Setting Up a Subsidiary in France – 2024 Guide

France is one of the largest marketplaces in the European Union. Statistics show that the country’s GDP is €3.1 trillion, placing it seventh in the world in terms of growth in GDP. France has advanced financially, proving to be a lucrative destination for entrepreneurs looking to expand their company’s footprint.  

If you are a business owner thinking of establishing a subsidiary in France, you should be aware that this country is a top destination for international expansion due to its various advantages. Today, we’ll examine the steps for establishing a subsidiary in France and the advantages of doing so.

Types of Subsidiaries in France 

Establishing a subsidiary abroad requires time and money, and there is no guarantee that the venture will be successful. There are several things to consider if you choose to establish a subsidiary in France to grow your business. 

For instance, you must choose the type of subsidiary that best suits your company’s needs, ensure legal compliance with local regulations, and hire staff. 

When entering the French market, foreign businesses often opt to form a limited liability company. This business entity is a great choice for foreigners making initial ventures into the French market because it has no minimal share capital and may be founded with just two members.

Businesses can also form a private limited liability company. Other types of companies include: 

French Joint Stock Company  

There must be at least seven shareholders for this business. The founders of a firm may be either natural persons or corporations. A joint-stock company’s starting share capital is €37,000, which can subsequently be increased to limited liability amongst shareholders.

Simplified Joint Stock Corporation

This business structure is comparable to a joint-stock company. The only notable distinction is that the shareholders must choose a president in this case. SAS can be incorporated with just two partners.

Commercial Partnership

According to the rules of a partnership business, there must be at least two partners to create a commercial partnership firm. These two partners are liable for the company’s debts to the degree of their personal assets. There is no minimum share requirement. All business dealings between the partners must be done using the company’s trademark.

French Sole Proprietorship

This business has a single owner. Sole proprietorship is the best option for people who want complete control of their firm. There is no required minimum share capital, and the firm owner is responsible for all debts and obligations.

Small and medium-sized firms frequently use private limited liability companies since they don’t need a certain share capital. Large firms, in particular, frequently use joint stock companies, which can be established by at least seven owners with a shareholding of at least €37,000. 

Once a subsidiary has been registered in the “Registre du Commerce et des Sociétés,” only then is it deemed to have been fully split from its parent firm. 

Ultimately, your business requirements will determine which subsidiary entity you choose. Thus, you should become aware of the basic and legal criteria for various business formats before establishing a subsidiary in France.

Steps to Set up a Subsidiary in France 

You must follow the steps outlined below in order to establish a French company and access the French market: 

• You must first decide on the type of business entity you wish to create. Determine if you want trade contacts or trade agreements. 
• Choose a firm nickname and visit the Institut National de la Propriete Industrielle (INPI) website to see if it is available. INPI is the national registry of France. 
• Notarise and create the articles of association, which should outline the company’s objectives, manager duties, and office location. 
• All required paperwork must be submitted to the Center de Formalités des Entreprises before registration can be printed in the Official Gazette. 
• To deposit the share capital and carry out business activities, open a business bank account. 
• Announce via the Official Gazette that your French firm has been incorporated. 
• Set up your business to pay taxes, receive insurance, receive loans, and so on. 
• Provide the Centre de Formalites des Enterprise with all the required paperwork. 
• Ask the commercial court to seal your company’s records.
• A local registered agent and address for business correspondence are required for the SARL. 
• Register every shareholder with the INPI 

Public corporations can form their subsidiaries as simplified joint stock companies (SAS), which have the same lenient standards as private companies (SARL).  The joint stock company is the least used corporate structure for establishing a subsidiary in France since the criteria are more complicated when it comes to ownership and organisational structure. 

FAQS

Are there any accounting rules for a French Subsidiary? 

A French bank account must be opened by the subsidiary to place the necessary share capital.  The subsidiary must adhere to national accounting standards because it is a French resident business and must notify the French Tax Authorities of its existence. 

The language of all records must be French. Based on the tax structure of the subsidiary, VAT filings can be issued on a quarterly or monthly basis, and tax records can be submitted yearly.

What are the Documents needed while Establishing a French Subsidiary?

You must submit the necessary paperwork to the trade registry to establish a foreign subsidiary in France. The documents you will need to open a subsidiary include: 

• Permit for residents 
• Passports and identification cards with personal information 
• Filled-out documents provided by the trade registration 
• Articles of Association Memorandum (for a “Company”) 
• The partnership agreement or contract (for partnership firms) 
• Data about the directors of the company (for SARLs, SAS companies, and SAs) 
• A bank statement that specifies the stock capital’s deposit amount 
• A registered leasing agreement or occupancy contract 
• Bank document attesting to the paid-up capital

What are the Uses of a French Subsidiary?

The fact that a French subsidiary business can be utilised for a variety of things is one of its benefits. A subsidiary is frequently used for the following purposes in France: 

• It can be applied when establishing a holding company for stock ownership; the parent firm will manage the subsidiary. 
• It has a wide range of applications, with information technology, farming, and research and development being the most common. 
• It can engage in other operations than its parent firm, as opposed to the branch office, which is constrained in this regard. 
• A joint venture wherein the subsidiary company joins forces with a local business is another option.

What are the Benefits of Opening a Subsidiary in France?

Here are some advantages of having a subsidiary business in France.

Flexible Business Models 

The parent business has no control over a French subsidiary. As a result, the parent company’s approval is not required for the subsidiary company’s operations. 

Tax Benefits 

The French government handles subsidiaries the same as any other venture or new business in need of financial support. It provides subsidiaries with a variety of tax benefits. 

Excellent Location 

Since France ranks among Europe’s largest marketplaces, foreign investors establishing subsidiaries there have many options to grow their businesses. Moreover, France is located in the heart of Europe, with easy access to other major European markets. This can be particularly advantageous for businesses that are looking to expand their operations across Europe.

There Is No Need For Share Capital

There isn’t a minimum capital requirement for businesses in France, which enables investors to work within their required budget quite easily. 

Inexpensive Labour Costs 

Comparatively speaking, France’s labour costs are lower than those of major European countries. In addition, France has a highly skilled and educated workforce with a strong tradition of engineering, science, and technology. This can be particularly beneficial for businesses operating in industries that require specialised skills and knowledge.

Final Thoughts

There are many benefits to setting up a subsidiary company in France. It provides you with a platform for the international expansion of your firm. Unfortunately, after a drawn-out registration process, there is a lot of documentation to complete. Start Company Formations steps in to help with that. 

As a multinational corporation, we have in-depth expertise regarding the entire registration process for French subsidiaries.  All of our clients receive courteous and professional treatment. 

We have years of expertise assisting businesses in growing, and we offer a wide range of services, including EMI bank services, global accounting and tax services, merchant processing solutions, payroll services, and the simple purchase of a shelf company. Visit our website today and get a quote!