The French Government Will Pay You to Start a Business

Sean Weisbrot: Welcome back to another episode of the We Live to Build podcast. Our guest today is Gabriel Cian is the founder and CEO of GetEmail.io, a technology based on AI and big data, which helps sales and marketing find the professional email address of anyone on Earth. Gabriel is also a longtime expat entrepreneur who has been in France for over 15 years, which is why he's a great person to share with us what it's like being an expat entrepreneur in France. More specifically, we talked about what is the process of setting up a company in France. How is the government improving the incorporation and management processes?

Sean Weisbrot: Can you set up locally but live and work in another country? How much can you expect to pay in taxes? How often do you have to file your taxes? Everything about paying your employees salaries. The best strategy for managing your company in France. The best place to live in France. The cost of living in France, the weather in France, and much more. So, thank you to Gabriel for this fantastic conversation and I hope you enjoy the show.

Gabriel Cian: I've been a French entrepreneur since 2005, so it's been 15 years. I have created with, uh, with a friend, um, a startup, which is called GetEmail.io five years ago, which is a fair success. Uh, we have so much potential still. So, basically what we do is guess people's professional email addresses using artificial intelligence and big data. So, this works like a charm. And we have so many users, it's great. And at the same time, we leverage the tremendous startup ecosystem here in France. So I think I could give you some very interesting insights in how things are working here in France for startups, financing subsidies and the whole ecosystem.

Sean Weisbrot: So, I'm really excited to learn more about France. I was first in France in November 2019, so actually I came back to Vietnam right before the virus started to flare up in Europe. I spent a week in Paris. I got to go to a place called station F, which is apparently one of Europe's largest accelerators and hubs for tech startups. So that was really awesome to be able to see that, especially because one of my friends who I've known from China, I also interviewed him before. So, if you're interested to hear about that episode, his name is Hugo Garcia, but with him, I didn't talk about France, I talked about China. So, I want to talk more with you about France. Why don't we start with, like, what's the process of setting up a company in France?

Gabriel Cian: It's not fairly simple. In France, it's still a bit complicated. Although the government made a lot of efforts in the last years to ease the whole process. It takes around one month and you have a lot of paperwork to do. Fortunately, there are some startups, you know, they take the whole process and do it for you. It costs a bit of money, maybe €300 or so, but they're going to take care of all the steps and just ask you questions. You provide them the necessary documents and they do the whole paperwork for you.

Sean Weisbrot: So, if you wanted to do it yourself, or would you just not advise doing that?

Gabriel Cian: It's a help. Don't do it yourself.

Sean Weisbrot: Let's say somebody wasn't in France but wanted to take advantage of some sort of laws in France, or grants or something that's available to them, but they're just not living there. Do you have to have a local nominee director or a registered office that your agent helps you handle mails and mail and things like that, or is that not necessary?

Gabriel Cian: The question most people ask is how they could leverage the French market, which is a rich market and the big market, and have the company basically incorporated elsewhere where taxes are lower and it's easier to deal, you know, with the environment, the fiscal and the administrative environment. So, to answer your question, yes, it's fairly complicated to have a company in France. If you are not located in France, uh, you would have to have a sort of local director who would have a lot of veto rights or on how to manage your company, which comes with risks. This is fairly not something that I would recommend, to be honest.

Sean Weisbrot: God, we're only two questions in, and all you keep saying is don't do it. Don't register in France, just stay away.

Gabriel Cian: I would like to give the people who listen to you some realistic view. There's huge advantages, but if you want to leverage those advantages, you would have to be located in France. This is where things get really interesting. If you are located somewhere else in another country, it's going to be complicated to take advantage of everything that France has to offer.

Sean Weisbrot: You know, the reason I asked that question is because, like I said, I am used to having a company where I'm not physically located in the country. And for Singapore, it's surprisingly easy because I had an agent that helped me set up everything, and now I have a lawyer doing it and he does, you know, everything related to talking with the bank and signing forms. So, they do a lot and they're super helpful. Obviously, Europe is a different beast. My experience in Singapore is probably similar to like, what would happen if I were to register in Estonia where I don't have to be there, I don't have to ever go there, and someone on the ground can just take care of the things that are related to the government. But I can focus on running my company. So, what you're saying is, if you want that with France, it's not going to happen.

Gabriel Cian: France is not centered around those kind of user experiences, and they want to have people on their territory. And indeed, you have a lot of advantages, and I hope I will be able to give you some detail with regards to those advantages, but only for the people who are located and working in France.

Sean Weisbrot: So earlier you mentioned that the government is working towards fixing some of these problems. Do you have any specific examples of things that you've seen change over the last few years?

Gabriel Cian: Yes, absolutely. So, a couple of years ago, the new president, Emmanuel Macron, he really put a lot of emphasis on startups and wanted to create like what he called the Start-Up nation. Because of this kind of priority, he put in place some new processes to incorporate the companies in a faster way. It does not compare to Estonia. Okay, but it's still way better than it was a couple of years ago before he came into power. You know, the paperwork would be easier. The administration has the obligation to answer faster to your request.

Gabriel Cian: They open specific one-stop shops when you create your company, whereas before you had to deal with different offices, different administrations, which was kind of a headache. So, in that aspect it's better. It's still a way to go until they get, you know. To the Estonian user experience. But it's still much better than it was before. And we clearly see that the government is making efforts towards that direction.

Sean Weisbrot: So, you mentioned that there are a lot of benefits that you can have access to if you are living in France and incorporated in France.

Gabriel Cian: If we take everything into account, France is the best country to create a company, a startup. Maybe it's not the best country to grow the startup when you have succeeded in generating some revenue and you're scaling up, but it's still going to be the best place to start something from the ground up and test it and use it as a laboratory and then eventually expand.

Gabriel Cian: So let me tell you why. In France, when you create a tech startup, so you need technical guys, you need engineers, you need software engineers. And France has a wonderful education system, very good engineering schools. And we are going to have a lot of engineers available on the market. The labor market. They are going to be cost-efficient. In the United States, you might find them, but it's so hard and you would have to pay them so much and that for a couple of months, they would go work for Twitter or Google or whatever. And the prices are sky-high.

Gabriel Cian: In France, the situation is different. The market is more balanced between the offer and the demand, and the prices are not skyrocketing. To give you an idea about what I'm talking about, you can find very good engineers with 5 to 10 years of experience at 60 K per year. You don't get to find that in many countries. I mean, there will be some maybe Ukraine and stuff. You're going to find them, but in the United States, you're not going to find them. And if you find them, they're going to quit because another company is trying to hire them and they're going to offer like a small additional money. And so, after 2 or 3 months and they're going to quit. So, those are really big challenges.

Gabriel Cian: We don't meet those kinds of challenges in France. It's easier to recruit people. It's easier to pay them because they're not so expensive and they don't quit their jobs so easily. They are more more loyal. So, when I talk about this specific aspect, it's so great in France that actually there is American companies who have their research and development teams in France and who leverage that kind of big advantage.

Gabriel Cian: What is very trendy here in France is to start a company here in France, and when you get above a couple of millions in revenue in your revenue to move the headquarters of the company in the United States. But to keep the research and development team here in France, because it's so again, it's so easy and the quality of the engineer is so great. And we have I have some examples you've heard of um, like retail for example. They're a French-founded company who is doing retargeting. Kind of. They are the kings of retargeting in the world, better than even Google. Google tried to acquire them.

Gabriel Cian: So, after a couple of years, they moved their headquarters in the United States because the market was there. But their research and development team is still in France. They have a whole building, you know, 1000 engineers or something like that. And there's so many companies that, uh, follow the same pattern over and over again. So that's one of the big advantages. Not only are the engineers, um, are really qualified and cost-efficient, but, uh, the government heavily subsidizes companies who hire and pay for research and development.

Gabriel Cian: So basically, the way it works is that we would take the total amount of money that has been spent on research and development, and the government will give you 50% more. Under the form of a yearly subsidy, which is huge. It might seem stupid for the government to do this, but at the same time, in the long run, it keeps the engineers here in France. And this is a big advantage for the future. And it's a bet that the government makes on those kinds of high-end engineers. Otherwise, they would all take their plane tickets and get to the United States most likely.

Gabriel Cian: So that's another big advantage. This is the main subsidy which is offered to those companies. But there are so many. We have a national bank here which finances research and development. So, every year there's new competitions, there's new subsidies. So at some point, you could get as much as 1 million or even more under the form of subsidies to start your company and to reach a certain threshold in terms of product and in terms of revenue. And then you would, of course, raise money from venture capitalists or eventually go to the United States.

Gabriel Cian: But you would have a big company which has already a product, which is post revenue, and the valuation of that company would have nothing in common with the ones you would have when you just, you know, come to the venture capitalist with a PowerPoint and implore them to invest in your company, and they would take 50% or so because the risk is so big. This is not happening in France because the French government pays you basically for starting those companies and bringing them to a certain level of performance.

Sean Weisbrot: Those are several really great reasons to look at starting a company in France. I have heard from several friends who are French. That firing people is very difficult in France. Does that carry over to the startup ecosystem?

Gabriel Cian: Yes. So that's a big challenge and a very interesting discussion. So, uh, before, uh, Emmanuel Macron came into power, the law was basically that you didn't have the right to fire people. And if you fire people and you don't respect the law and you don't have a legit what they call a legit reason to fire him, and it's very hard to have a legit reason from the legal point of view, you would be liable and would have to pay penalties which were not kept right so they could virtually go to an infinite amount. So, because of this, people, the employers and founders were really scared to hire people and to fire people because they didn't know what kind of risk they would take in doing so.

Gabriel Cian: Things have, uh, dramatically changed after Emmanuel Macron came into power. So basically issued a law that specifies the maximum amount of money of penalties that the company would pay if they fire an employee. And when you have a maximum amount, well, you can measure the risk you take. So, this becomes something really. This becomes a business decision and one that you can take. Understanding what are the advantages and disadvantages and the risks. So, this has also tremendously changed the situation.

Gabriel Cian: Now it's easier to recruit because you know if it doesn't work well, you could fire that person and you would still keep your company and you would not be liable, you know, having to pay 1 million or so in penalties. So, this is tremendously changed and improved. Now, again, just as I was telling you about the incorporation process, there's still a long way to go. But we still see efforts that the government is making. And this is bringing the whole process of managing technical teams at a much easier level.

Sean Weisbrot: It's strange for me because where I'm at, if I have a problem with someone and they're just not working out and I let them go, there's no penalty now, like I'll pay them for the work they did. But like I don't have to pay a penalty on top of that.

Gabriel Cian: Yes, this is very interesting. I think it has to do something with the history of France. In, uh, 1789, there was a revolution. The poor people took the power and destroyed the royalty. So, because of that, France has more or less become a socialist country. But at the same time, it's complex because there are some fairly strange laws here. But at the same time, you can still do business.

Gabriel Cian: If you know how the law works and you get the right lawyers, you understand how the risks are working. You can still manage your company and kind of manage all those legal restrictions pretty efficiently. Now, it took me 15 years to understand how this works. You know, when you're you have the right advisors, there are counselors and the right experts. Things get pretty straightforward.

Sean Weisbrot: Let's talk about accounting, corporate taxes, personal income taxes, things like that.

Gabriel Cian: Yeah. So, what I'm going to say here is kind of, uh, unofficial information, which I think brings your podcast to an even more interesting level. So, in fact, there is, um, officially, there are a lot of taxes. Basically, when you pay somebody like $10,000 or euros or whatever. You would have to pay an additional amount of €10,000 of dollars of taxes, different taxes. So, at first sight, this is really a big penalty on the economy.

Gabriel Cian: But at the same time, there are so many different ways you could pay people, uh, legally, 100% legally, but not to have to suffer that kind of huge taxes. And again, you have to know how to deal with this. You have to know what kind of contracts to sign with them, how to pay them, and how to leverage that. Uh, I would say very complex legal context here, but which offers also a lot of fiscal niches and tricks to avoid paying those taxes.

Gabriel Cian: So, it's so complex that most of the people are going to actually pay those taxes. And the ones who are part of the elite and who have the knowledge are going to avoid paying those taxes, and it's going to be 100% legal. So, there is a kind of two-tiered society where, you know, most of the people pay a lot of taxes, but the ones who know how to leverage the legal system here are going to do a lot of business and are going to have a lot of advantages.

Sean Weisbrot: What is the legal corporate tax rate for income? What is the tax structure around that in France, and what are the tax rates that companies can expect to see?

Gabriel Cian: Yeah. So very good question with a very long answer. So basically, your tax on everything, your tax on the profit of the company before it used to be 33%. Now it's okay. It's coming down to 28%. And a couple of years they try to get to 25% I believe. Let's talk about the taxes on the salaries you pay to people. If you want to pay 5000 that lands in the pocket of that employee, you would basically have to pay another 5000 in under the form of different taxes unemployment insurance, medical insurance, health insurance, and lots of different other insurance and taxes. I mean, it's very complex, and I wouldn't like to get too much into the details. And I'm not an expert in this. We have a CPA that really does this on a daily basis. But basically, those are the taxes.

Sean Weisbrot: That's insane.

Gabriel Cian: Uh, you're right, that's insane. That's the official part. As I told you before.

Sean Weisbrot: We don't hire any Singaporean citizens even though we're a Singaporean entity. So, we can avoid a lot of the. Extra taxation and requirements that the government places on a company that hires a local citizen in terms of revenue. We get taxed. I think it's 15% or 17%, but I think understanding that you're going to have to pay 100% tax on a person's salary is just nuts.

Gabriel Cian: France is a wonderful country. There is a sort of social peace here. The public services are great. There is a way, a French way of life, which is really great. There's a lot of advantages, but if you really want to take advantage of all those, those kinds of situations, you should come here and you should have the right experts, the right advisors to tell you how to deal with things.

Gabriel Cian: People like me, who have been here for a lot of years and have been in entrepreneurship, have the right knowledge on how to deal with those complexities. If you want to take advantage of this, this is the way to go. You come here, you're going to have a great life, balanced life, and at the same time, understand all those complexities with the help of a local. The official situation is kind of daunting and scares people, but at the same time, in reality, you can really kind of overrun all those difficulties and take advantage of what France has to offer.

Sean Weisbrot: In terms of paying salaries. What is the most common form of payment is just a wire transfer, like a direct deposit? Do you pay in cash? Do you pay twice a month? Once a month? Like what does that look like?

Gabriel Cian: There's a law in France to fight against money laundering and financing of terrorism, which forbids people and companies to pay more than €2,000 in cash. Salaries are paid in wire transfers once a month or eventually by checks. Britain checks that something that does not exist in most of the countries, but it still exists in France. But it's, you know, it's disappearing.

Sean Weisbrot: I have not seen a check in probably ten years. Yeah. How often do you have to file with the government for your corporate taxes? So, for example, I believe in Vietnam you have to do this every month. But in America, you do this once a year. So, what does this look like in France?

Gabriel Cian: So again, the system is fairly complex. And the answer is pretty long. It depends on the type of corporation you choose to have and the revenue and some other financial indicators. You would have different payment possibilities. Basically, the more revenue you generate, the more frequent those kinds of taxes have to be paid. You start by paying them maybe once a year, and then when your company grows, you have to pay them quarterly. And then you would have to pay the monthly.

Gabriel Cian: So, it starts easy and then gets more and more complicated. And what I advise is to take a CPA right away. It costs a bit of money, but it's going to take away a lot of strenuous work from you. And since the legislation is so complex and laws are changing on a constant basis, it's a headache to handle it this yourself. This is not the way to go, at least not in France.

Sean Weisbrot: Yeah, the whole idea of a dynamic payment system just sounds again, it sounds insane.

Gabriel Cian: Yeah, absolutely. I totally agree with you. So, France has a long way to go to for me, I would say to be more sensible with the way they handle companies.

Gabriel Cian: Yeah. So basically, you have an elite here who takes advantage of everything that France has to offer. I would say what around 1% of the population, people coming from across the world, who knows how to take, you know, that the right advices and the right experts. And then if you want to do it like everybody does it, it's a headache. So, it's a kind of a two-tier system. I think it's the same in many countries. France is a little bit farther down that road than other countries. It's not very transparent, but you still have a lot of niches and a lot of advantages when you know how to leverage them.

Sean Weisbrot: So, what's something I haven't asked you yet that you wish I would ask?

Gabriel Cian: Ask me. What's the weather in the south of France?

Sean Weisbrot: Yeah. Okay. Actually, that's probably something people are curious about, I guess, because when I was thinking about moving to another country, I was thinking about, am I going to be freezing or am I going to be hot, or am I going to be cool. Like, you know, what's it going to be like? So yeah, what is the average climate like in France?

Gabriel Cian: France is divided into two parts, the northern part, in the southern part. So basically, Paris is located in the north. So, I've been living in Paris for 18 years. The weather was nice, but at the same time you have clouds, you have sometimes you have wind. So, it was nice, but I thought that it could be nicer to move to the south of France. And this is what I decided to do with my wife three years ago. So, France is a nice country to live in, but the south of France is definitely the best place to live.

Gabriel Cian: You have around 200 or 250 days of sun. There is like 30 degrees in Celsius in the summer. That's a great place and it's really sunny and the weather is really adapted to like practicing sports or going outside hitchhiking, uh, going to the mountains. So, there's the Mediterranean Sea, also at 30km from the place where I stay. So, it's definitely the right place to be if you want to live in France.

Sean Weisbrot: I also forgot to ask, what is the average cost of living in France? If you want to move there, live there, start up a company. How much are you looking to spend?

Gabriel Cian: Paris is really expensive, the most expensive in France, and there's the rest of the country. So, in Paris, you would have to spend around €2,000 per month. Here in the south of France, for example, you would pay half the price for a rental in Paris is going to cost twice as much than in in the rest of France. So, you would pay maybe 30 or €40 for a good restaurant per person. But then restaurants are really nice. Also, um, you would spend €20 in the rest of France here in the south of France. So, I think it's less expensive than San Francisco, I would say, but it's more expensive than so many other countries in Europe, for example, that still offer a very nice quality of life, but maybe at a less expensive rate.