A foreign company that already operates through a French branch often reaches a point where the original structure no longer matches the business: French customers want a company with its own balance sheet, local investors want shares, employees need a stable employer, or the group wants to ring-fence future liabilities. The practical question is usually phrased as “Can we convert our French branch into a subsidiary?” The answer is yes in practice, but French law does not treat the operation as a simple change of legal form. A branch, or succursale, is an establishment of the foreign company. A subsidiary, or filiale, is a new French legal person. The transition therefore requires a new company, a carefully documented transfer or contribution of the branch activity, and the orderly closure or reduction of the branch.

This distinction controls the treatment of contracts, employees, assets, debts, VAT, corporate tax, banking and registration. This article is written for a foreign parent and its advisers. It explains the French terms that appear in the file: INPI is the National Institute of Industrial Property, which operates the business-formality one-stop shop; the RNE is the National Register of Enterprises; the RCS is the Trade and Companies Register; a Kbis is the official extract evidencing registration in the RCS; the greffe is the registry office attached to the competent commercial court; TVA means French value-added tax; IS means corporate income tax; URSSAF is the body collecting most French social-security contributions; and BODACC is the Official Bulletin of Civil and Commercial Announcements. The safest sequence is to define what is moving, incorporate the recipient company, obtain the approvals and consents required for that perimeter, then close the branch only after the evidence and filings are complete.

I. Can a foreign company convert its French branch into a subsidiary?

A. Why is the operation a new company plus a transfer rather than a change of legal form?

The word “conversion” is commercially convenient but legally imprecise. A French branch has no separate legal personality from the foreign company. Its French registration identifies an establishment through which the parent operates; the parent remains the person contracting with customers, employing staff, owning the branch assets and answering for branch debts. A French subsidiary is different. It has its own name, statutes, capital, directors, accounting records, bank account, tax identification and liability perimeter. The parent may own all of its shares, but ownership does not turn the two entities into one.

The consequence is that the parent cannot simply ask the greffe to replace the branch’s registration with a subsidiary’s Kbis. The usual legal sequence has three distinct components: first, incorporate a new French company; second, transfer the selected business activity from the parent’s French branch to that company by contribution, sale, contract assignment or another appropriate instrument; third, file the branch’s cessation or modification and settle the parent’s remaining French obligations. The official French Ministry for the Economy guidance on establishing a foreign company in France distinguishes the branch’s lack of separate legal personality from the subsidiary’s separate legal identity. The Service Public Entreprendre guidance on international expansion likewise identifies a branch and a subsidiary as different establishment options. Those sources are useful starting points, not substitutes for analysing the assets and liabilities actually being moved.

The distinction also appears in French registration rules. Article R. 123-40 of the Code de commerce defines a secondary establishment as a permanent establishment distinct from the registered office or principal establishment and directed by the person required to register, an employee or a person able to bind that person towards third parties. The official wording is: Est un établissement secondaire au sens de la présente section tout établissement permanent, distinct du siège social ou de l’établissement principal. The branch is therefore a registered operating location, not a second company. The new subsidiary must have its own registration record and cannot inherit the parent’s legal identity merely because the parent owns its shares.

There are several possible transaction shapes. A full transfer may move the branch’s customer portfolio, goodwill, inventory, equipment, intellectual property used in the activity, rights under leases and supplier arrangements, and the staff assigned to the economic unit. A partial transfer may move only a product line, a local sales operation or a complete autonomous business division. A sale gives the subsidiary an acquisition price and the parent a receivable or cash consideration. A contribution gives the parent shares in the subsidiary in exchange for the contributed assets, subject to valuation, corporate approvals and tax analysis. A mixed transaction can combine a contribution with a cash payment, an assumption of identified liabilities or a transitional services agreement.

Do not describe a contribution as an automatic transfer of every branch debt. Asset ownership, contract status, security interests and creditor protection must be mapped separately. A contribution agreement may allocate an economic burden between the parent and the subsidiary, but that allocation does not necessarily release the parent against a customer, lender, landlord, tax authority or employee. Release normally depends on the applicable law, the contract and the required consent. The closing file should therefore distinguish between: assets transferred to the subsidiary; liabilities assumed between the parties; liabilities that remain with the parent; and liabilities for which both entities may remain exposed to a third party.

Contract law makes this point particularly clear. Under Article 1216 of the Code civil, a contracting party may transfer its position to a third party with the agreement of the other contracting party. Légifrance states: Un contractant, le cédant, peut céder sa qualité de partie au contrat à un tiers, le cessionnaire, avec l’accord de son cocontractant, le cédé. The same article says that the transfer must be recorded in writing on pain of nullity. A group resolution or a board instruction is not, by itself, the customer’s consent. The team should review each material contract for advance consent, a change-of-control clause, an assignment prohibition, a notice procedure and a requirement to provide financial information about the incoming company.

The release issue is equally important. Article 1216-1 of the Code civil provides: Si le cédé y a expressément consenti, la cession de contrat libère le cédant pour l’avenir. Without that express consent, and unless the contract provides otherwise, the transferor remains jointly liable for performance. In a branch-to-subsidiary project, that means the parent should not promise internally that all old customer claims have disappeared on the transfer date. The agreement with the subsidiary should include indemnities, records access, claims handling, insurance and a procedure for responding to disputes that relate to the pre-transfer period.

The general force of the existing contract remains relevant while consents are being collected. Article 1103 of the Code civil says: Les contrats légalement formés tiennent lieu de loi à ceux qui les ont faits. The branch cannot tell a key customer that the counterparty has changed if the contract requires a signed amendment and the customer has not signed it. In parallel, Article 1104 of the Code civil requires contracts to be negotiated, formed and performed in good faith. That supports a transparent transition notice, but it does not remove an agreed consent requirement.

Employment law can make the operation automatic in some cases, even when the corporate documents call the transaction a contribution or sale. Article L. 1224-1 of the Code du travail provides that when the employer’s legal situation changes, including through a sale, merger, transformation of a business or incorporation of an enterprise, all employment contracts in force on the date of the change continue between the new employer and the employees. The exact statutory sentence is: tous les contrats de travail en cours au jour de la modification subsistent entre le nouvel employeur et le personnel de l’entreprise. That rule is not a drafting option. If the transferred perimeter is an autonomous economic entity that retains its identity and continues its activity, the parties cannot select only the convenient employees.

The leading test is set out in Cass. soc., 17 June 2009, no. 08-42.615, published in the Bulletin. The Court of cassation states that an autonomous economic entity is an organised group of people and tangible or intangible elements pursuing its own economic objective, and that significant means necessary for operation must be taken over directly or indirectly by a new operator. The Court repeats that approach in Cass. soc., 23 June 2021, no. 18-24.597, published in the Bulletin, a case expressly involving the filialisation of an activity. Its verified formulation is: Le transfert d’une telle entité se réalise si des moyens corporels ou incorporels significatifs et nécessaires à l’exploitation de l’entité sont repris, directement ou indirectement, par un nouvel exploitant.

The 2021 decision also identifies the timing question: the transfer occurs when the new operator is put in a position to direct the entity. That is why the effective date in the contribution agreement, the date on which the subsidiary can invoice and manage the activity, the employee transfer date, and the branch’s final operating date must be aligned. A subsidiary that has been incorporated but cannot yet use the premises, systems, licences or customer contracts may not yet be operating the transferred entity. Conversely, a group that leaves the branch running the same activity after the stated transfer date may create evidence inconsistent with its corporate paperwork.

More recent case law prevents an overly narrow group analysis. In Cass. soc., 28 June 2023, nos. 22-14.834 to 22-14.849, published in the Bulletin, the Court held that the existence of an autonomous economic entity is independent of the group’s organisational and management rules and that it may result from two distinct parts of companies in the same group. The official formulation is: une telle entité économique autonome peut résulter de deux parties d’entreprises distinctes d’un même groupe. Common ownership therefore does not prevent an employment transfer; nor does it prove one without a factual analysis.

For the foreign parent, the initial answer is therefore precise: yes, a branch activity can be moved into a subsidiary, but the project is not a formal conversion of one legal person into another. It is a structured reorganisation with separate incorporation, transfer instruments, employment consequences, tax filings and branch closure. Calling it a “conversion” in the title of a board paper is acceptable only if the paper immediately identifies those legal steps.

B. Which business perimeter should the foreign parent choose before incorporation?

Before selecting SAS or SARL, decide what the subsidiary is actually meant to operate. SAS means société par actions simplifiée, a simplified joint-stock company with flexible governance. SARL means société à responsabilité limitée, a private limited-liability company with a more statutory management framework. A one-shareholder SAS is an SASU, or société par actions simplifiée unipersonnelle. The form affects governance, transfer restrictions, director status and future financing, but it does not answer the prior question of which branch assets and obligations will be transferred. The parent should first write a perimeter schedule, then choose the company whose statutes and financing plan fit that perimeter. The firm’s French company-formation guidance can be used as the broader starting point before the narrower transfer work is finalised.

The schedule should list every operational component, not only assets that appear on the balance sheet. Include customer and supplier contracts; quotations not yet accepted; open purchase orders; receivables and deposits; stock and work in progress; equipment and vehicles; software licences; domain names; trademarks and know-how; marketing materials; regulated permits; insurance; premises and commercial leases; employee contracts; pension and benefit arrangements; accounting records; tax attributes; ongoing litigation; complaints; warranties; and personal-data processing obligations. Identify who owns each item, where it is registered, whether it is transferable, whether a consent is needed, and whether the transfer will be by contribution, sale, licence, novation or temporary service.

Customer relationships deserve a separate table. Mark each agreement as one of four categories: automatically usable by the subsidiary because it is a new order; assignable with written consent; assignable after notice under the contract; or non-assignable without a renegotiation. Include framework agreements, public-sector contracts, distribution arrangements, franchise or agency appointments, software subscriptions and bank facilities. A branch may have used a group-wide contract under which the foreign parent is the named party. That document cannot be treated as a local asset merely because the branch paid the invoices. The legal counterparty, invoicing entity, service provider and data controller should be identified.

Leases and licences require the same discipline. A premises lease may restrict assignment to a subsidiary, require the landlord’s intervention, or impose guarantees from the foreign parent. A regulated activity may require an approval tied to the existing entity, manager or registration. Software, trademark and technology rights may be licensed to the parent and only sublicensed to the branch. The new company needs an express right to use each item from the transfer date. If the right cannot be assigned, the parent may retain ownership and grant a licence, but the licence must address territory, duration, support, termination and insolvency.

Assets with security interests should be verified against the lender’s documents and public registers. A bank that financed equipment may require consent before the parent contributes it to a subsidiary. A retention-of-title seller may still own stock. A pledge or guarantee may be affected by a change in debtor or asset owner. The transaction agreement should attach an asset register with serial numbers, acquisition dates, net book values, valuation method, location and encumbrance status. The subsidiary should not accept a statement that “all assets used by the branch” are transferred if the parties have not identified them.

Decide how liabilities are allocated. Pre-transfer tax, employee claims, customer refunds, product defects, unpaid suppliers, lease arrears and regulatory fines may relate to the branch even if discovered later. The parent normally remains the primary debtor for obligations it incurred as the foreign company. The subsidiary can agree to reimburse or assume selected liabilities between the group companies, but that internal agreement does not automatically bind the creditor. The transfer agreement should include a cut-off date, an allocation rule for mixed periods, a claims-notification process, access to old accounting data, insurance cooperation and a cap or time limit where commercially appropriate. Keep a schedule of excluded liabilities rather than relying on a broad “all assets and liabilities” clause.

If the activity amounts to a French business or fonds de commerce, consider the publicity and creditor rules before choosing between a sale and a contribution. Article L. 141-21 of the Code de commerce requires a contribution of a business to be brought to the attention of third parties through the publications referred to in Articles L. 141-12 to L. 141-18 and an insertion in the BODACC, subject to statutory exceptions, including certain contributions to a company wholly owned by the contributor. Its official text begins: tout apport de fonds de commerce fait à une société en constitution ou déjà existante doit être porté à la connaissance des tiers. The wholly-owned exception should be tested against the actual ownership, transaction structure and filing date, not assumed because the parent intends to own the subsidiary.

For a sale or a contribution subject to the publicity regime, creditor protection can affect the cash timetable. Article L. 141-14 of the Code de commerce gives creditors of the previous owner a ten-day period after the last publication to oppose payment of the price. The statutory wording refers to an opposition that must state the amount and cause of the claim and elect an address within the jurisdiction of the business. Article L. 141-22 deals specifically with an unregistered creditor of the contributing partner and provides a ten-day declaration period, followed by rules on the company’s joint liability for a justified declared liability. The notary, lawyer or filing agent should determine which notices apply; the group should not pay out the price before the applicable opposition risk has been handled.

The parent must also ask whether the transaction changes the foreign-investment position. A new French subsidiary controlled by a non-French parent may fall within France’s foreign-investment screening rules if it carries on a protected activity. Article L. 151-3 of the Code monétaire et financier provides for prior authorisation of foreign investments in activities affecting public authority or specified public-order, security, defence, research, production or commercial fields. The rule is not a universal approval requirement for every branch-to-subsidiary move. It is a reason to check the activity, investor, control chain and thresholds before signing an irrevocable transfer agreement. If the activity is strategic, build the Ministry for the Economy process into the conditions precedent.

Tax classification should be made before the price is fixed. A contribution of a functioning business may differ from the sale of isolated assets. The parent may realise a gain, transfer inventory or trigger registration duties. The subsidiary may need financing to pay the price, while a contribution may change its share capital and premium. A valuation report should explain the method, the assets included, the treatment of goodwill, and why the consideration is arm’s length. Do not use the French tax treatment of a branch as if it automatically followed the subsidiary. The branch is part of the foreign company for legal purposes, while the subsidiary has its own taxable result.

Related-party pricing must be documented. Management fees, transitional services, licence royalties, financing, guarantees and the transfer price should reflect functions, assets and risks. Article 57 of the Code général des impôts addresses profits indirectly transferred to foreign related companies through increased or reduced purchase or sale prices or other means. The verified text uses the words: les bénéfices indirectement transférés à ces dernières […] sont incorporés aux résultats. The group should retain the valuation, comparable data, invoices, service evidence and board approvals. A transfer agreement with a nominal price does not prevent a tax authority from examining the economic value moved.

Finally, decide whether the branch will disappear completely or remain as a limited establishment during a transition. A short dual-running period may be needed to collect receivables, complete customer consents, migrate payroll or finish projects. If so, define who may sign, invoice, hire, incur expenses and use the premises during the period. A branch that remains active after the subsidiary’s supposed start date must have a coherent tax and accounting explanation. The planned end date should be tied to objective milestones: subsidiary registration, bank access, customer consent rate, employee transfer, licence approval, stock count and first invoice.

II. How should the foreign parent execute the transfer and close the branch?

A. Which corporate, contract, employment, VAT and tax steps should come first?

Start with the parent’s internal approvals. The foreign company’s constitutional documents and local law may require a board resolution, shareholder approval, supervisory-board consent or a power of attorney for the transfer and incorporation. The resolution should approve the perimeter, consideration, signatories, conditions precedent, financing, employee plan, contract-consent strategy and branch closure. If documents are signed abroad, check whether a notarised signature, apostille, legalisation or certified French translation is required for the INPI filing, bank, notary or counterparty. Keep the original corporate record and the French translation in the closing file. The Service Public information on a foreign founder’s French subsidiary illustrates why the foreign parent’s statutes, appointment evidence and premises documents may be requested in a related administrative file.

Incorporate the French subsidiary before attempting to migrate its operations. Choose its legal form and business purpose, reserve or clear its name, set its registered office, prepare the statutes, appoint the director or president, determine the share capital, deposit cash capital where required, prepare the beneficial-owner declaration, publish the legal notice and submit the creation file through the INPI one-stop shop. The INPI explanation of the Guichet unique and the RNE confirms that the one-stop shop centralises creation, modification and cessation formalities and that the RNE is fed by those declarations. The Article L. 123-11 of the Code de commerce also requires a legal person seeking registration to justify use of its premises, including the French establishment when the registered office is abroad.

Wait for the company’s registration evidence before treating it as the operational recipient. The subsidiary will receive a SIREN number, which is its nine-digit business identifier, and a SIRET number for each establishment. Its RCS registration is evidenced in practice by a Kbis extract, while the RNE may provide an attestation of registration. A French business bank will generally want the statutes, proof of the registered office, identification of the parent and ultimate beneficial owners, the director’s authority, the filing receipt or Kbis, and information on the activity. The account should be in the subsidiary’s name. The branch’s existing account should not be used to receive subsidiary invoices unless the bank and accountants have documented the transition.

Set the effective date only after the subsidiary can actually operate. On that date, sign the contribution or sale agreement, the transfer schedules, the contract assignments and any licences or transitional-services agreement. Execute customer and supplier novations in the same closing sequence. Send a short transition notice that identifies the new legal name, SIREN, RCS, registered office, VAT number when available, invoicing date, bank details and contact person. Explain that the parent remains responsible for pre-transfer matters unless the contract expressly provides a release. Keep proof of delivery and customer consent for every material contract.

Apply the employment analysis before issuing payroll instructions. Prepare an employee-by-employee map showing role, location, duties, percentage of time spent on the transferred activity, seniority, fixed and variable pay, benefits, collective agreement, pension and insurance, leave balance, disciplinary history and open claims. Ask whether the branch activity is an autonomous economic entity retaining its identity. The Court of cassation’s 23 June 2021 decision, no. 18-24.597, is especially relevant because it considered a filialisation project and emphasised the date at which the new operator is able to direct the activity. The 31 January 2024 decision, no. 21-25.273 also confirms that the absence of some managers does not necessarily defeat a transfer where the incoming operator takes over the activity, premises and significant equipment.

Where Article L. 1224-1 applies, employment contracts continue by operation of law. Do not make employees resign and sign fresh contracts simply to make the group chart look cleaner. Preserve seniority, contractual pay and applicable collective benefits, subject to the rules governing any proposed modification. Article L. 1224-2 of the Code du travail states that the new employer is subject to the obligations owed by the former employer at the date of the change, subject to the exceptions in the text. It adds that the first employer reimburses sums paid by the new employer that were due at the date of modification unless the agreement allocated the burden. The parties should therefore attach a payroll cut-off statement and agree how to settle accrued holiday, bonuses, expenses, litigation, social contributions and benefits.

Update the employer information in the payroll system and submit the required employer and social-security formalities. DSN, or déclaration sociale nominative, is the monthly payroll declaration used to transmit employment and contribution information. URSSAF, the pension bodies, health and provident insurers, occupational-health service and employee representative bodies may need updated details. The branch’s old employer record and the subsidiary’s new employer record must not be mixed. The subsidiary should receive the personnel file lawfully and securely, with a documented basis for transferring personal data and a clear retention policy.

Handle VAT as a transaction, not as an afterthought. A French branch and its foreign head office may be the same legal entity, while the subsidiary is a separate taxable person. The subsidiary normally needs its own French VAT identification and invoicing setup. Validate the customer’s VAT number, the place of supply, stock movements, imports, intra-European transactions and any tax-representative requirement. The official impots.gouv.fr guidance on VAT registration explains why a foreign business’s French VAT obligations depend on its operations and establishment status. For a business transfer, Article 257 bis of the Code général des impôts is verified as in force on 1 September 2026 until 1 January 2027. It provides that when a total or partial universality of goods is transferred for consideration, free of charge or as a contribution between VAT taxable persons, no supply of goods or services is deemed to take place. The text says: aucune livraison de biens ou prestation de services n’est réputée intervenir.

The condition matters. Article 257 bis is not a blanket exemption for every transfer of one asset, every licence or every branch expense. The transferred perimeter must be a total or partial business capable of continuing an economic activity, and the recipient must continue the transferor’s economic activity for the relevant purpose. The official BOFiP commentary on Article 257 bis explains the universal-business concept and distinguishes it from an isolated sale of stock or a single asset. Have the accountant document the conclusion on the transfer agreement, invoices, VAT return and asset-regulation records. If the rule does not apply, charge and report TVA correctly rather than inserting a generic “transfer of business” wording.

Run a parallel tax closing for the branch and a tax opening for the subsidiary. The official impots.gouv.fr explanation of corporate tax for a foreign company is a useful administrative cross-check. Under Article 209 of the Code général des impôts, corporate-tax profits take account of profits realised in businesses operated in France and those attributed to France by a tax treaty. The official text refers to uniquement les bénéfices réalisés dans les entreprises exploitées en France. The foreign company should calculate the branch’s result to the effective date, identify taxable gains or losses, file the appropriate cessation or final returns, review withholding and payroll obligations, and reconcile its French tax account. The new subsidiary must adopt its own accounting period, corporate-tax position, VAT returns, tax instalments and records.

Do not assume that a transfer of branch losses, tax credits, depreciation or VAT adjustments follows the assets. Tax attributes are governed by their own conditions and may be lost, limited or require an election. The closing balance sheet should distinguish assets sold or contributed, assets retained, provisions, receivables, cash, employee accruals, tax accounts, intercompany balances and contingent liabilities. If the parent finances the subsidiary, choose and document equity, shareholder loan or third-party debt. If the parent charges transitional services, set a term, scope, price and evidence of performance. A short schedule of opening balances will prevent the subsidiary’s first accounts from carrying unexplained branch history.

Transfer the accounting and tax records without destroying the parent’s archive. The subsidiary needs records supporting the assets, contracts, customer balances, stock, payroll and opening entries it receives. The parent needs records supporting historic invoices, tax filings, employee obligations, claims and the branch’s closing return. The handover should identify the person responsible for each archive, access rights, storage location, retention period and response process if a French authority, former employee or customer raises a pre-transfer question. If the branch used a shared group enterprise-resource-planning system, export an immutable closing copy and record the extraction date.

Only after operational migration should the parent file the branch’s cessation or modification through the Guichet unique. The filing should reflect the real date on which the establishment stopped or changed its activity, not merely the date of the board resolution. Notify the relevant tax office, VAT service, URSSAF and other bodies, submit final declarations, cancel or amend direct debits, close or redesignate the branch bank account, terminate or assign utilities and insurance, and collect outstanding receivables. Keep a separate list of creditors and claims that remain owed by the foreign company. Branch deregistration is a registry event; it does not extinguish unpaid debts or a parent guarantee.

B. What evidence, approvals and remedies protect the foreign group?

The closing binder should allow an independent reviewer to reconstruct the transaction without relying on a group employee’s memory. Its first section should contain the parent’s approvals, the subsidiary’s signed statutes, registration receipt, Kbis or RNE evidence, beneficial-owner filing, capital evidence, director powers, foreign corporate documents, translations and any screening approval. Its second section should contain the valuation, asset and liability schedules, contribution or sale agreement, conditions precedent, closing certificate, stock count, opening balance sheet and evidence of consideration. Its third section should contain every contract consent, lease amendment, licence, assignment, customer notice and bank instruction.

The employment section should show the legal analysis for the transferred entity, the effective date, the employee list, payroll cut-off, accrued rights, benefit migration, employee-representative information or consultation where applicable, social declarations and data-transfer record. Include the rationale for any employee who remains with the parent or is not transferred. The reasoning should not be “the group selected the people it needed”; it should identify whether the person was assigned to the transferred economic entity and how the applicable law was applied. If the parties deliberately delay the social transfer because the activity is not yet autonomous, obtain tailored advice and preserve the evidence of the actual organisation at the relevant date.

Case law shows why the facts and the documents must match. In the 17 June 2009 judgment, no. 08-42.615, the Court required an organised group of people and tangible or intangible elements pursuing its own economic objective, with significant means taken over. In the 31 January 2024 judgment, no. 21-25.273, it held that the absence of two managerial employees did not by itself defeat the transfer where the same activity, premises and significant equipment continued. In the 28 June 2023 judgment, nos. 22-14.834 to 22-14.849, the Court accepted that the autonomous entity could arise from separate parts of companies in one group. These are not automatic approvals of every corporate reorganisation; they are warnings against describing a transfer more narrowly than the operating reality.

The contract section should track consents and residual liability. For each contract, record the legal counterparty, consent requirement, date of request, date of consent, new invoicing entity, assignment document, release of the parent, guarantee, insurance, dispute forum, governing law and post-closing contact. Where consent is refused, choose a remedy: continue the contract through the parent under a subcontract or licence, negotiate a new contract with the subsidiary, keep the activity in the branch, or accept the commercial cost of termination if lawful. Do not let an unconsented assignment become the default merely because invoices were sent from the new bank account.

Use the statutory publicity rules as a risk-control exercise. If the transaction is a sale or contribution of a business, ask the filing professional to confirm whether Article L. 141-12 of the Code de commerce applies. That provision refers to publication within fifteen days on an authorised legal-announcement medium and by an extract or notice in the BODACC. The official text begins: toute vente ou cession de fonds de commerce […] est […] publiée, subject to the provisions and exceptions in the Code. If an exception applies because the recipient is wholly owned, retain the ownership chart and legal analysis supporting it. If it does not, calendar publication, creditor periods, escrow and release of price.

The tax file should contain the Article 257 bis analysis, the business-perimeter description, the continuity of activity, the VAT status of both parties, inventory and fixed-asset schedules, adjustments and return treatment. It should also contain the corporate-tax closing computation, valuation report, transfer-pricing support and any treaty analysis. The parent’s French taxable presence must be considered after the branch closes: board decisions, employees, dependent agents, premises and other activity may still create a French taxable connection. A new subsidiary does not automatically erase historic permanent-establishment questions.

Related-party arrangements should be reviewed after closing, not only at signature. The parent may provide management, technology, finance, purchasing, brand or compliance support. The subsidiary may provide sales or manufacturing services to the foreign group. Each flow needs a written agreement, an allocation key where relevant, invoices, proof of benefit, a VAT analysis and transfer-pricing evidence. Article 57’s principle means that a tax authority can examine whether the French result has been reduced by an unjustified charge or price. The group should also verify whether the subsidiary must prepare transfer-pricing documentation or country-specific reports based on its size and transactions.

Build a remedy plan for an incomplete transfer. If a critical customer refuses consent, the parent may have to remain the contracting party and have the subsidiary perform under a back-to-back arrangement. If a landlord refuses assignment, the group may need a new lease or a sublease compliant with the original lease. If an employee transfer is disputed, keep payroll uninterrupted while the status is assessed and do not create a gap in social coverage. If the INPI rejects a filing, preserve the rejection notice, correct the specific defect and update the effective-date plan. If a creditor objects to payment, place the price or disputed amount into the mechanism required by the applicable procedure and do not treat the objection as a commercial email to be ignored.

Keep the branch open until the essential evidence exists. The minimum go-live file should show: the subsidiary is registered; its bank and accounting systems are usable; the VAT position is documented; employees have a lawful employer record; the material contracts and leases are transferred or supported by a transition agreement; insurance is active; required licences are in place; customer invoices identify the correct entity; and the parent has a plan for pre-transfer liabilities. A premature branch deregistration can leave the group with an entity that has no practical ability to perform, invoice or pay, while the foreign parent still carries the legal obligations.

A useful board-level timeline is short but sequenced. At the planning stage, define the perimeter, legal form, valuation and approvals. At the incorporation stage, file the subsidiary, open its bank account and obtain registration evidence. At the signing stage, execute the contribution or sale, consents, licences, lease documents and employment records. At go-live, migrate invoicing, payroll, stock, systems and customer communications. At the closing stage, complete tax, VAT, social, registry, creditor and archive actions. At the post-closing stage, reconcile the opening balance sheet, chase missing consents, resolve claims, test invoices and review the first corporate-tax and VAT filings.

The project is complete only when the public records and commercial reality agree. The parent’s branch record should show the correct cessation or reduced activity. The subsidiary’s Kbis and RNE record should show the correct registered office, management and activity. Contracts, invoices, payroll, bank details and websites should use the same legal name. Customers should know who now owes performance and to whom they must pay. The foreign parent should retain the historic archive and accept that a subsidiary is a separate debtor for its own obligations but cannot erase the parent’s branch liabilities by declaration alone.

Conclusion

A foreign company can move its French branch activity into a subsidiary, but the operation is a legal reorganisation rather than a one-line registration change. Incorporate the French company, define the exact perimeter, value and document the assets, obtain contract and regulatory approvals, apply the employment-transfer rules, analyse Article 257 bis and corporate-tax consequences, and close the branch only after the subsidiary can genuinely operate. The most important evidence is the alignment between the transfer agreement, the effective date, the people and assets that moved, the invoices that were issued, and the filings made with INPI, the tax authorities and social bodies. A board resolution may authorise the strategy; it does not, by itself, transfer a customer contract, release a creditor, or remove a historic branch liability.

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