The Real Cost of Doing Business in France: Salaries, Taxes, Overheads
France is one of Europe’s most attractive markets for startups, but it also has a reputation for being expensive. For foreign founders, it is critical to understand the full cost structure before committing to expansion. Salaries, taxes, and overheads add up quickly, and underestimating them is a common reason for failed market entry. This guide provides a transparent breakdown of the real cost of doing business in France so you can budget realistically and avoid surprises.
1. Salaries and Employer Charges
The largest cost for most startups in France is payroll.
Gross vs Net vs Employer Cost
Gross salary: the amount agreed in the contract.
Net salary: what the employee receives after social contributions and income tax withholding.
Employer cost: gross salary plus employer contributions.
Employer contributions typically represent 40 to 45 percent of gross salary.
Example 1
Gross salary: €50,000
Employer cost: ~€70,000
Net monthly salary: ~€2,900
Example 2
Gross salary: €80,000
Employer cost: ~€112,000
Net monthly salary: ~€4,600
Market Salaries
Account Executive SaaS: €50,000 to €70,000 gross
Country Manager: €90,000 to €120,000 gross
Software Engineer: €45,000 to €65,000 gross
Customer Success Manager: €40,000 to €55,000 gross
Rule of thumb: always budget 1.4 times the gross salary to know the real employer cost.
2. Corporate Taxes
France has reduced its corporate tax rate significantly in recent years.
Standard corporate tax: 25 percent on profits.
Reduced rate: 15 percent on the first €42,500 of profit for SMEs.
Withholding tax: applies to dividends paid abroad (subject to treaties).
3. Payroll Taxes and Social Security
Employer contributions finance healthcare, pensions, unemployment, and family allocations.
Breakdown of employer charges (approximate):
Health and maternity: 13 percent
Retirement: 10 to 15 percent
Unemployment insurance: 4 percent
Family allocations: 3 to 5 percent
Other contributions: training, accidents at work, solidarity funds
This explains why the gap between gross and employer cost is so large.
4. Value Added Tax (VAT)
Standard VAT: 20 percent
Reduced VAT: 10 percent for some services and 5.5 percent for essentials
Exported services within the EU may benefit from reverse charge mechanisms
Foreign startups must register for VAT as soon as they invoice clients in France.
5. Overheads
Office Space
Paris CBD: €700 to €1,200 per m² per year
Paris outskirts: €400 to €700 per m² per year
Coworking: €300 to €600 per desk per month
Insurance
Mandatory business insurance policies:
Professional liability insurance
Employer liability
Office and equipment coverage
Legal and Accounting
Accounting services: €2,000 to €5,000 per year for a small company
Legal incorporation: €2,000 to €5,000 one-off
Payroll outsourcing: €20 to €50 per payslip
6. Hidden Costs
Delays: bank account approvals, tax registration, and admin can delay operations by weeks.
Benefits: transport reimbursement (50 percent), meal vouchers, supplementary health insurance.
Dismissals: termination processes are lengthy and costly, often including severance.
Culture: long sales cycles in certain sectors increase commercial costs.
7. Total Cost of a Small Subsidiary
Example: a SaaS startup opens a French office with 5 employees.
Country Manager at €100,000 gross → €140,000 employer cost
2 Account Executives at €60,000 gross → €170,000 employer cost
1 Customer Success Manager at €50,000 gross → €70,000 employer cost
1 Engineer at €55,000 gross → €77,000 employer cost
Total payroll cost: ~€457,000 per year
Overheads: €50,000 to €80,000 (office, insurance, accounting)
Total annual cost: ~€500,000 to €540,000
8. Case Example
An American fintech entered France in 2023 planning for €300,000 annual costs for a 5-person team. In reality, payroll and overheads reached €520,000. Without new funding, they would have faced liquidity issues within 9 months. With proper planning and use of incentives like CIR and JEI, they could have reduced costs by more than €100,000.
How morn Helps
morn ensures that foreign founders understand the full financial picture before expanding. We:
Provide detailed payroll simulations per role.
Integrate tax incentives like CIR and JEI into cost planning.
Estimate overheads and hidden costs.
Build realistic budgets aligned with your fundraising and runway.
Conclusion
Doing business in France is not cheap, but it is predictable if you understand the rules. The largest cost driver is payroll, followed by taxes and overheads. By planning carefully and leveraging incentives, foreign startups can reduce effective costs and operate profitably in France.
