A foreign company can do business in France in three ways: a liaison office, which may only prepare the ground; a branch, which trades in France but has no legal personality of its own; or a subsidiary, usually a simplified joint-stock company (SAS), which is a separate French company. The right choice depends less on tax than on three questions: will you sign contracts and invoice French customers, will you hire staff, and how much of your group’s liability are you prepared to expose to French courts? Most foreign groups that start with something light end up with a subsidiary within two years. It is worth knowing why before you begin.
A software company based in Austin, Texas, sells a compliance platform to banks. Its first French customers came through its London team, which invoices them from the United Kingdom. In 2026 the company wants to hire two account executives and a customer success manager in Paris, sign contracts in French with French banks, and take part in a public tender. The founders ask a simple question: can we just hire the three people and keep invoicing from abroad? The answer is yes for a few months, and no as soon as the Paris team starts negotiating and concluding contracts. That is where the structure has to be decided.
1. The liaison office: preparing, not selling
A liaison or representative office (bureau de liaison) is not a legal structure. It is a place where the foreign company carries out preparatory or auxiliary activities: market research, prospecting, information, advertising, supplier liaison. It cannot conclude contracts, issue invoices or carry out any commercial activity, and it does not have to be registered with the trade and companies register, although employees must be declared to the social security authorities (URSSAF) through the foreign employer procedure.
The limit is strict and practical. As soon as the office’s staff negotiate the terms of contracts that the parent then signs without real discussion, the French tax authorities may consider that the foreign company has a permanent establishment in France, with French corporate tax on the profits attributable to it, penalties and late-payment interest. Most tax treaties signed by France, including the treaty with the United States, define a permanent establishment by reference to a fixed place of business or a dependent agent who habitually concludes contracts. The liaison office is therefore a temporary solution, useful to test the market for six months to a year.
2. The branch: trading without a French company
A branch (succursale) is a permanent establishment of the foreign company, registered as such with the trade and companies register. It can sign contracts, invoice, hire and rent premises. It has no legal personality: the foreign parent is the contracting party and is liable, without limit, for the branch’s debts. A French creditor who obtains a judgment against the branch can enforce it against the parent’s assets wherever the French judgment can be enforced.
For tax purposes, the branch is subject to French corporate income tax on the profits it makes in France. Profits made by a branch of a foreign company are also deemed to be distributed and subject to a withholding tax under Article 115 quinquies of the French tax code. This branch tax does not apply to companies established in the European Union and subject to corporate tax there, and most tax treaties reduce or eliminate it. It still needs to be checked for each group.
The branch is a good choice for a bank, an insurance company or a group that wants to keep its French activity inside a single balance sheet, but for most commercial companies it is a less comfortable choice than it looks: every French dispute becomes a dispute with the parent, and French customers, banks and public buyers are often more at ease with a French company.
3. The subsidiary: the usual choice
A subsidiary is a French company whose shares are held by the foreign group. The simplified joint-stock company (société par actions simplifiée, or SAS) is by far the most common vehicle. It can be set up with a single shareholder, which may be the foreign parent; its share capital is freely set by the articles, with no legal minimum; its governance is largely contractual, with a mandatory president, who may be a legal entity or a non-resident individual; and it limits the parent’s liability to its contribution, except in cases of fault or of de facto management.
The subsidiary is taxed as any French company: corporate income tax at the standard rate of 25%, with a reduced rate of 15% on the first €42,500 of profit for qualifying small companies. Dividends paid to the foreign parent may be subject to withholding tax, which is generally eliminated within the European Union under the Parent-Subsidiary Directive and reduced by tax treaties. Transactions with the group (licences, management fees, intra-group services, resale margins) must be priced at arm’s length and, above certain thresholds, documented.
The Austin software company chose an SAS, with its American parent as sole shareholder and its head of European sales as president. The London team transferred the French contracts to the new company by assignment, with the customers’ consent.
4. The formalities
Since 1 January 2023, all company formalities go through a single online portal managed by the French intellectual property office (INPI, guichet unique). The file includes the articles of association, proof of a registered office in France (a lease, a domiciliation agreement or premises provided by a group company), the identity documents of the president and, where applicable, the statutory auditor, a declaration of beneficial owners and, for a subsidiary, proof that the share capital has been paid in.
That last step is often the one that takes longest. Opening a bank account for a company whose shareholder is foreign involves thorough anti-money laundering checks, and some banks simply decline. If several banks refuse, French law gives a right to an account: the Banque de France can designate a bank that must open a basic account. Most groups avoid the issue by starting the process with their own international bank or a bank that already knows the group, and by preparing in advance a clear chart of the group’s ownership, the certified documents of the parent company and, for non-French documents, sworn translations or apostilled copies depending on the country of origin, because the delay usually comes from a missing document rather than from the bank’s reluctance, and a complete file, with the parent’s latest approved accounts, a short description of the planned French activity and of the expected flows through the account, and the identity of every individual who ultimately holds more than 25% of the capital or voting rights, generally shortens the process considerably.
5. Employees and French employment law
Staff working in France are subject to French employment law and French social security, whatever the law chosen in the contract, with limited exceptions for employees temporarily posted from abroad, which includes the rules on working time, paid leave, termination and the collective bargaining agreement applicable to the company’s sector. Dismissal in France requires a real and serious reason and a strict procedure, and the scale of compensation for unfair dismissal is capped but still significant.
For the first hires, some foreign companies use an employer of record, a French company that employs the staff and makes them available. The solution is quick but has limits, particularly in terms of the legal framework for making workers available, and it does not solve the question of the permanent establishment if the employees conclude contracts on behalf of the foreign company.
6. The traps to check before investing
Foreign investment screening. An investment by a foreign investor in a French company active in a sensitive sector (defence, energy, health, telecommunications, data, critical technologies, food security, media, among others) may require the prior authorisation of the Minister for the Economy under Article L. 151-3 of the French Monetary and Financial Code. Creating a new subsidiary is not in itself an investment requiring authorisation, but acquiring a French company, or a branch of activity, often is. Our article on foreign investment control in France sets out the thresholds and timescales.
Regulated activities. Some activities require a licence or a registration before any operation: banking and payment services, insurance, investment services, transport, private security, certain healthcare activities. A licence obtained in another Member State can sometimes be passported into France.
Commercial leases. The standard French commercial lease runs for nine years, with a right for the tenant to terminate every three years and a strong right of renewal. It commits the company for longer than a foreign group often expects. Read it before signing.
Contracts with French customers. French law applies rules that the parties cannot exclude, including those on unfair terms between businesses, late payment penalties and the abrupt termination of established commercial relationships. A foreign group that transposes its standard contracts without adapting them often discovers these rules in court.
Getting set up
The firm assists foreign companies with the choice of structure, the incorporation of French subsidiaries and branches, commercial contracts with French customers and suppliers, and disputes in France. See our foreign investment in France and business law pages. For an initial discussion, use the contact page.
Frequently asked questions
Can a foreign company sell in France without a French entity?
Yes. It can sell and invoice from abroad. The risk arises when staff in France habitually negotiate or conclude contracts on its behalf: the company may then have a permanent establishment in France and be subject to French corporate tax.
What is the difference between a branch and a subsidiary in France?
A branch is part of the foreign company and has no legal personality: the parent is liable for all its debts. A subsidiary is a separate French company, usually an SAS, which limits the parent’s liability to its contribution.
Is there a minimum share capital for a French SAS?
No. The share capital of an SAS is freely set in the articles of association. In practice, a capital consistent with the planned activity reassures banks, landlords and customers.
Can the president of a French SAS live abroad?
Yes. The president may be a non-resident individual or a legal entity, including the foreign parent company. Banks and some authorities will nevertheless require identity and address documents, often apostilled.
Does setting up a French subsidiary require government approval?
Not in general. Prior authorisation from the Minister for the Economy is required for investments by foreign investors in sensitive sectors, mainly when acquiring control of, or a stake in, an existing French company or business.
On the same subject: foreign investment control in France, thresholds, sectors and timescales, governing law and jurisdiction clauses in international contracts and enforcing a US or English judgment in France.