited, that is, its members or shareholders have a joint, several and unlimited obligation to meet any insufficiency in the assets of the company in the event of the company's formal liquidation. The joint, several and unlimited liability of the members or shareholders of the company to meet any insufficiency in the assets of the company (to settle its outstanding liabilities if any exist) only applies upon the formal liquidation of the company. Therefore, prior to any such formal liquidation of the company, any creditors or security holders of the company may only have recourse to the assets of the company and not to those of its members or shareholders.

Until such event occurs (formal liquidation) ,an unlimited company is similar with its counterpart the limited company where its members or shareholders have no direct liability to the creditors or security holders of the company during its normal course of business or existence.

Finally, the Sole Proprietorship: also known as the sole trader or simply a proprietorship is a type of business entity that is owned and run by one individual and in which there is no legal distinction between the owner and the business. The owner receives all profits (subject to taxation specific to the business) and has unlimited responsibility for all losses and debts. Every asset of the business is owned by the proprietor and all debts of the business are the proprietor's.

Bank accounts

The British Banking Association has launched an online service listing the UK banks that allow overseas residents to hold an account for foreigners. There is no legal restriction stopping banks accepting customers with foreign addresses, but the overwhelming majority of Britain's 336 banks are unwilling to offer domestic banking services for residents who do not have an address in the UK because of concerns over fraud prevention and extra administrative costs. As an expatriate, open a bank account in England is crucial: you will indeed be asked by your employer so that he can pay you your wages. Which will be difficult, however, is to choose the English bank: how to choose between HSBC, Bank of England, Barclays Bank, Royal Bank of Scotland, Lloyds TSB? If opening a bank account in the UK is quick and easy, obtaining different payment methods can be time consuming, especially for new expatriates: the bank does not know, she will not give you immediately checkbooks, debit cards and even fewer credit cards, and wait to see the regular cash flow and a "normal" management of the account.

There are documents required for opening an account, they are the followings:

Identification (passport).

Proof of residence, such as a water bill or electricity ("utility bill"). This last document is often a problem: from land, you will not even water bill or electricity in your name. So remember to do the legwork water / telephone / television, etc.., as soon as possible and request a statement or invoice emergency.

Copies of your bank statements for the last six months (these documents are not systematically requested).

Certificate of a guarantor (usually required). It is a sort of "witness of good character", which must have lived in the UK for several years and which certifies that you are someone respectable. If you arrive on British soil having a job, the guarantor will usually be your boss or a company representative, who may also give an indication of your annual salary.

A reference letter (in English) from your bank in your home country. This document is not mandatory but can speed things up, especially with regard to obtaining a credit card. Ask your bank that provides banking information: date of opening your account, current balance, average balance during the year, whether or not discovered ... In some cases, your bank will do you no letter in English: you will have to translate it ...

To choose a bank, a foreigner should take advice from the consumer associations. Indeed, between HSBC, the Bank of England, the Barclays Bank, the Royal Bank of Scotland, the Lloyds TSB ... it is difficult to choose in the UK. The City, the business district of London, is not the European Capital of finance for nothing and the competition is fierce between banking institutions. To navigate through the jungle of standards and services it is recommend visiting the consumer associations or specialized on banking to make your choice. In particular, some websites offer complete a questionnaire which will direct you to the bank offers that may fit you.


The tax implications of using a UK holding company to hold shares in other UK or overseas companies. The general principle is that a UK resident company is subject to UK corporation tax on its worldwide profits and gains. However, there are a variety of exemptions potentially available to a UK holding company which makes having a UK holding company an attractive prospect in certain circumstances.

Some of the general considerations which may apply to UK holding companies are set out below. Whether a UK holding company is the appropriate solution for a company or investors very much depends on the particular circumstances and the other jurisdictions involved, so this guide only gives a brief indication of the issues that may be relevant. Investors can invest in a UK holding company through a mixture of two methods:

By way of debt, that is by lending the company money.

By way of equity, that is subscribing for shares in the company.

The UK holding company is likely to make returns to investors either by way of interest, in the case of debt funding, or dividends, or in the case of equity funding.

Legislation and regulations

As a new company in a foreign land, you are probably not familiar with the laws, rules and regulations in force in the country where you choose to settle. The differences are not only legal, but also cultural and understand these differences are essential if you move abroad. You may need to take advice on the following points:

- The complexity of the UK legislation on employment,

- The local requirements for licensing, especially if you run a restaurant or a bar,

- The types of license for your business, for example in the field of consumer credit,

- The need to register with one of the many regulatory agencies in the United Kingdom,

- Almost all businesses must be aware of the regulations regarding health and safety, and other items which most modern businesses must comply.

The assistance of a team of specialists able to advise you on suitable wisely is important, it is essential to the success of your business, because any misstep in this area can be extremely expensive.

Recruitment of staff

There are many recruitment agencies but pay attention to their reputation. It is possible to hire the agency Reed, who has a website highly developed www.reed.co.uk. The best way if your budget is reduced is to use freelancers that you recruit by placing an advertisement on www.elance.com or www.peopleperhour.com for instance. You can also use the local employment agency, where you can place an ad for free using job centers.

About the recruitment of specialists, most companies must rely on lawyers and accountants, and it is not easy to make the right choices in the absence of recommendations. Nowadays, most companies that are not directed to an accountant or a lawyer recommendation, the answer is on Google. But be careful; think first and foremost the following:

- What is the ideal size of your company? You need to use expensive services of a large firm or those of a firm specializing in the international arena?

- What is the level of specialization of your business? Do you need to hire a consulting firm that will be able to advise you on your business?

- The location of this team of specialists is important?

Whatever way you choose your team of specialists, meet them and do not rely solely on electronic exchanges or websites. In fact, meeting one or two firms potential lawyers or accountants, and organizing what we call in England a "beauty parade" (literally a beauty contest, even if the participants are not necessarily beautiful!) Or call open competition; you can compare your contacts to see if they are right for you, as well as the cost of their services and their organization.

Which social protection for the employees?

If you hire employees, you must register with the British social security ("Department of Health and Social Security") and pay the employer and employee social security contributions ("National Insurance"), so that they can take advantage of all the benefits regulations (health insurance, family allowances, old age and unemployment insurance). One contribution is calculated. The rate varies depending on the amount of salary. After deduction (for the fiscal year 2007/2008, the allowance was £ 5,225 per taxpayer, regardless of their status: single, married, father or mother).

Within the "Class 1" own employees, it is possible to choose one of three regimes:

- The first does, in retirement, the minimum pension paid by the State (public pension "contracted in");

- The second includes the minimum pension plus a private pension based on the salary level ("contracted out salary related");

- And the third includes the minimum pension plus a private pension based on the purchase of an annuity ("contracted out money purchase").

Since October, the 1st 2008, the minimum wage is £ 5.73 per hour for workers over 22 years, £ 4.77 per hour for those aged between 18 and 21 years and 3 £ 53 per hour for youth 16 and 17 years.

Something important to notice is that below a salary of £ 100 per week, no fee is payable by either the employee or the employer. You will, in addition, you replace the tax collector. Will deduct a monthly gross salary of your employees, the income tax they owe. Then you will pay directly to the Treasury (system of "Pay as you earn": PAYE).

Concrete examples

Arnaud Vaissié, a French entrepreneur created "International SOS" in 1985 and it is now the global leader in its sector; it is the only company offering integrated services in occupational medicine and safety. It even has as customer the American Department of Defense, for which it deals with the medical files of 30,000 soldiers, 70% of the 500 world's greatest global companies and 80% of the CAC 40 companies.

Arnaud Vaissié was named entrepreneur of the year in 2009 by Ernst & Young; he also is president of the French Chamber of Commerce in Great Britain, co-creator of the "Cercle d'Outre Manche", a reflexion circle and founder of a bilingual secondary school in Kentish Town.

Clémence de Crécy

At the head of a company

Clémence de Crécy went first to the UK in 1999, as she was a law student; she went then back to France to take marketing courses. She found her first job in London in a communication agency. At 27 years old she decided to create her own company in press relations in London, called "Clémentine Communications". It has eight employees in the capital of the UK and three in Paris. Clémence is now definitely settled in London she is married to a British and has children.

After one year working in communication in the UK, she tried to find a job in France but all she could find was beginner jobs. So she stayed in Great Britain, where people trusted her and gave her real responsibilities. Even after the creation of her company, she took the decision to open a subsidiary in France. This took three months whereas she had founded her company in England in the Internet in 24 hours. After her experience, she recognizes the issues of France concerning the administrative processes and the load of the employee's contribution.

Thierry Tomasin

Owner of a restaurant

Thierry Tomasin came to London in 1991, as he was 20 years old to learn English. He started as a waiter at the « Gavroche », one of the best restaurants in London (two stars in the "Guide Michelin"). He worked hard and the chef Michel Roux gave him the responsibility of his wine cellar, as he only was 21. Thierry Tomasin became then a renowned sommelier and was elected best worker in Great Britain in 1996.In 2007 he opened his own restaurant, the "'Angélus". He explained that when he arrived in 1991 he only intended to stay one year and he added that he thought this could not have happened in France. He said that in Great Britain if you show the will to succeed and if you work hard, you will be helped and supported, whereas in France the only way to get a good job is to take it from someone else. He had the chance to serve Queen Elisabeth and to build up Brad Pitt's personal cellar.

What do they think about this experience?

If most of French people came to the UK to work, many of them also find the life quality very good (see the following diagram). An illustrator, Charlotte du Jour, testifies that at the beginning she did not wanted to leave Paris at all, but she had to as she wanted to follow her husband. She had the idea that London was a sad and dull city, but this turned out completely wrong; she enjoys now the numerous parks and the respect people have for each other, which considerably changes from the aggressiveness reigns in the French capital.


Therefore after living an experience in the UK, most of the exiled French entrepreneurs do not regret their choice but, on the contrary, are more and more convinced that they made the right decision going to London and would hardly go back to their origin country.

For sure there are not only successful entrepreneurs in England, like in France it does not work for everybody, but the failure seems less hard to handle than in France.


The financial crisis

Europe is, in those times, growing brains to try to get out of the current financial situation and its banks are cautious when it comes to lending to companies; therefore the climate is not very conducive to entrepreneurship. However, if you can establish your business during a recession, there is a good chance that you are in pole position when the situation improves.

Yet the country was heavily affected by the financial crisis. The UK and Ireland are the two most indebted countries in the European Union. Since January, the 4th 2011 the rate of tax on value added tax (VAT) was raised to 20%. If a businessman wishes to set up his company or a subsidiary in London, he should go to the British Embassy in the country where he lives and visit the website of the UK Trade and Investment (www.ukti.gov.uk), where an advisor can give useful information.

However it is actually still much faster to start a business in London than in Paris.

Opening a bank account

What is best to do is to be accompanied by an expert of the English banking system, especially if you do not speak English well enough. It must be taken into account that everything is increasingly managed through the Internet and call centers, so it can be difficult to meet a financial advisor. Moreover many local offices are closed on Saturday or Wednesday afternoon. Consequently it is better to prepare a list of questions for the first appointment and to make sure to understand the main principles of the British banking system.


To make his settling easier, a foreign entrepreneur can hire an accountant who is familiar with the UK tax system and who knows how to negotiate rates. If he prefers to start his own accounting hold because of budget constraints, it is highly recommended to take English accountancy training one day, they can be offered for free.

Cost of Living/Housing

Finding the right place to live is maybe the most common problem that French entrepreneurs encounter when coming to the UK. To find an accommodation, it is recommended to come at least two to six months in advance, to oversee the launch of your business in London, to find the best office at the cheapest price.

On the top of that, the housing prices and the cost of living are also higher than in France.

Even if there is a boom in France for real estate : an apartment now costs more than 7,000 euros for a square meter in average, and the French capital is one the most expensive city in Europe, it is still below London. Despite the 2007 decrease in the prices, after the financial crisis, the 1.2% prices reduction over the last year and the fact that Paris evolves in the opposite way, London is still more expensive. Buying a house in this city requires on average 1.1 million pounds (1.3 million euros) and the square meter price is reported to reach 10,000 pounds (11,800 euros). On the whole, living in London remains two or three times higher than living in the other European capitals.

The place

In a big city like London, it is essential to carefully select the location of your new business. What criteria should be taken into consideration?

Are you looking for posh offices in London's West End or offices at a reasonable price in a neighborhood with greater cultural diversity? Is access to highways necessary for your business? Would you prefer your business to be located at a ten-minute walk from St Pancras international railway station to easily and quickly reach your office in Paris or Lille? Or is it better if you are close to Heathrow airport? Does the type of business you intend to develop determine the location of your site, or at least reduce the possibilities? For example, if you are a specialty retailer, do you want to be present in an area where other specialty retailers already are or in the contrary far away from them?

All those issues are critical and need to be addressed before you decide to leave for London, as it might not work like in every other city.


There are many advantages for entrepreneurs to settle in the UK, but there are also the bad sides that should not be forgotten. But what is really important is, for an entrepreneur, to evolve in a nice and positive atmosphere, which is the case in London and not necessarily in France.

So it is above all London's climate and its image in other countries that could eventually encourage leaving.