Paris. The business culture here is so toxic and aristocratic that you could probably recruit any developer by promising to not terrorize him. (An internationally competitive salary is not required: small steps.)
I am curious about the banking issue as well. Never heard of it being that difficult. Working visa are indeed becoming increasingly difficult, but I am afraid this is a trend that is not restricted to France.
I think the issues in Paris are much closer to the toxic environment mentioned by the OP. I know several people who founded their own company just to avoid the usual IT job which consists in being a semi-slave for one of the numerous consulting companies.
And about the issue about being a semi-slave : I worked for many startups in Paris and I never felt that. Of course if you take the consulting way you can't really compare with startups. And yes an internationally competitive salary is required and it costs an arm for the employer.
Bring some facts in here, leave the conclusions to us please. As for getting the "government support for young companies", isn't negotiating with Sand Road VCs a skill of its own as well ? What about scoring DOD contracts ? Both require immersion in a culture with specific goals, myths and traps.
look at what cost an employee in France
An engineer in France is way cheaper than an engineer in Silicon Valley. Taxes on salary are indeed higher, but the base salary is so much lower that in the end, France is cheaper. To give you an idea, a basic salary in Silicon Valley is $100K, the equivalent in France would be below 50K€. Those cost the employer about $120K and 75K€ respectively, so you can see which is cheaper.
On top of that, France has a pretty good tax incentive for R&D engineers. You can almost get all your money back as the employer, it's frankly crazy (it's called CIR). But nice for startups.
The main issue in France is the complexity of navigating all the government aid. It's a patchwork of measures that don't fit well with one another...
Concerning the cost of an employee: one thing to keep in mind is that once you paid your employee, he already got his basic retirement and health plan in place, contrary to the US and pretty much everywhere else outside western europe. As an example, I earn more here in Japan than in Paris, the cost of living in Japan is certainly cheaper than in Paris, and taxes are low but in the end once I factor out the cost of health insurance, retirement, and maybe soon sparing money for children's education, France is really not so bad.
I actually know several friends who came back to France after earning "so much money" in the US, especially once they had kids.
It's high, not hight (I'm French too).