France and Monaco

Bureau of Economic and Business Affairs
June 29, 2017

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Executive SummaryShare    

Please see the end of this report for a summary of the investment climate of Monaco.

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, strong intellectual property protections, and innovative business leaders. The country is known for its world-class infrastructure, including high-speed passenger rail, maritime ports, extensive roadway networks and public transportation, and efficient intermodal connections. High speed (3G/4G) telephony is nearly ubiquitous.

Foreign firms account for one third of France’s manufacturing, 30% of goods and services exports, and have increased corporate R&D expenditures by 32%. France was the seventh largest global market for foreign direct investment (FDI) inflows in 2016. In total, there are more than 22,570 foreign-owned companies doing business in France. It is home to more than 30 of the world’s 500 largest companies. In 2016, France moved up one place to number 21 in the World Economic Forum’s ranking of global competitiveness. The investment regime in France is generally conducive to U.S. investment. Around 4,800 U.S. companies in France, of all sizes, employ over 460,000 French citizens, and indirectly support over 2 million jobs.

The 2016 American Chamber of Commerce in France - Bain Barometer Survey on the attitudes of U.S. investors in France indicates rising optimism about France’s investment climate: 81% of American tech investors surveyed by AmCham-Bain found the climate for development of digital technologies and other innovations to be attractive in France. The Paris region supports the largest concentration of technology engineers outside of Silicon Valley and the latest generation of engineers is turning toward entrepreneurship.

Despite increasing optimism, U.S. investors face some persistent challenges. As a whole, the French economy has been slow to rebound from the global financial crisis of 2008/2009. Unemployment, at 9.7% in 2016, remains higher than most other major global economies. The government projects a budget deficit of 2.7% for 2017, down from 3.4% in 2016. American companies continue to point to the need for reform of France’s complex and rigid labor laws and tax code, ranking France well below many other investment destinations in Europe in these areas. Despite major terror attacks in France and Europe in 2015/2016, 80% of American businesses in France reported to Bain that they were not changing their investment plans for this reason.

Key issues to watch in coming months include: 1) results of French presidential and parliamentary elections scheduled for spring 2017, which will determine the direction of France’s economic reform agenda, and 2) opportunities and challenges resulting from the launch of negotiations of British departure from the EU in 2019.

Table 1

Measure

Year

Index/Rank

Website Address

TI Corruption Perceptions Index

2016

23 of 175

http://www.transparency.org/
research/cpi/overview

World Bank’s Doing Business Report “Ease of Doing Business”

2017

29 of 190

doingbusiness.org/rankings

Global Innovation Index

2016

18 of 128

https://www.globalinnovationindex.org/
analysis-indicator

U.S. FDI in partner country ($M USD, stock positions)

2015

78,282 USD

http://www.bea.gov/
international/factsheet/

World Bank GNI per capita

2015

40,580 USD

http://data.worldbank.org/
indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign InvestmentShare    

Policies Towards Foreign Direct Investment

France is committed to encouraging foreign investment. In the current economic climate, the French government sees foreign investment as a way to create jobs and stimulate growth. Investment regulations are simple, and a range of financial incentives are available to foreign investors, who report they find France’s skilled and productive labor force, good infrastructure, technology, and central location in Europe attractive. France’s membership in the European Union (EU) and the Eurozone facilitates the efficient movement of people, services, capital, and goods. However, notwithstanding French efforts at economic reform, market liberalization, and attracting foreign investment, perceived disincentives to investing in France include the tax environment, the high cost of labor (with the minimum wage at EUR 1,4480.27 per month), rigid labor markets, and occasional strong negative reactions toward foreign investors planning to restructure, downsize or close.

The French investment regime is said to be among the least restrictive in the world. With a few exceptions in certain specified sectors, there are no statutory limits on foreign ownership of companies. Foreign entities have the right to establish and own business enterprises, and engage in all forms of remunerative activity.

Investment promotion agency

Business France is the government agency established to promote new foreign investment, expansion, takeovers, acquisitions, technology partnerships and financial investment. Business France provides complementary services to help investors understand the regulatory, tax, employment issues as well as state and local investment incentives and government support programs. Business France also helps companies to find project finance, potential equity acquisitions and buyouts.

In addition, France updated the New Industrial France program (La nouvelle France industrielle) in 2016 targeting 47 priority industrial sectors, such as developing the next generation TGV (high speed train); an affordable fully electric car for all; the first fully electric passenger airplane; efficient, low-emissions ships; more powerful and longer-lasting batteries; electricity charging stations; “intelligent” fabrics; thermally-efficient building renovation; nano-electronics; augmented reality; connected objects; robotics; electrically propelled satellites; cloud computing; and cyber security.

The Government’s Direction Generale des Entreprises launched the second phase of Innovation 2030 program in December 2016 via a global contest called the “Worldwide Innovation Challenge,” open to all entrepreneurs investing in France regardless of nationality. Up to 30 projects will be selected for the 2017 theme “Risk Reduction” and will receive between EUR 1 million and EUR 3 million in start-up funding.

Business France and other government agencies are particularly nurturing of foreign investment in tech sectors. The French government has developed a brand “French Tech” to promote the development of France’s tech sector and promote France as a location for start-ups and high-growth digital companies, with the goal of turning France into a “Start-Up Republic.” The French Tech initiative includes an “acceleration” investment by the French government of EUR 200 million to foster start-up ecosystems in and outside France. In addition to offices in 17 French cities, French Tech hubs are established in 22 cities globally including New York, San Francisco, Los Angeles, Shanghai, Hong Kong, Vietnam, Moscow and Berlin.

Limits on Foreign Control and Right to Private Ownership and Establishment

With a few exceptions, there are no statutory limits on foreign ownership or control of companies. Foreign entities have the right to establish and own business enterprises, and engage in all forms of remunerative activity.

However, French law stipulates that acquisitions in certain sectors deemed crucial to France’s national interests relating to public order, public security and national defense are subject to prior notification, screening, and approval by the Economy and Finance Minister. Other sectors requiring approval include energy infrastructure; transportation networks; public water supplies; electronic communication networks; public health protection; and installations vital to national security. As a recent example of how France’s government remains engaged in strategic sectors, in January 2017, the government sold 100 million shares in Engie. The French government now owns 28.7% of the energy utility and controls 32.6% of the voting rights. The French state owns 83.1% of Electricite de France (EDF) and has reserved the right to retain a golden share in any restructuring of Areva, the French nuclear and renewable energy company.

National security and defense are the reasons given for why the French government must review any investment in the aforementioned specified sectors that acquires control of a French firm, surpasses a 33.33-percent ownership threshold, or involves any part of such a firm that has established headquarters in France.

Other Investment Policy Reviews

Given the relative development and stability of the investment climate, France has not recently been the subject of international organizations’ investment policy reviews. The Organization for Economic Cooperation and Development (OECD) has not conducted a review of the French investment climate since 1996. The World Trade Organization (WTO) does not provide trade policy reviews for the individual member states of the European Union, but does provide one for the European Union as a whole. The United Nations Committee on Trade and Development (UNCTAD) does not have a public report on the investment climate in France, though UNCTAD provides a statistical fact sheet on French FDI (inward and outward) at http://unctad.org/sections/dite_dir/docs/wir2016/wir16_fs_fr_en.pdf

Business Facilitation

Companies, including foreign companies, may use the online business process which has been created to simplify business registration formalities: https://www.guichet-entreprises.fr/. A government organ called “Agence France Entrepreneur” (France Business Entrepreneur) also has information on creating a business: https://www.apce.com/pid224/8-les-formalites-de-creation.html. The World Bank’s “Investing Across Borders” webpage on France, (http://iab.worldbank.org/data/exploreeconomies.france) provides quantitative indicators on the country’s laws, regulations and practices affecting how foreign companies invest across sectors, start businesses, access industrial land, and arbitrate disputes. “Centre de formalités des entreprises” (CFE or “business formalities center”), which are generally Chambers of Commerce and similar organizations located throughout France, are equipped to accept registration applications. Note some required formalities are not handled by a CFE, notably related to the domiciliation of business, the protection of the name of the business, and business insurance. In the best case, registration may take as little as one week to complete.

Outward Investment

French firms invest more in the United States than in any other country and support approximately 574,000 American jobs. Total French investment in the U.S. reached $234 billion in 2015. France was our eighth-largest trading partner with nearly $115 billion in bilateral trade. The business promotion agency Business France also assists French firms with outward investment. There is no restriction on outward investment.

2. Bilateral Investment Agreements and Taxation TreatiesShare    

Investments in France by other EU member states are governed by the provisions of the Treaty of Rome and by European Union Law. France has Bilateral Investment Treaties (BITs) with 96 countries: Albania, Algeria, Argentina, Armenia, Azerbaijan, Bahrain, Bangladesh, Bosnia and Herzegovina, Bulgaria, Cambodia, Chile, China, the Democratic Republic of the Congo, Costa Rica, Croatia, Cuba, Czech Republic, Djibouti, Dominican Republic, Ecuador, Egypt, El Salvador, Equatorial Guinea, Estonia, Ethiopia, Georgia, Guatemala, Haiti, Honduras, Hong Kong, Hungary, India, Iran, Israel, Jamaica, Jordan, Kazakhstan, Korea (South), Kuwait, Kyrgyz Republic, Laos, Latvia, Lebanon, Liberia, Libya, Lithuania, Macedonia (FYRM), Madagascar, Malaysia, Malta, Mexico, Moldova, Mongolia, Montenegro, Morocco, Mozambique, Namibia, Nepal, Nicaragua, Nigeria, Oman, Pakistan, Panama, Paraguay, Peru, Philippines, Poland, Qatar, Romania, Russian Federation, Saudi Arabia, Senegal, Serbia, Seychelles, Singapore, Slovakia, Slovenia, Sri Lanka, Sudan, Tajikistan, Trinidad and Tobago, Tunisia, Turkey, Turkmenistan, Uganda, Ukraine, United Arab Emirates, Uruguay, Uzbekistan, Venezuela, Vietnam, Yemen, and Zambia.

Bilateral Investment Treaties between France and the following countries have been signed but are not in force: Belarus, Brazil, Chad, Colombia, Ghana, Iraq, Kenya, and Zimbabwe. France previously had BITs with Mauritius and Syria; new BITs with these two countries have been signed but have not yet entered into force. The list of ratified and non-ratified BITs is on the UNCTAD website: http://investmentpolicyhub.unctad.org/IIA/CountryBits/72#iiaInnerMenu

The United States and France have enjoyed a Navigation and Commerce Treaty since 1822, which guarantees national tax treatment of U.S. citizens.

3. Legal RegimeShare    

Transparency of the Regulatory System

France’s government has made considerable progress in the last decade on the transparency and accessibility of its regulatory system. The French government generally engages in industry and public consultation before drafting legislation or rulemaking through a regular but variable process directed by the relevant ministry. However, the text of draft legislation is not always publicly available before parliamentary approval. The French government has experimented with new procedures such as online industry consultations for input related to the EU-Japan FTA, the fourth round for which began in September 2016, as well as mandatory impact assessments.

To increase transparency in the French legislative process, all ministries are required to attach an impact assessment to their draft bills. The Prime Minister's Secretariat General (SGG for Secrétariat Général du Gouvernement) is responsible for ensuring that impact studies are undertaken in the early stages of the drafting process. The State Council (Conseil d'Etat), which must be consulted on all draft laws and regulations, may reject a draft bill if the impact assessment is inadequate.

U.S. firms may also find it useful to become members of industry associations, which can play an influential role in developing government policies. Even "observer" status can offer insight into new investment opportunities and greater access to government-sponsored projects.

The government has a position of State Secretary for State Reform and Simplification tasked with making French regulations simpler. The State Secretary consults with companies prior to the drafting of legislation that may affect them, working in close cooperation with two other agencies under the Prime Minister: the Prime Minister's Secretariat General and the Secretariat General for European Affairs. (This policy is part of a wider effort by the European Union to reduce regulatory burdens under the European Commission's REFIT program.) More than 400 proposed simplification measures have been presented so far, including the “tell us once” initiative for e-government-related services and the provision on "zero additional cost" for all new measures. This means that the impact on businesses of any change in regulations or legislation will be quantified by independent experts, or representatives of the business community, and any new cost should be offset by a "reduction at least equivalent to it." The State Secretary for Simplification is also charged with promoting open access to public data.

Major reforms extended the investigative and decision-making powers of France's Competition Authority. The Authority publishes its methodology for calculating fines imposed on companies charged with abuse of a dominant position. It issues specific guidance on competition law compliance, and government ministers, companies, consumer organizations and trade associations now have the right to petition the authority to investigate anti-competitive practices. While the Authority alone examines the impact of mergers on competition, the Minister of the Economy retains the power to request a new investigation or reverse a merger transaction decision for reasons of industrial development, competitiveness, or saving jobs.

International Regulatory Considerations

France incorporates EU regulatory norms. While developing new draft regulations, the French government submits a copy to the World Trade Organization for review to ensure the prospective legislation is not inconsistent with its WTO obligations.

The United States and the EU have negotiated mutual recognition agreements covering the testing and certification of some products; French standards apply where EU-wide standards do not exist. Rigorous testing and approval procedures are sometimes required before goods approved in the United States are cleared for sale in France. Some foreign companies have expressed concern regarding France's standard-setting procedures.

Legal System and Judicial Independence

French law is codified into what is sometimes referred to as the Napoleonic Code, but is officially the Code Civil des Français, or French Civil Code. Private law governs interactions between individuals (e.g., civil, commercial, and employment law) and public law governs the relationship between the government and the people (e.g., criminal, administrative, and constitutional law).

France also has an administrative court system to challenge a decision by local governments and the national government; the State Council (Conseil d’Etat) is the appellate court. France enforces foreign legal decisions such as judgments, rulings and arbitral awards through the procedure of exequatur introduced before the Tribunal de Grande Instance (TGI), which is the court of original jurisdiction in the French legal system.

France has a distinctive system of protection of intellectual and industrial property rights, applicable not only to artistic or creative rights approximately equivalent to copyright, but also to designs, drawings, patents and trademarks. Firms can register and protect innovation on French territory with the centralized authority for registering industrial property rights, the INPI (Institut National de la Propriété Industrielle, http://www.inpi.fr). French attorneys are qualified and specialized in the specific field of intellectual property. No French commercial court has a monopoly on intellectual property rights. The French Courts are frequently called upon to decide claims from holders of intellectual property rights.

With regard to French patents, actions are generally brought before the High Court (Tribunal de Grande Instance), however questions of jurisdiction may arise concerning foreign patents. The French judicial system is independent, competent, and substantively fair and reliable. Firms can also protect their rights on the European territory or in foreign countries. Cases related to intellectual property rights on a European community brand can be brought to the European courts or the European Court of Justice. French courts must recognize and enforce judgments of foreign courts.

France’s Commercial Tribunal (Tribunal de Commerce or TDC) specializes in commercial litigation. Magistrates of the commercial tribunals are lay judges, who are well-known in the business community and have experience in the sectors they represent. Decisions by the commercial courts can be appealed before the Court of Appeals. France’s judicial system is procedurally competent, fair, and reliable and is independent of the government.

Regulatory decisions may be appealed administratively, or in the court of first instance.

Laws and Regulations on Foreign Direct Investment

Foreign and domestic private entities have the right to establish and own business enterprises and engage in all sorts of remunerative activities. U.S. investment in France is subject to the provisions of the Convention on Establishment between the United States of America and France, which was signed in 1959 and remains in force. The rights it provides U.S. nationals and companies include: Rights equivalent to those of French nationals in all commercial activities (excluding communications, air transportation, water transportation, banking, the exploitation of natural resources, the production of electricity, and professions of a scientific, literary, artistic and educational nature as well as certain regulated professions like doctors and lawyers);

Treatment equivalent to that of French or third-country nationals with respect to transfer of funds between France and the United States; property is protected from expropriation except for public purposes, accompanied by payment that is just, realizable and prompt.

Potential investors can provide relevant investment information and links to laws and investment regulations at http://www.businessfrance.fr/.

Competition and Anti-Trust Laws

Major reforms extended the investigative and decision-making powers of France's Competition Authority. The Authority publishes its methodology for calculating fines imposed on companies charged with abuse of a dominant position. It issues specific guidance on competition law compliance, and government ministers, companies, consumer organizations and trade associations now have the right to petition the authority to investigate anti-competitive practices. While the Authority alone examines the impact of mergers on competition, the Minister of the Economy retains the power to request a new investigation or reverse a merger transaction decision for reasons of industrial development, competitiveness, or saving jobs.

A new law on Economic Growth, Activity and Equal Opportunities (known as the "Macron Law"), adopted in August 2016, vested the Competition Authority with the power to review mergers between retailers ex ante (beforehand). The law provides that all contracts binding a retail business to a distribution network shall expire at the same time. This enables the retailer to switch to another distribution network more easily. Furthermore, distributors are prohibited from restricting a retailer’s commercial activity via post-contract terms. The civil fine incurred for restrictive practices can now amount to up to 5% of the business's revenue earned in France.

The Competition Authority is also active in highly regulated industries such as energy. Together with the energy regulator CRE (Commission de Régulation de l’Énergie), the Authority submits a report every five years to the government on the implementation and effects of the Regulated Access to Incumbent Nuclear Electricity (ARENH) mechanism, particularly regarding its impact on the wholesale and retail markets, as well as investments in electricity production facilities. The ARENH mechanism entitles suppliers to purchase electricity from EDF at a regulated price, in volumes determined by the CRE. In its opinion published on February 16, 2016, the Authority urged the government to give a clear indication that it would start progressively phasing out this mechanism. The Authority has deemed the current system not conducive to “effective competition in France’s basic energy production market.”

Expropriation and Compensation

Government cannot legally expropriate property to build public infrastructure without fair market compensation. There have been no expropriations of note during the reporting period.

Dispute Settlement

ICSID Convention and New York Convention

France is a member of both the International Centre for Settlement of Investment Disputes (ICSID) Convention and a signatory to the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention) which means local courts are obligated to enforce international arbitral awards under this system.

France was one of the first countries to enact a modern arbitration law in 1980-1981. In 2011, the French Ministry of Justice issued Decree 2011- 48 which introduced further international best practices into French arbitration procedural law. As a result of that decree, parties are free to agree orally to settle their disputes through arbitration, and the arbitrators to apply their chosen procedure, subject only to minimum standards of due process and a newly enacted principle of procedural efficiency and fairness. The President of the Tribunal de Grande Instance (High Civil Court of First Instance) of Paris has the authority to issue orders related to ad-hoc international arbitration (i.e., not institutional arbitration). Paris is the seat of the International Chamber of Commerce’s International Court of Arbitration, composed of representatives from 90 countries, that handles investment as well as commercial disputes.

International Commercial Arbitration and Foreign Courts

As part of France’s arbitration law parties are free to agree orally to settle their disputes through arbitration, and the arbitrators to apply their chosen procedure, subject only to minimum standards of due process and a newly enacted principle of procedural efficiency and fairness.

The timeframe for dispute resolution varies considerably -- up to two years (all forms of appeal included). For emergency situations, a so-called référé procedure is available provided there is a danger of irreparable harm; this expedited procedure takes just a few days.

Bankruptcy Regulations

France has extensive and detailed bankruptcy regulations. Any creditor, regardless of the amount owed, may file suit in bankruptcy court against a debtor. Foreign creditors, equity shareholders and foreign contract holders have the same rights as their French counterparts. Monetary judgments by French courts on firms established in France are generally made in euros. Not bankruptcy itself, but bankruptcy fraud -- the misstatement by a debtor of his financial position in the context of a bankruptcy -- is criminalized. Under France’s bankruptcy managers and other entities responsible for the bankruptcy of a French company are prevented from escaping liability by shielding their assets (Law 2012-346). France adopted a law that enables debtors to implement a restructuring plan with financial creditors only, without affecting trade creditors. In the World Bank’s 2017 Doing Business rankings, France remained in 24th of 189 on ease of resolving insolvency.

4. Industrial PoliciesShare    

Investment Incentives

France offers a range of financial incentives, generally equally available to both French and foreign investors. The French government continued a competitiveness and employment tax credit (Crédit d'Impôt pour la Compétitivité et l'Emploi - CICE) in 2017 that reduces payroll taxes paid by businesses, and temporarily exempts some firms based on geographic location (urban tax-free zones, rural regeneration zones, etc.) or status as an innovative start-up. The Responsibility and Solidarity Pact provides firms established in France cuts in payroll taxes totaling EUR 41 billion through 2017, and a gradual reduction in the rate of corporate tax on SMEs.

Recognizing that French corporate taxes are higher compared to those in other leading industrial countries, the government plans to gradually reduce the nominal corporate tax rate from 33% to 28% by 2020 and to further decrease corporate tax on SMEs to 15%, on top of tax credits already in place.

The government provides corporate investors incentives for capital investment in small companies. Under the plan, a French company or French subsidiary of a foreign company that invests in a minority shareholding (less than 20%) in a small, innovative SME, either directly or indirectly (i.e., through a fund), would benefit from a five year, linear amortization of their investment. To qualify, SMEs must allocate at least 15% of their spending on research.

Research and Development

Incentivizing research and development (R&D) and innovation is a priority for the French government with Business France reporting that the percentage of foreign investment projects in R&D rose to 32% in 2016, accounting for 10% of all foreign investment decisions in 2016, and resulting in 37% of all jobs created by foreign investors. New innovation outlays from foreign firms created an estimated 2,700 R&D jobs in France in 2016. Inward R&D investments increased 5% in 2016 in key sectors such as pharmaceutical and biotechnologies, electronics, agriculture, alternative energy, and software. R&D continues to be a major component that attracts foreign investment. International companies may join France’s 71 innovation clusters increasing access to both production inputs and technical benefits of geographical proximity. The Research Tax Credit (Crédit Impôt Recherche), innovative new company status (Jeune Enterprise Innovante), National Investment Program, and La French Tech form part of this innovation policy. Additional programs include La French Tech Ticket and the French Young Entrepreneurs Initiative.

The Research Tax Credit (Crédit Impôt Recherche - CIR) offsets R&D expenditures undertaken by both domestic and foreign firms operating in France, regardless of size or business sector, covering both R&D spending and innovation expenses incurred by small and medium-sized enterprises. The French government provides tax credits to support up to 30% of a firm’s first EUR 100 million in R&D costs, and an additional 5% in credits above this threshold. Additionally an “innovation tax credit” is available that reduces the cost of innovation expenditure by 20% up to EUR 400,000. The research tax credit and innovation schemes are set through 2017.

La French Tech initiative supports the growth of startups and digital companies by providing funding under the umbrella of the National Investment Program. La French Tech accelerates the growth of startups throughout France, accrediting 17 French Tech cities in 2017, and investing EUR 200 million in acceleration programs for digital companies. Additionally, La French Tech aids in the internationalization of startups and aims to attract foreign investors, corporations, startups, and talent. French Tech Hubs in foreign cities help French companies to expand to the global marketplace. La French Tech Ticket is a Paris-based program that focuses on bringing international startups to France by offering benefits which include a residence permit, a grant of EUR 25,000 and free mentoring in a Parisian startup incubator. Following the first selection of winners in March 2016, the program was expanded to cover 200 selected startups in 17 French cities.

Performance and Data Localization Requirements

While there are no mandatory performance requirements established by law, the French government will generally require commitments regarding employment or R&D from both foreign and domestic investors seeking government financial incentives. Incentives like PAT regional planning grants (Prime d'Aménagement du Territoire pour l’Industrie et les Services) and related R&D subsidies are based on the number of jobs created, and authorities have occasionally sought commitments as part of the approval process for acquisitions by foreign investors. PAT has been revised to benefit SMEs with the objective of promoting the development of businesses in priority regional zones, including EUR 30 million in direct government subsidies.

The French government imposes the same conditions on domestic and foreign investors in cultural industries: all purveyors of movies and television programs (i.e., television broadcasters, telecoms operators, internet service providers and video services) must invest a percentage of their revenues to finance French film and television productions. They must also abide by broadcasting content quotas (minimum 40% French, 20% EU).

5. Protection of Property RightsShare    

Real Property

Real property rights are regulated by the French civil code and are enforced. In the World Bank’s Doing Business Report (DBR), France is ranked 100 of 190 on registering property. French civil-law notaries (notaires) -- highly specialized lawyers in private practice appointed as public officers by the Justice Ministry -- handle residential and commercial conveyancing and registration, contract drafting, company formation, successions and estate planning. The official system of land registration, the “cadastre” is maintained by the French public land registry under the auspices of the French tax authority (Direction Générale des Finances Publiques - DGFiP); available online at http://www.cadastre.gouv.fr. Mortgages are widely available, usually for a 15-year period.

Intellectual Property Rights

France is a strong defender of intellectual property rights. Under the French system, patents and trademarks protect industrial property, while copyrights protect literary/artistic property. By virtue of the Paris Convention and the Washington Treaty regarding industrial property, U.S. nationals have a priority period following filing of an application for a U.S. patent or trademark in which to file a corresponding application in France: twelve months for patents and six months for trademarks.

Counterfeiting is a costly problem for French companies, and the government of France maintains strong legal protections and a robust enforcement mechanism to combat trafficking in counterfeit goods -- from copies of luxury goods to fake medications -- as well as the theft and illegal use of intellectual property. The French Intellectual Property Code has been updated repeatedly over the years to face this challenge. In recent years Parliament passed a law reinforcing France’s anti-counterfeiting law and its implementation of EU directives on intellectual property rights. The new legislation increases the euro amount for damages to companies that are victims of counterfeiting and extends trademark protection to smartcard technology, certain geographic indications, plants, and agricultural seeds. The new legislation also increases the statute of limitations for civil suits from three to ten years and strengthens the powers of customs officials to seize fake goods sent by mail or express freight. The government also reports on seizures of counterfeit goods. France’s top private sector anti-counterfeiting organization, UNIFAB, dedicated its 2016 counterfeiting report to exposing the links between crime, terrorism, and counterfeiting. The report (available at http://www.unifab.com/en/counterfeiting-terrorism/) makes clear that terrorist networks and criminal organizations raise money from selling counterfeit goods (including via both legitimate and illicit e-commerce sites).

France has robust laws against online piracy. The government agency called the High Authority for the Dissemination of Artistic Works and the Protection of Rights on Internet (Haute Autorité pour la Diffusion des Œuvres et la Protection des droits sur Internet - HADOPI) administers a “graduated response” system of warnings and fines. It has taken enforcement action against several online pirate sites, including Megaupload. HADOPI cooperates closely with the U.S. Patent and Trademark Office (USPTO) including pursuing voluntary arrangements that target intermediaries that facilitate or fund pirate sites. (Note that one of HADOPI’s tasks is to ensure that the technical measures used to protect works do not prevent the right of individuals to make private copies of television programs for their private use.) Despite HADOPI’s efforts.

EY global consultancy and accountancy group estimates 13 million people accessed pirated media in France 2016, costing €1.35b ($1.42b) in lost tax revenue and earnings in 2016.

For additional information about treaty obligations and points of contact at French IP offices, please see the World Intellectual Property Organization’s (WIPO) country profiles at http://www.wipo.int/directory/en/.

6. Financial SectorShare    

Capital Markets and Portfolio Investment

There are no administrative restrictions on portfolio investment in France, and there is an effective regulatory system in place to facilitate portfolio investment. France’s open financial market allows foreign firms easy access to a variety of financial products both in France and internationally. France continues to modernize its marketplace; as markets expand, foreign and domestic portfolio investment has become increasingly important. As in most EU countries, French listed companies are required to meet international accounting standards. Some aspects of French legal, regulatory and accounting regimes are less transparent than U.S. systems, but they are consistent with international norms.

Euronext Paris (also known as Paris Bourse), the primary French stock exchange, created Alternext, a 21st century alternative for small and medium-sized companies to list on an unregulated market (based on the legal definition of the European investment services directive), with more consumer protection than the Marché Libre still used by a couple hundred small businesses for their first stock listing. A company seeking a listing on Alternext must have a sponsor with status granted by NYSE-Euronext, and prepare a French language prospectus for a permit from the Autorité des Marchés Financiers (AMF or Financial Markets Authority), the French equivalent of the U.S. Securities and Exchange Commission. Small and medium-size enterprises (SMEs) may also list on EnterNext, a new subsidiary of the Euronext Group.

France continues to modernize its marketplace; as markets expand, foreign and domestic portfolio investment has become increasingly important. As in most EU countries, French listed companies are required to meet international accounting standards. Some aspects of French legal, regulatory and accounting regimes are less transparent than U.S. systems, but they are consistent with international norms. Foreign banks are allowed to establish branches and operations in France and are subject to international prudential measures.

France’s banking system recovered gradually from the 2008-2009 global financial crises. French banks are now largely healthy. The assets of France's largest banks totaled EUR 6.3 trillion (USD 8.5 trillion) in 2015. Foreign investors have access to all classic financing instruments, including short-, medium-, and long-term loans, short- and medium-term credit facilities, and secured and non-secured overdrafts offered by commercial banks. They assist in public offerings of shares and corporate debt, as well as mergers, acquisitions and takeovers, and offer hedging services against interest rate and currency fluctuations. Foreign companies have access to all banking services. Although subsidies are available for home mortgages and small business financing, most loans are provided at market rates.

Foreign Exchange and Remittances

Foreign Exchange

There are no restrictions or limitations placed on foreign investors in converting, transferring, or repatriating funds associated with an investment. Funds associated with any investment may be freely converted from euro into U.S. dollars or any other world currency. France is one of nineteen countries (known collectively as the Eurozone) that use the euro currency. Exchange rate policy for the euro is handled by the European Central Bank, located in Frankfurt, Germany. The euro has been trading in a range from USD 1.2 to USD 1.067 between January 1, 2015 and March 31, 2017.

Remittance Policies

France’s investment remittance policies are stable and transparent. All inward and outward payments must be made through approved banking intermediaries by bank transfers. There is no restriction on the repatriation of capital. Similarly, there are no restrictions on transfers of profits, interest, royalties, or service fees. Foreign-controlled French businesses are required to have a resident French bank account and are subject to the same regulations as other French legal entities. The use of foreign bank accounts by residents is permitted.

For purposes of controlling exchange, the French government considers foreigners as residents from the time they arrive in France. French and foreign residents are subject to the same rules; they are entitled to open an account in a foreign currency with a bank established in France, and to establish accounts abroad. They must report all foreign accounts on their annual income tax returns, and money earned in France may be transferred abroad.

France is a founding member of the OECD-based Financial Action Task Force (FATF, a 34-nation intergovernmental body). As reported in the Department of State's France Report on Terrorism, the French government has a comprehensive anti-money laundering/counterterrorist financing (AML/CTF) regime and is an active partner in international efforts to control money laundering and terrorist financing. Tracfin, the French government’s financial intelligence unit, is active within international organizations, and has signed new bilateral agreements with foreign countries.

Sovereign Wealth Funds

France has no sovereign wealth fund per se (none that use that nomenclature), but does operate funds with similar intent. The Public Investment Bank (Banque Publique d’Investissement – BPI, now known as Bpifrance). Bpifrance’s role is to support small and-medium term enterprises (SMEs), larger enterprises (Entreprises de Taille Intermedaire) and innovating businesses. The government strategy is defined at the national level and aims to fit with local strategies. Bpifrance also provides export insurance. All investment made by Bpifrance is domestic. Bpifrance may hold direct stakes in companies, hold indirect stakes via generalist or sectorial funds, venture capital, development or transfer capital. It has taken minority stakes in firms and 250 investment funds, including 90 local investment funds that invest in businesses.

7. State-Owned EnterprisesShare    

The 13 listed entities in which the French State maintains stakes are Aéroports de Paris (50.63%), Airbus Group (10.94%), Air France-KLM (17.58%), Areva (holds 28.83%; controls 86.52%), CNP Assurances (holds 1.11%; controls 66%), Dexia (5.73%), EDF (84.94%), Engie (28.7%), Orange (a direct 13.45% stake and a 9.60% stake through BPI France), PSA (13.68%), Renault (19.74%), Safran (14% of shares and 21.9% of voting rights), and Thalès 25.97%). Unlisted companies owned by the State include SNCF (rail), RATP (public transport), CDC (Caisse des dépôts et consignations) and La Banque Postale (bank). The government also has majority and minority stakes in small firms in a variety of sectors.

Private enterprises have the same access to financing as SOEs, including from state-owned banks or other state-owned investment vehicle. SOEs are subject to the same tax burden and tax rebate policies as their private sector competitors. SOEs may get subsidies and other financial resources from the government.

France, as a member of the European Union, is a party to the Agreement on Government Procurement (GPA) within the framework of the World Trade Organization. Companies owned or controlled by the state behave largely like other companies in France and are subject to the same laws and tax code. The Boards of SOEs operate according to accepted French corporate governance principles as set out in the (private sector) AFEP-MEDEF Code of Corporate Governance. SOEs are required by law to publish an annual report, and the French Court of Audit conducts financial audits on all entities in which the state holds a majority interest. The French government appoints representatives to the Boards of Directors of all companies in which it holds significant numbers of shares, and manages its portfolio through a special unit attached to the Economics Ministry, the shareholding agency APE (Agence de Participations de l’Etat). A recent APE annual report highlighted the government’s strategy to keep a sufficient level of control in strategically important companies while scaling back its shareholdings in traditional industrial sectors to invest in growth companies in key sectors for economic growth. In 2015 and 2016, the government sold some of its holdings in Engie, and jet engine firm Safran, with proceeds used to reduce public debt and invest in its Public Investment Bank (BPI).

Privatization Program

The government has partially or fully privatized many large companies, including Air France, France Telecom, Renault, and Thales. However, the government maintains a strong presence in some sectors, particularly power, public transport, and defense industries. The government sold its stakes in the Nice and Lyon airports in November 2016.

8. Responsible Business ConductShare    

There is general awareness of standards for responsible business conduct (RBC) in France. The country has established a National Contact Point (NCP) for the OECD Guidelines for Multinational Enterprises, coordinated and chaired by the Directorate General of the Treasury in the Ministry for the Economy and Finance. Its members represent State Administrations (Ministries in charge of Economy and Finance, Labor and Employment, Foreign Affairs, Ecology, Sustainable Development and Energy), six French Trade Unions (CFDT, CGT, FO, CFE-CGC, CFTC, UNSA) and one employers’ organization, MEDEF. The NCP promotes the Guidelines and ensures their application. It provides relevant information and handles enquiries. It examines the specific instances referred to it, offers its good offices to the parties (discussion, exchange of information) and may acts as a mediator in disputes, if appropriate.

The 2013 Rana Plaza building collapse in Bangladesh was a trigger for the French Office of the NCP to think about responsible conduct guidelines in the textile industry specifically, and to promote the OECD Guidelines in a manner that is relevant to specific sectors. In specific instances, the NCP conducts fact-finding to assist the parties in resolving disputes, and posts final statements on any recommendations for future action with regards to the Guidelines . The NCP may also monitor the follow-up of its recommendations, which are made by consensus while ensuring that confidentiality incumbent to its activities is respected.

In France, corporate governance standards are the product of a combination of legislative provisions and the recommendations of the AFEP-MEDEF code (two employers’ organizations). The code meets the expectations of shareholders and various stakeholders, as well as of the European Commission. Specifically on the subject of compensation, the recommendations set out compensation principles based on demanding performance criteria, on the director’s involvement in the undertaking’s risk and even on the prohibition of any severance pay in the event of failure. The code’s recommendations, which operate according to the “comply or explain” principle, are applied extensively, as indicated by both the Autorité des marchés financiers (Financial Markets Authority) and the annual report published by AFEP and MEDEF.

Worker unions and business associations are part of the French NCP. The OECD Guidelines are available on the treasury website. There are similar measures requiring supply chain due diligence at EU level. The EU is expected to pass a new regulation in May 2017 to stem the trade in conflict minerals and to stop conflict minerals and metals from being exported to the EU, global and EU smelters and refiners from using conflict minerals, and mine workers from being abused. This will then apply directly to French law.

The “Transparency, Anti-corruption, and Economic Modernization” law adopted in 2016 (Sapin 2 law) established a High Authority for Transparency in Public Life (HATVP). The HATVP promotes transparency in public life by publishing the declarations of assets and interests it is legally authorized to share publicly. After review, declarations of assets and statements of interests of members of the Government are published on the High Authority’s website under open license. declarations of interests of members of Parliament and mayors of big cities and towns, but also of regions are also available on the website. In addition, the declarations of assets of parliamentarians can be accessed in certain governmental buildings, though not published on the internet.

France has played an active role in negotiating the ISO 26000 standards, the International Finance Corporation Performance Standards, the OECD Guidelines for Multinational Enterprises, and the UN Guiding Principles on Business and Human Rights. France was one of the first European countries to support the Extractive Industries Transparency Initiative (EITI) launched at the Evian G7 Summit in 2003 although it has not yet implemented it. All large companies in France are required to publish an annual report on CSR activities.

9. CorruptionShare    

In November 2016, France’s parliament adopted the “Transparency, Anti-corruption, and Economic Modernization Law” which is also known as the “Loi Sapin II”. Key aspects of the law include: creating a new anti-corruption agency; establishing “deferred prosecution” for defendants in corruption cases and prosecuting companies (French and foreign) suspected of bribing foreign public officials abroad; requiring lobbyists to register with national institutions; and expanding legal protections for whistleblowers. The U.S. embassy in Paris has received no specific complaints from U.S. firms of unfair competition in France in recent years. France ranked 23rd of 168 on Transparency International’s (TI) 2016 corruption perceptions index; TI maintains that France continues to face corruption challenges in certain areas, see https://www.transparency.org/country/FRA. According to TI’s chapter in France, the sectors most affected by corrupt practices are public works and the defense industry. TI France works with French companies of all sizes to discourage and avoid corruption when investing in foreign countries.

Resources to Report Corruption

The Central Office for the Prevention of Corruption (Service Central de Prévention de la Corruption or SCPC) will be replaced in 2017 by the new national anti-corruption agency - Corruption, Detection and Prevention Agency (CDPA). The CDPA will be charged with preventing corruption by establishing anti-corruption programs, making recommendations, and centralizing and disseminating information to prevent and detect corrupt officials and company executives. The CDPA will work under the supervision of both the Ministry for Justice and the Ministry for Finances.

Contact information for Transparency International’s French affiliate:

Transparency International France
14, passage Dubail
75010 Paris
Tel: (+33) 1 84 16 95 65; Email: contact@transparency-france.org

10. Political and Security EnvironmentShare    

France is a politically stable country and political violence is uncommon. Occasionally, large demonstrations and protests occur (sometimes organized to occur simultaneously in multiple French cities), and they normally don’t result in violence.

When faced with imminent business closures, on rare occasions French trade unions have resorted to confrontational techniques such as setting plants on fire, planting bombs or kidnapping executives or managers -- as was the case in 2014 at a Goodyear plant in northern France. (The now-former Goodyear employees received jail sentences in January 2016.) A labor dispute in October 2015 between Air France management and unionists resulted in assault of an Air France executive, but with no serious injuries. To remedy the situation and switch from a confrontational approach on labor disputes to a more conciliatory, compromise-oriented one, the current government introduced a labor law in 2014 that aimed to encourage negotiated settlements over conflicts.

11. Labor Policies and PracticesShare    

France's private sector labor force is a major asset in attracting foreign investment, despite the relatively high cost of labor and rigid labor regulations.

Unemployment rose sharply after the 2008 economic crisis. The number of unemployed rose to an all-time high in 2015 with 3.84 million unemployed (3.59 million in Metropolitan France), up from 3.5 million in 2014. The rate of unemployment remains high, but is improved at 9.7% in Metropolitan France and 10% overall (including overseas territories). Regional disparities are significant, with unemployment rates ranging from 8.8% to 14%.

Youth unemployment is 25.1% (the unemployment rate among those aged 20 to 24 has been at or above 22% since 2009). Many educated youth in the 20 to 24 age bracket take up internships or short-term employment contracts, but cannot find a permanent job that gets them on the path to the taxpaying, property-owning French ideal that was the norm for decades. The number of job-seekers over age 50 has nearly doubled since 2008 to reach 592,000. The underemployment ratio (defined as part-time workers unable to find full-time positions) was 6.3% in 2016.

Labor-Management Relations: While the rate of union membership in France (around 8% overall; 5% in the private sector and 14% in the public sector) has steadily declined to just over half the rate of union membership in the United States, French labor law provides an extensive institutional role for employee representatives and organized labor. This is due in part to the fact that union delegates represent all employees (nonmembers and members alike). In addition, at companies with 50 or more employees, management is required to establish and meet regularly with a workers’ council and employees’ health-and-safety council on an array of managerial decisions. As a result, many SMEs hover at employing no more than 49 employees; when they do cross the trip-wire, French unions continue to play a significant (even outsized) role in labor-management relations. Indeed, the top five unions and the top three employer associations (collectively known as the partenaires sociaux or social partners) have a statutory role in national-level negotiations. Strikes are common and are part of the social fabric of France but strikes do not pose a serious commercial risk to foreign or local investors. Labor tribunals (playing a role largely equivalent to the U.S. National Labor Relations Board in resolving labor disputes) are comprised of equal numbers of union and employer representatives. Appeals are possible to the level of the Cour de Cassation, France’s highest civil court.

France adopted an important labor reform commonly referred to as the ‘El Khomri law’ after the French Minister of Labor, Myriam El Khomri, in August 2016. The legislation was designed to revise France's Labor Code with the aim of making the country's labor market more flexible, which the government claimed would reduce unemployment. Within the law are limited provisions for companies to lay off workers, reductions to overtime payments for hours worked beyond France's statutory 35-hour workweek, and reductions to severance payments that workers are entitled to if their company has made them redundant.

Labor rights: Working conditions are generally excellent in France and workers are well-protected. The labor code sets minimum standards for working conditions including the workweek, layoffs, overtime, vacation and personal leave. The 35-hour work week (beyond which overtime compensation must be paid) is standard. Most French retire at age 62. Work contracts follow requirements stipulated in industry-wide collective bargaining agreements. For example, an employee of a large company who is laid off for economic reasons may benefit from training, short-term contracts, or transfer to another company. Other labor standards are contained in collective agreements, usually negotiated by sector (at a national or regional level) by various trade union federations and employers' associations. Additionally, occupational health and safety committees are mandatory under French law in medium and large companies. When a company grows beyond 10 employees, it must begin to meet a wider range of administrative requirements; companies with 50 or more employees face a larger number of administrative and health regulations.

12. OPIC and Other Investment Insurance ProgramsShare    

Given France's high per capita income, investments in France do not qualify for investment insurance or guarantees offered by the Overseas Private Investment Corporation (OPIC). Further information can be found on the OPIC website (http://www.opic.gov).

13. Foreign Direct Investment and Foreign Portfolio Investment StatisticsShare    

Table 2: Key Macroeconomic Data, U.S. FDI in France (US Dollars/Millions)

 

Host Country Statistical Source

USG or International Statistical Source

USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other

Economic Data

Year

Amount

Year

Amount

 

Host Country Gross Domestic Product (GDP) ($M USD)

2015

$2,419,000

2015

$2,422,000Amt

www.worldbank.org/en/country

Foreign Direct Investment

Host Country Statistical Source

USG or International Statistical Source

USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other

U.S. FDI in partner country ($M USD, stock positions)

2015

$83,200

2015

$78,282

BEA data available at http://bea.gov/international/direct_investment_
multinational_companies_comprehensive_data.htm

Host country’s FDI in the United States ($M USD, stock positions)

2014

$250,800

2015

$251,375

BEA data available at http://bea.gov/international/direct_investment_
multinational_companies_comprehensive_data.htm

Total inbound stock of FDI as % host GDP

2015

1.78%

2015

1.77%

UNCTAD


Table 3: Sources and Destination of FDI

Direct Investment from/in Counterpart Economy Data

From Top Five Sources/To Top Five Destinations in 2015 (US Dollars, Millions)

Inward Direct Investment

Outward Direct Investment

Total Inward

660,107

100%

Total Outward

1,198,770

100%

Luxembourg

128,919

20%

United States

216,481

18%

Netherlands

80,190

12%

Belgium

157,369

13%

Switzerland

76,958

12%

United Kingdom

132,143

11%

United Kingdom

71,696

11%

Netherlands

122,919

10%

United States

71,504

11%

Germany

59,923

5%

"0" reflects amounts rounded to +/- USD 500,000.


Table 4: Sources of Portfolio Investment

Portfolio Investment Assets

Top Five Partners in 2015 (Millions, US Dollars)

Total

Equity Securities

Total Debt Securities

All Countries

2,530,937

100%

All Countries

721,386

100%

All Countries

1,808,651

100%

Luxembourg

314,328

12%

Luxembourg

191,870

27%

Italy

231,342

13%

Italy

263,328

10%

Germany

93,236

13%

Netherlands

214,676

12%

Netherlands

259,375

10%

U.S.

77,490

11%

UK

190,418

11%

U.S.

245,894

10%

UK

49,426

7%

U.S.

168,405

9%

UK

239,845

9%

Ireland

47,404

7%%

Spain

166,611

9%

14. Contact for More InformationShare    

Peter Chisholm, Economic Affairs Officer, U.S. Department of State
U.S. Embassy in Paris
Tel: +33-1-4312-2433; e mail: FranceICSeditor@state.gov
https://fr.usembassy.gov/business/

John Howell, Commercial Officer, U.S. Department of Commerce
U.S. Commercial Service in Paris
Tel: +33-1-4312-7083; Fax: +33-1-4312-7012; e mail: office.paris@trade.gov
http://export.gov/france

From within France or by international courier, mail may be sent to:

U.S. Commercial Service
Embassy of the United States of America in Paris
2, avenue Gabriel
75382 Paris Cedex 08
France

Special Section on Monaco

The Principality of Monaco, the world’s second smallest country by area, has an open economy that welcomes foreign investment. Monaco enjoys a high standard of living and low unemployment. Foreigners (and Monegasques) actually living and working in Monaco are not subject to personal income tax, with the exception of French citizens. Corporations may benefit from various tax incentives. There are no restrictions preventing foreigners and non-residents from buying property or opening bank or brokerage accounts in Monaco, though some banks have levied fees on American accounts. Non-residents likely account for more than half of real estate investments. Monaco is well known for its security and political stability.

Note: the Principality of Monaco is not covered by the World Bank’s Doing Business Report, Transparency International’s Country Corruption Report, or the Heritage Foundation's Economic Freedom Index report.

Investment Regime of Monaco

Monaco’s economic and regulatory system is closely tied to that of France, and Monaco uses the Euro as its currency. The convention of May 1, 1963 brought French and Monegasque territories, including territorial waters, under a customs union resulting in the application of French customs law in Monaco. Although Monaco is not a full member of the European Union, the customs union with France makes it subject to EU customs laws, thus guaranteeing that the transfer of goods and services from and into Monaco remains within the single European market.

Economic activity within Monaco, including commercial, craft and industrial activity, is strictly monitored by the government. Prior approval from the Direction de l'Expansion Economique is required before conducting any economic activity in the principality, and this applies to foreign companies which may establish a branch or an administrative unit in the principality. Monegasque authorities issue approvals based on type of business; approval is personal and may not be transferred. Any change in the terms requires a new approval. The government is streamlining the approval process by reducing the number of documents required to nine, or six for individual authorizations.

A body called Espace Entreprises Monaco Business Office helps new investors. The Monaco Welcome and Business office (MWBO) assists individuals and entrepreneurs in relocating to the Principality of Monaco. In the financial sector, creation of any financial organization is subject to the approval of both the French CECEI (Committee for Credit and Investment Institutions) in Paris and of Monegasque financial supervisory authorities. Offshore companies are subject to the same due diligence and suspicious transaction reporting regulations as other banking institutions.

Monaco has taken a number of initiatives to promote economic activity and make company operations more transparent while maintaining high ethical standards, including:

  • creation of the legal status of Limited Liability Company;
  • adoption of systems to combat money laundering, organized crime and corruption (through the creation of the Service d'Information et de Contrôle sur les Circuits Financiers, SICCFIN: http://www.siccfin.gouv.mc); and
  • special exemptions for new companies and research.

In Monaco, there is no direct taxation, with two exceptions:

  • companies earning more than 25% of their turnover (revenue) outside of the principality, and companies whose activities consist of earning revenues from patents and literary or artistic property rights, subject to a tax of 33.33% on profits, and
  • French nationals unable to prove that they resided in the principality for five years before October 31, 1962 are subject to the French income tax.

To encourage the creation of economic activity, the Principality of Monaco offers tax exemptions to new companies developing a new activity. These new companies enjoy 100% exemption from corporate tax in the first two years, and then gradually assume normal tax obligations: third year (25%), fourth year (50%), and fifth year (75%). A research tax credit was additionally created in March 2009.

On July 12, 2016, The European Union and Monaco signed an agreement making Monaco’s tax compliance regulations and automatic exchange of financial information stronger and equivalent to measures in force in the EU. The EU-Monaco agreement will take force in 2018. Monaco is now classified as “largely compliant” by OECD tax transparency standards alongside the U.S and Germany. The principality has signed 32 tax information exchange agreements (TIEA), including one with the United States on September 8, 2009.

Size of the Economy of Monaco

Monaco's GDP was EUR 5.64 billion in 2015, up 5.4% from 5.32 billion in 2014 and 4.94 billion in 2013 (Source: IMSEE – Monaco Statistics http://www.monacostatistics.mc/Economy-and-Finance/GDP). The country’s budget comes from taxes on industry, trade and services, a vibrant tourism sector, and several government-owned enterprises, most notably the country’s famous casinos. Approximately 50% of government revenue is estimated to come from the Value Added Tax (VAT) applied by the French Administration on Monaco.

There is a high concentration of financial professionals in Monaco, as might be expected in this center of international business. French banking law applies in Monaco, subjecting banks to the same level of supervision as in France. Some 33 banks, 3 finance corporations, 60 mutual investment funds, and 55 portfolio management companies' financial institutions operate in Monaco. Recent figures show that Monaco's outsized financial sector manages well over EUR 750 billion for a clientele that is 46% non-resident.