Branch or subsidiary in France?

This is the first decision a foreign group makes when it comes to France, and it is the one that is hardest to undo. Here is what actually separates the two, in plain terms.

What a subsidiary is

A subsidiary is a French company in its own right, usually an SAS or an SARL. It has its own legal personality, its own share capital and its own management. Liability stops at the French entity. It is taxed in France on its own profits, keeps its own accounting records and files its own annual accounts with the commercial court registry.

What a branch is

How the choice is usually made

• You plan to hire in France, sign local contracts and invoice French clients. A subsidiary is almost always the right answer.
• You want to test the market with a small team and keep the structure light. A branch can be enough at first, and it converts into a subsidiary later.
• Your group does not want its consolidated accounts made public in France. That single point rules out the branch more often than any tax consideration.
• You have no commercial activity at all, only representation. A liaison office may be sufficient, with no taxable presence in France.

What I do

I set up the structure, register it, put the accounting in place and run it from there. Statutory accounts, tax filings, payroll if you hire, and a monthly reporting pack your head office can actually read. In English when that is easier for you.

More for foreign groups