Foreign founders who set up a French company often assume that social security is a question of payroll paperwork: once the company is registered and the first salary is paid, someone somewhere will handle the contributions. That assumption is dangerous precisely when the director does not live in France. A president of a French société par actions simplifiée (SAS, the flexible joint-stock company form most foreign investors choose) who works from London, New York or Dubai, a gérant (managing director) of a société à responsabilité limitée (SARL, the French limited liability company) who flies in twice a month, or a foreign parent company that sends one of its own officers to run its French subsidiary, all sit at the intersection of two legal systems that do not tolerate improvisation: the French Social Security Code, which claims contributions for virtually any work performed on French soil, and the European coordination rules — or the bilateral convention — that decide which single country may levy them.
The stakes are not theoretical. URSSAF, the French agency that collects social security contributions, audits companies whose directors draw remuneration without a matching affiliation, and the criminal courts sanction concealed work with up to three years’ imprisonment. Conversely, a director who pays French contributions while legally detached from another Member State may be paying twice for nothing. This article sets out, first, which legislation actually applies to a director of a French company who lives or works abroad (I), and, second, what happens when the rules are ignored and how to regularize the situation from abroad (II).
I. Which country’s social security applies when you run a French company from abroad?
A. The single-legislation rule: work performed in France points to French affiliation
The starting point of French law is remarkably broad. Under Article L. 311-2 of the Social Security Code, compulsory affiliation to the general regime covers “toutes les personnes quelle que soit leur nationalité, de l’un ou de l’autre sexe, salariées ou travaillant à quelque titre ou en quelque lieu que ce soit” — all persons whatever their nationality, whether employees or working in any capacity or place whatsoever, regardless of the amount or nature of their remuneration or the form, nature or validity of their contract. Nationality is irrelevant; residence is not even mentioned in this sentence. What triggers the obligation is work.
Company officers are not outside this net. Article L. 311-3 of the same code (currently in force, with a deferred repeal scheduled for 1 January 2027 as part of the ongoing recodification) lists the corporate officers assimilated to employees for contribution purposes: at point 11°, “Les gérants de sociétés à responsabilité limitée et de sociétés d’exercice libéral à responsabilité limitée à condition que lesdits gérants ne possèdent pas ensemble plus de la moitié du capital social” — the managing directors of SARLs, provided they do not together hold more than half of the share capital; at point 12°, the chairpersons of the board, chief executive officers and deputy CEOs of sociétés anonymes (public limited companies); and at point 23°, “Les présidents et dirigeants des sociétés par actions simplifiées et des sociétés d’exercice libéral par actions simplifiées” — the presidents and officers of SAS companies. A foreign national appointed president of a French SAS is therefore, by default, affiliated to the French general regime as an assimilé salarié (a person treated like an employee) on his or her director’s remuneration, exactly like a French president.
One major exception must be kept in mind, because it drives the whole cost comparison between the SAS and the SARL: the managing director of a SARL who, alone or with a spouse and minor children, controls more than half of the share capital — the gérant majoritaire — falls outside Article L. 311-3 and belongs instead to the regime of travailleurs non salariés (TNS, the self-employed regime), whose scope is defined by Article L. 611-1 of the Social Security Code, which applies at point 1° to “Les travailleurs non salariés”. The same person doing the same work can thus owe contributions to two different regimes, with different rates, different benefit entitlements and different payment schedules, depending on a single percentage point of shareholding. For a foreign owner structuring a French acquisition, this is one of the first points a lawyer must model — before the articles of association are signed, not after the first URSSAF letter.
Where the director works, however, can shift the answer entirely, and here European law takes precedence over the French code. Article 11 of Regulation (EC) No 883/2004 of the European Parliament and of the Council of 29 April 2004, the cornerstone text coordinating the social security systems of the Member States, lays down a strict principle of unicity: every person covered by the Regulation is subject to the legislation of one single Member State, determined under its own allocation rules. Paragraph 3(a) of that article then allocates that single legislation to the place of work: a person pursuing an activity as an employed or self-employed person in a Member State is subject to the legislation of that Member State. This is the rule lawyers call lex loci laboris: the law of the place of work governs. A director who genuinely performs his or her duties in France — board meetings in Paris, management from the French office, signature of contracts on site — is subject to French legislation even if he or she sleeps every night in Brussels, Geneva or London. Conversely, a director who performs the substance of the activity abroad is not automatically within French reach merely because the company is registered at the greffe (the commercial court registry) in Paris.
The European rule applies to persons, not to passports or contracts. The Court of Cassation, France’s highest civil court, has repeatedly confirmed that the determination of the applicable legislation follows the reality of the activity. In a judgment of 30 November 2023 published in its Bulletin, the second civil chamber recalled that under Article 13(3) of Regulation 883/2004, “la personne qui exerce normalement une activité salariée et une activité non salariée dans différents États membres est soumise à la législation de l’État membre dans lequel elle exerce une activité salariée” — a person who normally pursues both employed and self-employed activity in different Member States is subject to the legislation of the State where the employed activity is carried out (Cass. 2e civ., 30 November 2023, No 21-18.251). The court also stressed that the determination procedure organized by Article 16 of the implementing Regulation No 987/2009 produces only an initially provisional result: “Cette détermination initiale est provisoire.” In practice, this means that the first position taken by the institution of the State of residence can be contested and revised within a structured dialogue between the institutions of the States concerned — a director who receives an unfavourable determination is not bound by a unilateral first word.
B. Detachment and multi-state work: when the A1 certificate keeps you at home
European law carves out two major exceptions to the place-of-work rule, and both are documented by a single piece of paper: the A1 certificate, the portable document issued by the social security institution of the home State confirming which legislation applies to the person concerned.
The first exception is posting, or détachement. Under Article 12(1) of Regulation 883/2004, an employed person who works for an employer that normally carries out its activities in a Member State, and whom that employer posts to another Member State to perform work on its behalf, remains subject to the legislation of the first Member State — provided that the anticipated duration of the work does not exceed twenty-four months and that the person is not sent to replace another posted worker. Article 12(2) extends an equivalent possibility, again for twenty-four months, to a self-employed person who goes to pursue a similar activity in another Member State. A British company that sends one of its officers to Paris for eighteen months to launch a French subsidiary can therefore keep that person within UK National Insurance, provided the posting is genuine, temporary and documented by an A1 certificate obtained from HMRC before the mission starts.
The second exception governs persons who work habitually in several Member States at once — the classic profile of a foreign director of a French company who keeps duties at the parent company abroad. Under Article 13(1), an employed person active in two or more Member States follows the legislation of the Member State of residence when a substantial part of the activity is pursued there, and otherwise the legislation of the State where the employer’s registered office is situated. Under Article 13(2), a self-employed person in the same situation likewise follows the State of residence if a substantial part of the activity is pursued there, and otherwise the State where the centre of interest of the activities is located. “Substantial part” is fleshed out by the implementing regulation at around a quarter of working time or remuneration; below that threshold, the person’s ties to the State of residence may be insufficient. For a director who spends three weeks a month at the German parent and one week at the French subsidiary, the answer will often be German affiliation alone — but only after the A1 procedure has formally confirmed it.
French law adds its own formalities on top of the European certificate whenever a foreign employer posts workers to France. Article L. 1262-1 of the Labour Code defines the situations in which “Un employeur établi hors de France peut détacher temporairement des salariés sur le territoire national” — an employer established outside France may temporarily post employees to the national territory — notably for the provision of a service to a client established in France, between establishments of the same group, or on the employer’s own account. Article L. 1262-2-1 then imposes two obligations before the posting begins: the employer “adresse une déclaration, préalablement au détachement, à l’inspection du travail du lieu où débute la prestation” — files a prior declaration of posting with the labour inspectorate, in practice through the SIPSI online portal of the Ministry of Labour — and designates a representative on French territory to liaise with the inspection authorities. These duties exist even where an A1 certificate has been validly obtained: the certificate settles which legislation applies, the SIPSI declaration informs the French labour inspectorate that posted workers are present. One does not replace the other.
The practical sequence for a foreign group is therefore the following. Before the director or employee starts working in France, the home institution (HMRC in the United Kingdom, the DVKA in Germany, the social security institution of the Member State of residence in multi-state cases) is asked for an A1 certificate under Article 12 or Article 13. If the person is posted by a foreign employer to a French client or subsidiary, the employer additionally files the SIPSI declaration and appoints its French representative. Only then does the mission begin. Directors who reverse this order — work first, regularize later — expose both themselves and the company, as the second part of this article explains.
II. What happens if you ignore the rules — and how do you regularize from abroad?
A. URSSAF reassessment, administrative fines and the hidden work offence
A director of a French company who works in France without French affiliation and without a valid A1 certificate leaves the company exposed on three distinct levels: social, administrative and criminal.
At the social level, URSSAF can reassess the company for all the contributions that should have been paid on the director’s remuneration, over a limitation period that currently runs three years back (five where concealed work is established), plus late payment surcharges. The reassessment is addressed to the French company as the deemed employer of the contributions, and the French entity cannot defeat it by arguing that the director was “paid from abroad”: what matters is the reality of the work performed in France under Article L. 311-2 and the European allocation rules. Where the director should have been affiliated to the self-employed regime as a majority manager, the reassessment follows the TNS base computed under Article L. 131-6 of the Social Security Code; where he or she was an assimilé salarié, the general regime rates apply to the full director’s fee.
At the administrative level, a foreign employer that posts workers to France without the prior SIPSI declaration or without appointing a French representative incurs an administrative fine under Article L. 1264-1 of the Labour Code, which makes the breach of the obligations of Article L. 1262-2-1 “passible d’une amende administrative” — the amounts being fixed per posted worker and doubled in case of repetition, with the labour inspectorate empowered to halt the service in serious cases.
At the criminal level, the risk escalates sharply. Article L. 8221-1 of the Labour Code prohibits concealed work (travail dissimulé), including, at its point 3°, “Le fait de recourir sciemment, directement ou par personne interposée, aux services de celui qui exerce un travail dissimulé” — knowingly using, directly or through an intermediary, the services of a person carrying out concealed work. Failing any declaration of activity while employing labour in France falls squarely within this definition. Article L. 8224-1 punishes the breach with “un emprisonnement de trois ans et d’une amende de 45 000 euros” — three years’ imprisonment and a 45,000 euro fine, the fine being multiplied by five for legal persons, to which are added the additional penalties of exclusion from public contracts.
The Court of Cassation has made the A1 certificate the centrepiece of the criminal analysis. In a judgment of 21 February 2023, published in the Bulletin, the criminal chamber held that “la personne morale qui contracte avec une entreprise établie ou domiciliée dans un autre Etat membre de l’Union européenne doit, dans tous les cas, se faire remettre par celle-ci le certificat A1 attestant de la régularité de la situation sociale du cocontractant au regard du règlement (CE) n° 883/2004 du Parlement européen et du Conseil du 29 avril 2004 portant coordination des systèmes de sécurité sociale pour chacun des travailleurs détachés auxquels elle a recours” — the company contracting with an undertaking established in another Member State must in all cases obtain from it the A1 certificate attesting the regularity of its co-contractor’s social situation for each posted worker (Cass. crim., 21 February 2023, No 22-81.903). The failure to verify the certificates sufficed, in that case, to establish the intentional element of knowingly using concealed labour. The diligence duty is therefore not confined to the foreign employer: the French company that welcomes posted directors or workers must ask for and keep the certificates.
One procedural safeguard deserves to be known by foreign groups facing prosecution. Where the dispute engages the European coordination rules — typically where the defence rests on a posting covered by Article 12 of Regulation 883/2004 — the Court of Cassation, following the Court of Justice of the European Union’s judgment of 2 April 2020, has held that URSSAF cannot appear as a civil party in the criminal proceedings: the criminal chamber formally “DÉCLARE irrecevable la constitution de partie civile de l’URSSAF” in such configurations (Cass. crim., 12 January 2021, No 18-86.757). The prosecution remains possible, but the financial claims of the collection agency must then be pursued through the social courts rather than as an adjunct to the criminal file — a distinction that changes the defence strategy and the forum.
B. Certificates of coverage, bilateral conventions and contesting the reassessment
Regularization starts with identifying which instrument governs the director’s situation, because not every foreign director comes from a Member State.
For directors linked to another Member State of the European Union — and, by extension, of the European Economic Area and Switzerland — the instrument is Regulation 883/2004 itself: the employer or the person concerned applies to the designated institution for an A1 certificate, either under Article 12 for a temporary posting of up to twenty-four months, or under Article 13 for habitual multi-state activity. The certificate binds the French institutions and, once issued, defeats the French claim to contributions for the period it covers. Where two States disagree, the dialogue procedure of Article 16 of Regulation 987/2009 applies — the very procedure the Court of Cassation analysed in its judgment of 30 November 2023 — and the provisional determination becomes final only after the two-month window for objections has closed.
For directors linked to the United States, the instrument is the Franco-American social security agreement, signed in Paris on 2 March 1987 and in force since 1 July 1988, published in France by Decree No 88-610 of 5 May 1988 in the Journal officiel. Its Article 5(1) restates the single-legislation principle in terms close to the European regulation: a person employed on the territory of one contracting State is, as regards that employment, subject only to the legislation of that State, even if the person resides in the other contracting State or the employer’s seat is located there. Its Article 6(1) then organizes the posting exception, more generous than the European twenty-four months: an insured person detached by an employer to the other State remains subject only to the legislation of the first State, provided the foreseeable duration of the work in the other State does not exceed five years (full official text on the US Social Security Administration website). The American employer obtains a certificate of coverage from the SSA; the French company keeps it as the counterpart of the European A1. For British directors after Brexit, the social security protocol annexed to the Trade and Cooperation Agreement of 30 December 2020 plays the same coordinating role, with posting rules broadly aligned on the European model.
For directors linked to a State without any convention, the French default rule applies without filter: work in France means French contributions, and planning must focus on structuring the remuneration and the time physically spent in France rather than on exemption certificates.
When a reassessment notice (redressement) has already been issued, the contestation follows a strict calendar. The director or the company first seizes the commission de recours amiable (CRA), the amicable appeals commission of the URSSAF, within two months of the motivated notice of reassessment; the commission’s decision, or its two-month silence, then opens the way to the social pole of the judicial court (pôle social du tribunal judiciaire), again within two months. Missing either deadline renders the reassessment definitive. Two lines of defence recur in the case law. The first is the allocation of legislation: a valid A1 certificate or certificate of coverage covering the reassessed period removes the very basis of the French claim, subject to the review of abusive arrangements the European Court of Justice allows where posting is a façade. The second is the reality of the activity: where the director demonstrates that the centre of the activity was genuinely abroad — diaries, travel records, minutes of board meetings held abroad, remuneration borne by the foreign parent — the place-of-work premise of the reassessment can be reversed. Both lines require documents assembled before the dispute, which is why the filing discipline described in the first part of this article is not bureaucracy but evidence.
Finally, the social security position of the director must be aligned with the rest of the company’s French set-up: the corporate bank account on which the director’s fee is paid, the Kbis extract naming the officer, the VAT registration and the first hiring formalities all tell URSSAF and the tax administration a story that must be coherent. Foreign founders who are still structuring that set-up will find the full sequence in our guide on setting up a company in France as a foreign founder: bank account, Kbis, VAT and the first hire. A director whose social position contradicts the company’s other declarations — affiliated abroad while signing every contract in Paris, or affiliated in France while the company’s accounts show no remuneration at all — invites precisely the audits this article has described.
Conclusion
Running a French company from abroad is lawful, common and perfectly manageable — provided the director’s social security position is settled deliberately rather than left to default. The French Social Security Code claims contributions for any work performed on French territory whatever the director’s nationality, and it assimilates SAS presidents, minority SARL managers and SA chief executives to employees, while majority managers fall into the self-employed regime. The European regulation, and for American directors the Franco-American agreement of 1987, can shift the contributions to the home State, but only through the A1 certificate or the certificate of coverage obtained in advance, supplemented for postings by the SIPSI declaration and the appointment of a French representative. Ignored, these rules expose the company to a three-to-five-year reassessment, administrative fines and a criminal qualification of concealed work punishable by three years’ imprisonment; respected, they cost little more than a form filed on time. The directors who fare best before URSSAF are those whose paper trail was built before the first letter arrived.
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