Starting a Business: Singapore versus France
5 minute read
France is one of the leading countries in the European Union. This superpower has a long and rich history and is home to many successful businesses such as Orange, L’Oreal, and Groupe BPCE.
On the other hand, Singapore is one of the most attractive places for doing business in Asia. Its DB score stands at 86.2 while this score for France is 76.8.
Opening a business in both these countries has its benefits and shortcomings. Let’s take a more careful look and see whether you should place your next investment in Singapore or France.
Before a business can be registered in Singapore, there is a set of requirements:
- The company name needs to be approved before registration.
- At least one resident director has to be appointed.
- A company can have between 1 and 50 shareholders who can be both locals and foreigners.
- A qualified resident company secretary has to be appointed within six months of the registration.
- A minimum of S$1 worth of paid-up capital is necessary to register.
- Providing a local (physical) Singapore address as the registered company address is mandatory.
On the other hand, here are the most critical requirements for incorporating a French company:
- Provide personal details of shareholders and directors (one director is the minimum requirement).
- The company’s Articles of Association has to be drafted in French and validated by a public notary.
- The owner has to provide a local physical address in France.
- All documents submitted by foreign individuals or legal entities need to be translated into French and then notarized.
Singapore is known for its reduced corporate income tax rates and significant tax incentives that attract and keep global investments.
- The country has a single-tier territorial based flat-rate corporate income tax system. Effective tax rates are among the lowest in the world, going up to only 17%.
- Singapore adopted a single-tier corporate income tax system in 2003, where there is no double-taxation for stakeholders. A company’s tax paid on its chargeable income is the final tax, and all dividends paid by a company to its shareholders are exempt from further taxation.
- Additionally, there is no tax on capital gains in Singapore. Capital gains include gains on the sale of fixed assets, gains on foreign exchange on capital transactions, and so on.
When it comes to France, taxes are a bit more complicated.
- The corporate tax system in France is separate from the French taxes applicable to income from the business paid as salary.
- The amount of French corporate tax an individual pays depends on the turnover of the capital structure.
- France has recently introduced a new bill that reduces the standard France corporate tax rate. For large companies, it will drop from 33.33% to 25% over five years (28% in 2020).
- Also, bear in mind that there are different French corporate tax regimes such as BIC, BNC, and BA, depending on the industry you operate in.
There are many venture capital firms these days that are based in Singapore or will only accept investing in companies from Singapore.
Singapore’s location in the region is attractive and the numbers are there to prove this statement. Many reports record an increased influx of funds being directed towards VC companies in Singapore.
Venture capital firms that have allocated significant amounts of money to emerging businesses include:
- Singtel Innov8
- KK Fund
- East Ventures
- Golden Gate Ventures
The government is supporting this growth too by offering incentives to attract entrepreneurs and venture capitalists. The laws on intellectual property protection are rather effective and a lot of public money is allocated to early investments.
On the other hand, France is also quite an attractive place for foreign investors. Here are a couple of things you should know about VC in France:
- France is the largest venture ecosystem in Continental Europe.
- The growth and equity market in France is emerging, with entrepreneurs looking to build multi-billion success and growth equity funds capable of financing more substantial rounds.
Singaporean government offers several attractive grants and funding schemes that help grow a business through its various early phases.
On top of that, there are angel investing networks (Business Angel Network South East Asia, Business Angel Scheme, Singapore Angel Network), private equity firms (3V Source One Capital, Venstar, Navis Capital Partners), startup incubators (Action Community For Entrepreneurship, Advanced New Technology Incubator, FocusTech Ventures, etc.), and accelerator programs.
On the other hand, there are over 250 grants and subsidies offered in France. Most subsidies offered by the French government are intended to provide support for small businesses that have already operated for some time. However, occasionally, there are specific subsidies available for new companies.
Some notable schemes (EU to local) include European Union grants and Subsidies, Encouragement au Développement d’Entreprises Nouvelles (EDEN), Primes d’Aménagement du Territoire, and so on.
The French government also offers new businesses a number of financial benefits or incentives.
Some of these benefits come in the forms of:
- Tax benefits
- Income tax reductions and exemptions for companies setting up in ‘special development zones
- Exemption from IFA for the first three years for certain business types
- Reduction of the corporate tax
Foreigners who are shareholders in their Singaporean companies that want to relocate to the country need to apply for an entrepreneur pass (EntrePass). This visa is valid for up to 2 years. To be eligible for this visa, the individual must meet all the requirements outlined by the Ministry of Manpower in Singapore.
A person is eligible to apply for the EntrePass if they intend to set up a private limited company registered with the Accounting and Corporate Regulatory Authority (ACRA) in Singapore. Also, the applicant has to own at least 30% of the share capital of the company to be eligible for the visa.
When it comes to France, there is a startup visa program designed for entrepreneurs and business professionals looking to set up a French company.
The requirements for the French visa are listed below:
- Proof of financial resources equal to the French annual minimum wage must be provided.
- A candidate is required to create an innovative startup project and incorporate a legal entity in France.
- They need to be selected by a designated incubator in France and approved by relevant Government Agency (DIRECCTE).
- They have to show proof of the source of funds used for investment.
This visa comes with a renewable residence card valid for four years with children under 18 and the spouse included.
Once the visa is obtained, the candidate has access to the EU as a member (free mobility within the Schengen area). They can also work, study, and live in France, just like the locals. Free access to a high-standard public education and healthcare system is provided too.
Should you decide to invest in Singapore, you can rest assured that hiring local talent will be a breeze.
Singapore is a very high-proficiency country with the EF EPI score of 66.82. This makes the country number one in all of Asia and number five out of 100 countries/regions worldwide.
The government of Singapore also promised to continue developing the local workforce’s skills and maximise the potential of the best in the country while welcoming talent overseas to work alongside Singaporeans.
This is a proper strategy introduced by the Minister of Trade and Industry. Hence, it is clear that the country finds it essential to educate and equip the local workforce with the right skills.
On the contrary, France records only 57.25 when it comes to the EF EPI score. This makes France the 23rd best country in Europe (out of 33) and the 31st best country in the world workforce-wise.
However, according to a new study by INSEAD, France has outstanding individuals that have a lot to bring to the table.
In January, INSEAD discovered that France is very well-placed to compete in the rapidly digitizing global economy thanks to a robust base of technical and analytical skills, and a workforce that is increasingly flexible and international in outlook.
Nonetheless, businesses will need to provide opportunities for learning, social impact, and inclusion to tap into the local talent pool.
In Singapore, English is the language of business and administration. Hence, there will probably be no communication problems. Locals speak it, while translation and interpreting services are widely available and affordable.
On the contrary, French is the only official language in France. However, there are a few regional languages spoken (mostly by older people). It is good that English is taught in schools, since its importance as an international language cannot be undermined.
The gist is that a big part of French people will understand you if you speak English, especially younger people.
Infrastructure and resources
Singapore is an attractive financial hub with advanced infrastructure and well-utilised resources. This has earned Singapore the reputation of one of the best economies in the world.
In 2017, the country was ranked as the world’s second most open economy by the Heritage Foundation’s Index of Economic Freedom along with the world’s other most pro-business regime by the World Bank’s Doing Business report.
Although the country has a small domestic market and limited natural resources, Singapore has managed to stick through the financial turmoils of 1997 and 2008. Today, the economy of this country is among the most stable economies in the world.
When it comes to France, the economy looks rather good. First of all, France is a global economic power, with a lot of natural resources, useful ports, and diverse regions.
It is open to foreign investments and is often an attractive destination for investors due to its geographical location.
Finally, Paris is one of the European Union’s leading financial centers.
Governance and transparency
Even during the pandemic, Singaporean companies recorded a new record in governance and transparency. The Singapore Governance and Transparency Index (SGTI) 2020 improved and reached an all-time high score of 67.9 points. Keep in mind that this score stood at 59.3 last year.
What this actually means is that companies deal better with corporate governance disclosures than last year. The results are based on base scores, bonuses, and penalties.
When it comes to France, there is a growing need for transparency by the management of listed companies. Consider the increasing weight of foreign minority shareholders that hold almost one-third of the shares on the Paris Stock Exchange.
However, there are efforts that are slowly raising the importance of corporate governance in France. There are still only two models of governance, but there is a high chance that the French will modernise this structure too.
Ready to incorporate?
This match was a tight one. Or not so much? Singapore is among the leading economies in Asia, one of the most attractive business hubs of the world, and investing there won’t be a mistake.
Contact us and we will be happy to help you start your business journey in Singapore.