France is the second most complex jurisdiction in which to do business, according to the Global Business Complexity Index (GBCI), a report by the leading professional services firm, TMF Group. From EMEA, France is joined by Poland near the top of the rankings, as the tenth least business friendly country in which to operate.
The study analyses rules, regulations, tax rates, penalties and compliance issues across 77 jurisdictions, which account for 92% of the world’s total GDP and 95% of net global FDI flows. In total, 292 indicators are tracked annually, offering data on key aspects of doing business, including incorporation timelines, payroll and benefits requirements, and compliance procedures.
France’s second place is driven by complexities in accounting and tax processes, its heavily employee-centric HR regulations, and local language requirements for accounts reporting. In addition, France has been one of the first jurisdictions to put the EU SAF-T (an electronic exchange for accounting data) in place. Despite the introduction of “Business France” – a website to assist foreign companies to remain compliant with French accounting standards – businesses may still struggle due to the constant changes to those standards. HR and payroll is also heavily regulated, and employment litigation outcomes are usually in favour of employees. Firing an underperforming worker can take up to 12 weeks, as opposed to one week in Ireland, for instance.
Poland, ranked 34th most complex country in 2020, is now the tenth least business friendly country to operate in globally. Reasons can be found in an always evolving legislative scenario, which leaves business little time to react and implement changes in accordance with new laws. In addition, despite the government has adopted electronic signatures, Polish authorities don’t accept many international signature providers, and instead require signatures from specific local providers, adding to complexity in the jurisdiction.
The report finds that EMEA is still a region where countries such as the Netherlands and the Republic of Ireland represent very attractive locations for multinational organisations, ranking 70th and 74th respectively for business complexity of the 77 researched. Both offer stable and fair regulatory environments, advanced, digitalised and competitive tax regimes, and educated, highly skilled and service-oriented workforces.
In the mid-range of EMEA rankings, countries such as South Africa and UAE require that businesses only register with one tax authority during the incorporation process. The average length of time to set up a company is also between two and three weeks, meaning that incorporation is relatively straightforward in these jurisdictions.
More generally, EMEA, together with the APAC, is a region characterised by strong state intervention to invest in digitalisation, to ease processes and to reduce the burden of bureaucracy. EMEA has also recorded some advancements with more progressive HR benefits, such as childcare assistance and housing or social care contributions: these are now mandated by law for permanent employees in many EMEA jurisdictions.
Juraj Gerzeni, Head of EMEA Management at TMF Group commented: “2021 has been a difficult year due to the pandemic but it has been a positive surprise to note how companies and local governments have been coping with the challenges. The region is marked by different approaches, but resilience is the common factor. It is very good to see how countries such as France are willing to go through a series of overhauls to foster the appetite of international investors.”
Top and bottom ten
|1. Brazil||68. Mauritius|
|2. France||69. El Salvador|
|3. Mexico||70. The Netherlands|
|4. Colombia||71. United States|
|5. Turkey||72. British Virgin Islands|
|6. Indonesia||73. Curaçao|
|7. Argentina||74. Republic of Ireland|
|8. Bolivia||75. Cayman Islands|
|9. Costa Rica||76. Hong Kong|
|10. Poland||77. Denmark|