You live in London, New York, Berlin or Dubai. Your company has no French subsidiary, no French branch, no office lease in Paris and no registration with any French registry. Yet your people spend their weeks in France: a sales director who visits French prospects from a Paris coworking desk, a technician who installs and maintains your equipment at client sites in Lyon and Lille, an account manager who negotiates renewals over lunch near La Défense. The contracts are signed by the foreign head office, the invoices carry your foreign VAT number, and the money lands in your foreign bank account. Then a letter arrives from the DGFIP, the Direction générale des finances publiques, the French tax administration, or a French client asks for a French VAT number you do not have, and the question you thought you had settled comes back with interest: is your company already taxable in France even though it never registered there? For many foreign groups the answer is yes. France taxes profits made through a business operated in France, and European VAT rules attach your services to the French establishment from which they are actually supplied, with or without a Kbis, the Kbis being the official registration certificate issued by the greffe, the registry office of the commercial court, as proof that a business is entered on the RCS, the Registre du commerce et des sociétés, the French Trade and Companies Register. France publishes company filings in the BODACC, the Bulletin officiel des annonces civiles et commerciales, the official bulletin of civil and commercial announcements, while payroll and social-security tax is collected by the URSSAF, the Union de recouvrement des cotisations de sécurité sociale et d’allocations familiales, the body that collects French social contributions. This guide explains the mechanism in the order a foreign founder needs it. First, when your activity in France already amounts to a permanent establishment for corporate tax and for VAT, following the exact reasoning the Conseil d’État, the French supreme administrative court, applied to a foreign group operating through a French sister company. Second, what unregistered years cost in back taxes, late interest and surcharges, how far back the administration can reach, and how you register and clean the file from abroad, step by step, before the next audit notice lands.

I. Your activity in France can already be taxable, even with no French company on paper

A. When your French team habitually decides the deals, France taxes the profit: the corporate-tax establishment

French domestic law starts from a simple territorial rule. Article 209, I of the Code général des impôts, the French General Tax Code, provides that corporate profits are computed “en tenant compte uniquement des bénéfices réalisés dans les entreprises exploitées en France”, in other words taking into account only profits made in businesses operated in France, “ainsi que de ceux dont l’imposition est attribuée à la France par une convention internationale relative aux doubles impositions”, as well as profits whose taxation is attributed to France by a double-tax treaty (see Article 209, I of the Code général des impôts). The companies liable to that tax include, “quel que soit leur objet”, whatever their purpose, “les sociétés anonymes, les sociétés en commandite par actions, les sociétés à responsabilité limitée”, public limited companies, partnerships limited by shares and limited liability companies (see Article 206 of the Code général des impôts). A foreign company therefore enters French corporate tax as soon as it operates a business in France, and a tax treaty can only narrow that grip, never widen it beyond what the treaty allows. The same code treats as French-source income “Les revenus d’exploitations sises en France”, income from businesses located in France, and “Les revenus tirés d’activités professionnelles, salariées ou non, exercées en France”, income from professional activity carried on in France (see Article 164 B of the Code général des impôts), since the article opens with the words “Sont considérés comme revenus de source française”. Registration is not the trigger. Economic activity on French soil is.

Treaties then decide how much of that activity France may tax. Most French treaties follow the same architecture, and the Franco-Irish treaty examined by the Conseil d’État is a textbook example. Its article on business profits states that Business profits of an enterprise of one contracting State are taxable only in that State unless the enterprise carries on business in the other State through a permanent establishment situated there, so industrial and commercial profits stay home unless a local establishment exists. The treaty defines the key term in plain words: The treaty defines a permanent establishment as a fixed place of business through which an enterprise carries on all or part of its activity. And it adds the dependent-agent clause that catches most unregistered sales organisations: A person acting in one contracting State for an enterprise of the other State, other than an independent agent, is treated as a permanent establishment where it holds powers that it habitually exercises to conclude contracts in the name of the enterprise. Each of these rules comes from the treaty as set out in the decision of the Conseil d’État of 11 December 2020, No. 420174 (see Conseil d’État, 11 December 2020, No. 420174, Value Click).

The facts of that case read like a diagnosis of the modern unregistered group. An Irish company, Valueclick International Ltd, now Conversant International Ltd, sold digital marketing services across Europe while a French sister company, Valueclick France, supplied it with marketing assistance, back-office and administrative services for cost plus 8 percent under an intra-group services agreement. The Irish company set the contract templates and the general pricing, but everything else happened in France. The Conseil d’État endorsed a functional reading of the dependent-agent clause: for a foreign company to have a permanent establishment in France, it is enough that it relies on a non-independent person who habitually exercises powers that bind it in commercial dealings connected with its own business. The court put the test in terms every foreign founder should memorise: a French company which habitually decides on transactions that the Irish company merely rubber-stamps, even without formally signing contracts in the foreign company’s name, counts as that company’s establishment because the endorsed transactions bind it. Applying that test, the court found that the choice to take on an advertiser and every task needed to conclude the contract belonged to the French company’s staff, while the Irish company merely validated each file with what amounted to an automatic signature. A rubber stamp at head office does not save the structure. The Paris appeal court had discharged the company, and the Conseil d’État quashed that discharge, annulling the Paris judgment of 1 March 2018 and remanding the case to that court. The practical lesson is direct. If your French-based staff identify prospects, negotiate terms, and decide which deals close, while your foreign entity only signs off, France will treat the French presence as your permanent establishment and tax the attributable profits as if you had registered, typically for every open year. Choosing the right vehicle before you scale, subsidiary, branch or liaison presence, is the subject of our guide to choosing between a SAS, a SARL, a branch and a subsidiary in France, and the wider entry sequence, bank account, Kbis, VAT and first hire, is mapped in our foreign-founder setup guide for France.

B. When your services are treated as supplied from France, France collects the VAT: the VAT establishment

Corporate tax is only half the exposure. Value added tax follows its own establishment logic, and the same French team that creates a corporate-tax presence usually creates a VAT presence too. French VAT starts from a broad charge: “Sont soumises à la taxe sur la valeur ajoutée les livraisons de biens et les prestations de services effectuées à titre onéreux par un assujetti agissant en tant que tel”, supplies of goods and services made for consideration by a taxable person acting as such are subject to VAT (see Article 256 of the Code général des impôts). The place-of-supply rules then decide which country collects it. For business-to-business services, the code states that “Le lieu des prestations de services est situé en France : 1° Lorsque le preneur est un assujetti agissant en tant que tel et qu’il a en France”, the place of services is in France where the customer is a taxable person acting as such established in France (see Article 259 of the Code général des impôts), and the mirror rule taxes services whose supplier is established in France when the customer is not. The question that decides your file is therefore concrete: does your foreign company have an establishment in France from which the services are supplied, with enough permanence and enough human and technical resources to deliver them on its own?

The Conseil d’État answered that question in the same Value Click decision, and its answer should worry every unregistered operator with staff in France. For VAT, the court recalled, the registered office is the priority connecting factor, and another establishment counts only if it shows a sufficient degree of permanence with human and technical resources fit to deliver the services independently. The Paris court had reasoned that the French sister company could not deliver alone, because campaign launches needed Irish signatures and the data centres running the platforms sat in the United States, the Netherlands and Sweden. The Conseil d’État disagreed on both points. On people, it held that the French company possessed the human resources allowing it to decide contracts independently. On technology, it held that creating, configuring and managing the client account from France was enough, since those steps effectively open the client’s access to the promised functionalities with no specific intervention required from other group companies, even though no data centre used for the matching functions was located in France, or indeed in Ireland. The appeal judgment was therefore annulled on the VAT side as well. For a foreign founder, the translation is blunt: if your French team onboards clients, configures accounts and runs delivery, while the servers happen to sit in Frankfurt, Dublin or Virginia, France will still treat the services as supplied from your French establishment and charge French VAT on them. Years of invoices issued with a foreign VAT number, or with no VAT at all, then become a backlog of French VAT due, plus interest and penalties. If you have already billed French clients without a French VAT number, the repair sequence, correcting invoices, paying the VAT due and limiting penalties, is detailed in our guide to fixing French invoices issued without a French VAT number, and the parallel invoicing duties, mandatory mentions, late-payment interest and the new electronic invoicing calendar, are covered in our guide to compliant French invoices and e-invoicing.

II. What unregistered years cost you, and how to register and clean the file from abroad

A. How far back the administration can reach, and what it adds on top of the tax: interest, surcharges and the ten-year window

Once France establishes that you operated here, the bill has three layers: the tax itself for each year, late-payment interest running from the original due date, and surcharges whose rate depends on how your behaviour is graded. The interest layer is automatic. The code provides that “Toute créance de nature fiscale, dont l’établissement ou le recouvrement incombe aux administrations fiscales, qui n’a pas été acquittée dans le délai légal donne lieu au versement d’un intérêt de retard”, any tax debt not paid by the legal deadline bears late-payment interest, on top of any penalties (see Article 1727 of the Code général des impôts). Interest therefore runs on every undeclared year whether or not you acted in bad faith, and it compounds the cost of waiting: each additional year of unregistered operation adds another vintage of tax plus its own interest clock.

The surcharge layer is where behaviour changes the maths. Start with late filing as such. The code states that “Le défaut de production dans les délais prescrits d’une déclaration ou d’un acte comportant l’indication d’éléments à retenir pour l’assiette ou la liquidation de l’impôt entraîne l’application, sur le montant des droits mis à la charge du contribuable ou résultant de la déclaration ou de l’acte déposé tardivement, d’une majoration de”, failure to file a return on time triggers a surcharge on the duties assessed (see Article 1728 of the Code général des impôts), at 10 percent without a formal demand or with filing within thirty days of one, 40 percent beyond that, and “80 % en cas de découverte d’une activité occulte”, 80 percent where a hidden activity is discovered. Inaccuracies and omissions in filed returns attract their own scale: “Les inexactitudes ou les omissions relevées dans une déclaration ou un acte comportant l’indication d’éléments à retenir pour l’assiette ou la liquidation de l’impôt”, inaccuracies or omissions found in a return, trigger a surcharge of “40 % en cas de manquement délibéré”, 40 percent for deliberate failure, rising to 80 percent for abuse of law, fraud or concealment of part of a contract price (see Article 1729 of the Code général des impôts). An unregistered foreign operator typically cumulates both scales across taxes: no corporate returns and no VAT returns for the same years, each feeding its own interest and surcharge, with corporate tax and VAT assessed in parallel exactly as in Value Click.

The time layer is the one foreign owners underestimate most. The ordinary audit window for income and corporate tax runs to the end of the third year following the year of taxation, but hidden activity extends it dramatically: “le droit de reprise de l’administration s’exerce jusqu’à la fin de la dixième année qui suit celle au titre de laquelle l’imposition est due, lorsque le contribuable exerce une activité occulte”, the administration’s right of recovery runs to the end of the tenth year following the taxed year where the taxpayer carries on a hidden activity (see Article L. 169 of the Livre des procédures fiscales). The same article defines the trigger without mercy: “L’activité occulte est réputée exercée lorsque le contribuable”, a hidden activity is deemed carried on where the taxpayer, has failed to file the returns due on time and either never declared the business to the single business-formalities body or carried on an unlawful activity. A foreign company that sold, installed or supported clients in France for years without any registration or return fits that definition almost by construction, which turns a three-year risk into a ten-year one. There is, however, one genuine nuance worth knowing, because the administration does not always keep the top rate. In the follow-up to Value Click, the Paris appeal court granted discharge of the corporate-tax and VAT assessments for the oldest periods and of the remaining 80 percent hidden-activity penalties charged, rejecting only the remainder of the company’s claims, a ruling the Minister challenged before the Conseil d’État on 4 April 2025 (see Conseil d’État, 4 April 2025, No. 461220, Conversant). The 80 percent uplift is therefore litigable, period by period, and limitation arguments can bite for the oldest vintages, but that is advocacy after assessment, not safety before it. The only reliable way to shrink all three layers at once is to come forward before the audit: spontaneous regularisation removes the hidden-activity narrative, stops new interest clocks, and usually confines the debate to the tax plus the lower surcharge bands. Waiting for the verification notice, the French tax-audit notice whose handling is explained in our guide to answering a French tax audit from abroad, inverts the leverage completely.

Unregistered operation also exposes the group to the administration’s heaviest investigation tool. Where the tax office suspects fraud, it can ask the JLD, the juge des libertés et de la détention, the judge in charge of civil liberties and detention, for authorisation to search business premises and seize documents. The Cour de cassation confirmed such an order against a Luxembourg company operating through French connections: “un juge des libertés et de la détention (JLD) a, sur le fondement de l’article L. 16 B du livre des procédures fiscales, autorisé des agents de l’administration fiscale à effectuer des visites et saisies”, a liberty-and-detention judge authorised tax officers to carry out premises searches and seizures on the basis of article L. 16 B of the Livre des procédures fiscales, the French tax procedure code, “en vue de rechercher la preuve de la commission, par la société Orefa, d’une fraude fiscale”, in order to look for evidence that the company had committed tax fraud (see Cour de cassation, commercial chamber, 15 February 2023, No. 21-13.288, Orefa). The searches took place, and the company’s challenge to the authorisation and to the regularity of the operations was rejected. For a foreign group with desks, stocks or servers in France but no registration, this is the scenario that turns a quiet backlog into dawn visits: the administration does not need your French entity to exist on paper before it walks through the door of the premises your French team actually uses.

B. How to register and clean the file from abroad: the establishment, the VAT number and the returns

Regularisation follows a fixed order, and each step has its counter. First, give the French activity a legal container. If the French operation is permanent, the standard choice is to incorporate a subsidiary, usually a SAS, the société par actions simplifiée, the flexible French joint-stock company led by a president, or a SARL, the société à responsabilité limitée, the French limited liability company run by a gérant, or to register a branch, the succursale, the secondary establishment of the foreign company, which has no legal personality of its own. All business formalities now pass through the single online counter, the Guichet des formalités des entreprises operated for the RNE, the Registre national des entreprises, the National Business Register, which replaced the old separate centres (see the official counter guide at Guichet des formalités des entreprises, entreprendre.service-public.gouv.fr). The filing produces a SIREN number, the unique business identifier, registration on the RCS kept by the greffe, and the Kbis certificate that banks, clients and landlords will ask for before any serious relationship. Founders who try to shortcut this step rediscover it at the bank: an account refusal is common for unregistered structures, and the remedy, the Banque de France designation procedure known as the droit au compte, the right to an account, is mapped in our guide to getting a French business account after a refusal. Where the French presence is genuinely preparatory, a liaison office with no commercial powers can be enough, but the Value Click test governs that assessment: if the people in France decide deals the head office merely signs, the file will be reclassified as a taxable establishment whatever the letterhead says, so the job description and the email trail matter as much as the corporate form.

Second, fix the VAT position, which runs on its own track. A foreign company carrying out taxable transactions in France needs a French individual VAT number, obtained through the professional tax portal or, depending on the case, through the SIEE, the Service des impôts des entreprises étrangères, the tax office for foreign businesses, and non-EU operators must generally appoint a fiscal representative, the représentant fiscal, the France-based party answerable for the VAT. The official registration path is described on the tax administration’s own pages (see Immatriculation à la TVA, impots.gouv.fr). Registration alone does not heal the past: each missing period needs its return, CA3 for the standard real-tax regime, with the VAT due paid and the interest and surcharge regime of articles 1727 to 1729 applied as above. Where French VAT should have been charged but the client already accounted for it under reverse charge, the reverse-charge mechanics must be documented invoice by invoice rather than assumed in bulk. Where the company only now discovers the issue, a spontaneous filing before any audit remains the strongest argument for the lower surcharge bands and against the hidden-activity uplift, while after an audit starts the same filings read as forced compliance. Keep every contract, order confirmation, delivery slip and email showing who decided what and where, because the establishment test turns on decision-making facts, and keep the French sister company’s services agreement, transfer-pricing paperwork and board minutes consistent with the story the VAT returns tell. Inconsistency between the corporate narrative and the VAT narrative is exactly what sinks files at the verification stage.

Third, close the yearly routine so the file stays clean. Once registered, the French entity joins the ordinary calendar that every foreign owner must internalise: approving annual accounts, depositing them at the greffe, publishing through the BODACC, paying corporate-tax instalments, filing VAT returns and, where relevant, declaring the beneficial owners on the RBE, the Registre des bénéficiaires effectifs, the register of beneficial owners. The full deadline map is set out in our guide to the French company legal calendar, and the corporate-tax mechanics, 25 percent rate, branch versus subsidiary treatment and payment discipline, in our guide to French corporate tax for foreign owners. If the French operation also employs staff, the URSSAF track opens in parallel, with its own declarations, formal notices and enforcement, addressed in our guide to answering a URSSAF mise en demeure from abroad. Do the three steps in this order, container, VAT history, standing calendar, and the file tells a coherent story: an establishment that was late to register, came forward, paid what was due and now runs clean. Do them in reverse, or file VAT returns while denying any establishment for corporate tax, and the administration will use your own filings against you.

Conclusion

Operating in France without a French registration does not keep you outside French tax; it keeps you inside it without any of the protections registration brings. The Value Click line of cases shows how Paris judges connect the dots: staff in France who habitually decide transactions the foreign company merely endorses create a corporate-tax establishment, and human and technical resources in France that independently deliver the service create a VAT establishment, even when the servers sit abroad and the signature sits at head office. The price of those years is then computed mechanically, tax for each year, late interest from each deadline, surcharges graded by behaviour up to 80 percent, and a recovery window stretched to ten years where the activity stayed hidden. The exit is equally mechanical and entirely available from abroad: incorporate or branch through the single counter, obtain the SIREN, the RCS entry and the Kbis, secure the French VAT number with a fiscal representative where required, file and pay the missing periods spontaneously, and lock the entity into the standard French calendar of approvals, filings and payments. The groups that do this early pay the tax and the lower bands; the groups that wait for the audit pay the tax, the interest, the top bands and the advisers’ premium for litigating uphill. If your teams already sell, install or support clients in France, treat this quarter as the one in which the file gets built, and build it before the administration builds it for you.

Need a quick opinion on your case

Unregistered French activity turns on your contracts, your team’s actual powers, your invoices and the line between a preparatory presence and a taxable establishment. Our firm offers a telephone consultation within 48 hours with a lawyer of the firm to review your file and set the strategy before registration or the next audit step. Call +33 6 46 60 58 22 or write through our contact page with your contracts, your French VAT position and any DGFIP letter attached. We assist foreign founders and groups in Paris and across Île-de-France as well as throughout France.