FRANCE Trends and Developments Contributed by: Hugo Sanchez de la Espada, Robin Gaulier, Magalie Dansac Le Clerc and Aurore Cormary, Baker McKenzie Paris
healthcare, technology, artificial intelligence, telecom - munications, water supply, critical raw materials, and critical technologies such as cybersecurity and bio - technology. The scope of the regime has been progressively expanded since 1 January 2024 to encompass activities related to the extraction and processing of critical raw materials and expressly included French branches ( succursales ) of foreign companies within its perimeter. This strengthened framework has not, however, diminished France’s attractiveness: for the seventh consecutive year, France ranks as the lead - ing destination for FDI in Europe. FDI filing activity continues to grow, with 417 FDI filings submitted in 2025, up from 392 in 2024. At EU level, the revised EU FDI Screening Regula - tion – which aims to move from a patchwork system towards a harmonised baseline across EU Member States – was formally adopted by the Council of the EU on 8 June 2026. The Member States will have 18 months to implement the required national screen - ing mechanisms ahead of the regulation’s expected application in January 2028. Antitrust In terms of recent regulatory changes, the French Competition Authority (FCA) introduced a “pact of trust” to simplify antitrust screening procedures for straightforward transactions, enabling them to be notified without the need for pre-notification. At the same time, Law No. 2026-403 of 26 May 2026 on the simplification of economic life, enacted following the Constitutional Council’s decision of 21 May 2026, raises the French merger control notification thresh - olds for the first time since 2004. From 1 Septem - ber 2026, a transaction must be notified to the FCA where (i) the combined worldwide turnover of the par - ties exceeds EUR250 million (up from EUR150 million) and (ii) at least two of the parties each generate more than EUR80 million in turnover in France (up from EUR50 million). The specific lower thresholds appli - cable to the retail sector have also been increased, while the thresholds applicable to French overseas territories remain unchanged. The reform is expected to reduce the annual number of notifiable transactions by 20–30%, mainly in the retail sector.
In addition, following the European Court of Justice’s decision in the Illumina / Grail matter, the FCA is con - sidering adopting new directives that would enable it to review transactions in strategic sectors that fall below the legal thresholds, particularly within the technology and healthcare industries. The FCA demonstrates a notably active and robust level of enforcement in France, positioning itself among the most vigorous competition authorities both within Europe and internationally. Employment Law France has one of the most protective employment frameworks in Europe, governed by the French Labour Code and extensive collective bargaining, with strong dismissal protections, mandatory employee representation above certain headcount thresholds and an active role for the labour courts (c onseils de prud ’ hommes ). Successive reforms have nonetheless introduced greater flexibility for employers, most notably the 2017 Ordonnances Macron, which capped damages for unfair dismissal and streamlined social dialogue. France also offers employers a comprehensive toolkit to attract and retain talent, ranging from the favour - able inpatriate tax regime to a wide range of employee incentive and profit-sharing schemes. Recent developments include the transposition of EU Directive 2023/970 of 10 May 2023 on pay transparen - cy, currently being discussed before Parliament. The draft bill will replace the existing gender equality index (in place since 2019) with seven new indicators to be published by employers with 50 or more employees, covering in particular overall gender pay gaps, vari - able pay components and pay quartiles. Tax Overview: Key Considerations After several years of pro-business reforms, most notably the gradual reduction of the corporate income tax rate from 33.33% to 25%, the reduction of produc - tion taxes and the steady improvement of incentives for innovation, the French tax landscape has tightened since late 2024, in a context marked by heightened pressure on public finances and the need to consoli - date the budget deficit.
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