Articles
Establish a Branch in France
Updated on Thursday 13th July 2023 Rate this article
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The branch office is a dependent entity registered by a foreign company in another country. Because of the absence of the status of a legal entity, a branch established in France must follow in its internal policy the law which guides the foreign company.
The branch registered in France has no legal autonomy and doesn’t own legal personality, so the liability for its actions is taken by the foreign company in full and its field of activity cannot be different from the one of the parent company.
| Quick Facts | |
|---|---|
| Applicable legislation | For foreign countries |
| Best used for | - banking, - financial operations, - insurance |
| Minimum share capital | No |
| Time frame for the incorporation (approx.) | Approx. 3 weeks |
| Management | Local, but not mandatory |
| Legal representative required | Yes |
| Local bank account | Yes |
| Independence from the parent company | Dependent on the parent company |
| Liability of the parent company | Fully liable for the branch office' obligations |
| Corporate tax rate | 25% |
| Possibility of hiring local staff | Yes |
The French legal requirements enter the discussion when hiring foreign employees for a branch in France. As such, the working contracts must respect local legislation. One of our agents with experience in the incorporation of foreign workers can provide support in terms of obligations and social security rights.
The characteristics of a branch office in France
Most of the times, the branch office is compared to the subsidiary company, however, the differences between the two types of structures are very important and the foreign company having to choose between the first and the second business form.
The representatives of foreign companies interested in setting up branches in France need to consider that this business form will be limited to undertake the activities of the foreign company only. For this purpose, the parent company will be required to apply for the same business license in France.
The branch office must also bear the same name as the parent company, have a registered address in France and a local representative. A major difference between the French branch and the subsidiary is that the branch office is not required to have a bank account with a local bank. This will save a lot of time when it comes to registering the branch office with the local authorities. However, it is advisable to also open a French bank account for this type of company.
Most of the times, branches serve the interests of foreign financial institutions.
Our company registration specialists in France can offer detailed information on the characteristics of branch offices.
In most cases, the registration of a branch in France should not exceed 3 weeks. However, compared to branches, subsidiaries are subject to more paperwork and procedures, therefore, representation and support are required in this matter.
Documents needed to open a branch in France in 2023
Apart from the documents which need to be provided by the foreign company, the branch office must also have its own Articles of Association which must be drafted in accordance with the local legislation. It is possible for the branch office to use a virtual office during the first phase of the company registration with the French authorities.
If you need to open a branch in other countries, such as Spain, we can help you get in touch with our international partners in this country.
If your branch will be set up as a French SARL, you should pay attention to the incorporation fees. As such, around EUR 1,000 is the company formation fee, with personalized services. Moreover, the company registration fee is around EUR 65.
How to open a branch in France
In order to open a branch in France, the applicant must deposit at the Court of Commerce two copies of each of the following documents:
- - copy after the foreign company’s articles of association and certificate of incorporation,
- - the application form issued by the French Companies Registrar for registering the branch,
- - qualifications or approvals for certain activities which will be undertaken by the French branch,
- - a copy of proof of possession of the premises where the facility is installed (or the right to use those facilities),
- -a declaration which states the appointment of the branch’s representative in France.
These documents must be certified and translated into French. The registration of the branch in Register of Commerce and Companies doesn’t take longer than 15 days from submitting the correct documents.
You can see the scheme below, if you want to open a branch in France:
Conditions for foreign citizens and companies
If the branch’s representative is not a French resident, he must receive a residence card bearing the words of the activity (unless it is a citizen of a Member State of the EU, another state party the European Economic Area or the Swiss Confederation) and must make a declaration on non-conviction and affiliation.
The parent company must indicate, at the top of its invoices, price lists, correspondence (concerning the activities of the branch), its name, legal form, its seat, its registration number in the country where it has its headquarters and, if necessary, if it is in liquidation. The branches opened in France are not subject to a second tax in the country of origin, but only if France has concluded a bilateral agreement to avoid this double taxation with those countries.
The French regulations stipulate that the parent company must include, in the annual financial statements, the assets and liabilities allocated to the branch and file annually two copies of its records with the clerk of the commercial court of the place where it is registered. Even though it has no specific separate property of the society to which it is attached, the branches opened in France must keep records of its own.
The director or manager of a French branch will respond directly to the parent company. He has, in most cases, the expatriate status, so he must follow the labor law of the country of the parent company. Employees, on the other hand, are subject to the rules of the French Labor Law.
We invite you to watch the following video presentation with details on this topic:
Taxation of the branch office in France
From the taxation and accounting points of view, the branch office will be subject to the following:
- the branch will be taxed only on the income generated in France;
- the parent company is required to submit the annual financial records of the branch with the French tax authorities;
- the branch cannot deduct any royalties distributed to the parent company;
- there is no value added tax on the activities carried out between the branch and its parent company;
- the branch office has the status of a permanent establishment; therefore, it will benefit from all of France’s double tax treaties.
It should also be noted that it is much cheaper to register a branch than a subsidiary in France.
What taxes do branches pay in 2023?
Branch offices in France are liable to the payment of various corporate taxes and social security taxes. The corporate income tax in France is one of the most import is charged at a lower rate, of 26.5%. Starting with 2022, the tax is set at a rate of 25%. Other taxes are charged for a profit above EUR 500,000.
Advantages of branch offices in France
There are several advantages linked to establishing a branch office in France, among which the liability which will fall onto the parent company alone. However, it should also be noted that the same parent company will have full decisional powers of the branch.
Another advantage of the branch office is that it is protected by France’s double taxation agreements and will only be taxed on the income generated in France if such agreement does not exist between the foreign company’s country of origin and France.
The branch office must bear the same name as the parent company, therefore all intellectual property rights over the trade name will be protected. Also, a large company with operations all over the world will benefit from the same recognition by setting up a branch in France.
It is also possible for foreign companies to open more than one branch in France. Also, the branch office is allowed to hire French citizens or to bring employees from the foreign company’s home country.
Perhaps the greatest advantage of opening a branch office in France is the simple registration procedure. This process can be completed in a matter of weeks.
If you want to open a branch in another country, such as UAE, we can put you in touch with our local partners.
FAQ on branch offices in France
Here are the answers to some of the most frequently asked questions on French branch offices:
1. How long does it take to set up a branch in France?
The procedure of registering a branch in France can take up to 4 weeks, depending on the activities the company will undertake.
2. Can a branch office be fully owned by a foreign company or does it need a local partner?
The branch office can be wholly owned by the foreign company.
3. Is there a minimum share capital which needs to be deposited in order to establish a branch in France?
No, the branch office does not require a specific minimum amount of money to be created, however, the parent company must decide on the amount needed to complete its operations.
4. Does a company representative need to come to France to open a branch office?
No, it is possible for the branch to be registered remotely by appointing a local representative who will be granted a power of attorney to complete the formalities. Our local specialists in company formation in France can help with this procedure.
5. How many directors must the branch have, and do they have to be French residents?
The minimum number of directors for opening a branch in France is one and he or she does not need to be a French resident.
With a deep knowledge of the French legislation, our representatives can help foreign investors who want to set up a branch office or any other type of company in this country. We can handle the registration formalities on behalf of foreign entrepreneurs through a power of attorney which will grant us the right to prepare the documents needed to be submitted with the Trade Register and to obtain the tax identification and VAT numbers for the branch office.
We mention that you can benefit from the services offered by our accountants in France. Our specialists can guide you regarding the procedures related to bookkeeping, payroll, auditing, preparation of annual financial statements, and human resources management. You will also be able to benefit from our support for tax registration in France. Moreover, we can prepare dedicated financial plans and offer expert tax advice if you are a company owner in this country.
The representatives of foreign companies who want to open a branch in France in 2023 may contact our company formation team. We can also help with the creation of other types of French companies or any other issue related to starting a company in France.
Meet us in Paris
Call us now at +33 9 73 22 01 51 to set up an appointment with our lawyers in Paris, France. Alternatively you can incorporate your company without traveling to France.
As a BridgeWest client, you will beneficiate from the joint expertize of local lawyers and international consultants. Together we will be able to offer you the specialized help you require for your business start-up in France.
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