A subsidiary established in France has its own legal personality and a big part of the capital owned by the foreign company. The foreign company cannot be considered responsible for the French company’s actions and its assets are fully protected in case of liquidation of the subsidiary.
The advantages of owning a subsidiary in France are numerous, for example, the support of the France government is granted in case of expansion. Also, the system of taxes is very advantageous. Usually, a subsidiary must pay all the taxes and VAT like a regular company, but due to the many treaties signed by France, many exemptions are granted.
Withholding taxes for dividends paid to a company situated in an EU country are exempt, if the company owns at least 10% of the subsidiary’s capital.
In case the company is located outside the EU, the withholding tax on dividends is 25%, but exemptions or lower taxes may be granted due to the vast network of double tax treaties signed by France all over the years.
There are two forms of business that a subsidiary may take: private limited liability company or joint stock company.
A private limited liability company is specially used by the small and medium businesses and doesn’t require a minimum share capital. The maximum number of shareholder cannot exceed 100.
A joint stock company can be formed by at least seven founders with a share capital of at least 37,000 EUR and it is especially used by large corporations.
A subsidiary is considered fully separated from its parent company only after the registration in the “Registre du Commerce et des societes”.
First step that must be taken when trying to establish a subsidiary in France is drafting the articles of association in front of a notary from the foreign country. The articles must state the reason of opening a subsidiary, the manager’s responsibilities, the name and the address of the subsidiary and other provisions.
If the future manager is not a French resident or from EEA, he must receive a residence permit (skills, expertise and business activity) and a long stay visa.
Another requirement that must be accomplished before incorporation is checking the desired name in the French Patent and Trademark Office.
A bank account must be opened and the minimum share capital must be deposited (37,000 EUR in case of a joint stock company and any amount for a limited liability company).
The next step is the publication of the French subsidiary’s incorporation in the official journal. After this, the company must file all the necessary documents (articles of association, a letter from the bank confirming the opening of an account, the decision of opening a subsidiary and the letter from the official journal) at the Centre de Formalites des Enterprise.
The last step of setting up a subsididary in France is buying the company books and stamp them at the clerk of the Commercial Court.
After approximately one week from checking the name and depositing all the necessary documents at the competent authorities, the French subsidiary may begin the commercial activities.
For more details about setting up a subsidiary in France, you may contact our company formation agents.