You run a company in London, New York, Dubai or Singapore, French clients are calling, and you need a presence in France fast. Should you create a French subsidiary (filiale), register a branch (succursale), or start with a light liaison office (bureau de liaison)? The wrong choice costs months: a branch that signs contracts without the right registration can be treated as a hidden permanent establishment, taxed and fined retroactively, while a liaison office that oversteps its role loses its shelter in a single audit. This guide explains, entirely from the founder’s point of view and from abroad, how a branch and a liaison office really work in France: what each vehicle can and cannot do, how registration on the French single window (guichet unique) works in practice, how corporate income tax (impôt sur les sociétés, IS), value added tax (taxe sur la valeur ajoutée, TVA) and payroll charges apply, and how you close a branch or convert it into a French company (société par actions simplifiée, SAS) when the business takes off. Every decisive statement below is anchored to an official text or court decision you can open and check.
I. Should You Open a Branch (Succursale), a Liaison Office (Bureau de Liaison) or a Subsidiary in France?
Before spending a euro on lawyers or office space, you must understand what French law sees when your foreign company starts working in France. A branch (succursale) is your company acting in France under its own foreign name: it has no legal personality of its own, no share capital of its own, and no assets of its own. A liaison office (bureau de liaison) is even lighter: a representative desk that may prospect, study the market and communicate, but may never do business. A subsidiary (filiale), typically a SAS or a SARL (société à responsabilité limitée), is a separate French person in the eyes of the law. Choosing between the three is the single most consequential decision of your French launch, because liability, taxation and closure costs flow directly from it.
A. What Is a French Branch (Succursale) and How Do You Register It on the Guichet Unique?
A branch is not a company. It is an establishment (établissement) of your existing foreign company on French soil, geographically distinct from the head office but legally inseparable from it. The practical consequences are stark. The branch has no assets of its own: the goods, the cash and the receivables it uses remain the property of the foreign parent. Debts born from running the branch are the debts of the parent itself. If the Paris branch is sued, it is the foreign company that answers, and the foreign company’s worldwide assets stand behind the judgment. Conversely, because the branch operates a genuine business with clients, a lease and a sign, it can be sold, contributed to a company, leased out or pledged, and it benefits from French commercial lease protection (statut des baux commerciaux). A third party can sue your company before the court of the place where the branch sits whenever the dispute relates to the branch’s activity, which means a dispute born in Paris will be heard in Paris even if your head office is in Delaware or Dubai.
Registration is compulsory and it runs through one single channel. French commercial law requires registration (immatriculation) at the trade and companies register (registre du commerce et des sociétés, RCS) for “Les sociétés commerciales dont le siège est situé hors d’un département français et qui ont un établissement dans l’un de ces départements”, which is exactly your situation when you open a branch. Since 1 January 2023, every business formality in France passes through the electronic single window (guichet unique) operated by the INPI (Institut national de la propriete industrielle, the French intellectual property and business formalities office). The Paris business court registry (greffe du tribunal des activites economiques de Paris, the clerk’s office that keeps the company register) confirms that the complete file for a branch must be filed on the INPI single window, and that supporting documents will be requested to complete the registration. Your file must therefore be built for the INPI examiner, not for a paper counter.
In practice, the examiner expects proof that the foreign parent exists (an extract from its home company register, with a certified French translation and, depending on the country, an apostille or legalisation), the decision of the competent corporate body to open a French branch, proof that the branch has premises (commercial lease, domiciliation contract with an approved domiciliation company, or qualifying evidence of occupation such as a recent utility bill), and the identity file of the branch manager (responsable de succursale): passport copy plus a sworn statement of no criminal conviction (déclaration sur l’honneur de non-condamnation), dated and signed. Every document in a foreign language must be translated into French, and copies must be certified as true by the branch manager. If the branch manager is a foreign national, they must hold a valid residence permit (titre de séjour) whose status authorises registration on the RCS and on the national business register (registre national des entreprises, RNE). Founders living abroad often stumble here: appointing a talented manager who lacks the right permit blocks the whole file, and the INPI examiner will reject it until the situation is fixed. Our companion pillar guide on setting up a company in France as a foreign founder walks through the bank account, Kbis extract (Kbis, the official identity card of a French-registered business, issued by the greffe) and first-hire steps that follow registration.
Two traps deserve special attention. First, the registered office rules (domiciliation): at creation, the branch may be domiciled at its legal representative’s home with no time limit where no statute or contract clause forbids it, but where such a prohibition exists the home domiciliation is capped at five years from registration, and possibly less if the lease or court order says so. A Paris landlord’s lease that bans professional use therefore shortens your runway from day one. Second, staff: the moment your branch employs people in France, registration is not optional paperwork but a criminal shield. A company that fails to register a branch employing staff faces prosecution for concealed work (travail dissimulé) by concealment of activity. Register first, hire second.
Why choose a branch rather than a subsidiary? Speed and reversibility. Opening a branch requires no share capital deposit, no articles of association under French law and no French shareholder meetings: one parent decision plus one INPI file. Closing it later is generally simpler and cheaper than liquidating a subsidiary, which is why groups testing the French market often start with a branch. The price of that simplicity is unlimited liability: unlike a SAS, where “Une société par actions simplifiée peut être instituée par une ou plusieurs personnes qui ne supportent les pertes qu’à concurrence de leur apport.”, a branch never shields the parent. If limited liability matters more than speed, create a subsidiary instead.
B. What Is a Liaison Office (Bureau de Liaison) and When Does It Become a Taxable Branch?
A liaison office is the lightest possible footprint: a desk that represents the parent, studies the market, prospects clients and communicates, without ever doing business. The rule is absolute and Bpifrance, the French public investment and business support bank whose business-creation guidance is the national reference, states it plainly: the office may never conclude a contract in the name and on behalf of the parent, its purpose is not to carry on a commercial activity, and it plays only a relay role preparing the negotiation of contracts that are then sent and signed by the foreign parent. Invoices and contracts must be issued and signed by the parent abroad. An office that signs deals, bills clients or delivers services from Paris is not a liaison office anymore, whatever its letterhead says.
Formally, a liaison office that hires no employees is barely visible to the administration: it declares itself through the single window and states that it has no tax obligations, following the step-by-step path published by the tax administration for foreign companies without a stable establishment. But the moment it hires staff in France, declaration on the single window becomes compulsory, and registration on the RCS is strongly recommended whenever you need a Kbis extract, for example to open a French bank account, with the same supporting documents as a branch. The comparison published by Bpifrance is worth memorising: neither the liaison office nor the branch has its own legal personality, while the subsidiary does; commercial activity is forbidden for the liaison office and allowed for the branch and the subsidiary; single-window declaration is compulsory for the branch and for any liaison office hiring staff, and RCS registration is compulsory for the branch while merely recommended for the liaison office. Founders who bank on staying invisible should weigh this carefully: payroll is what pulls a liaison office into the light.
The tax shelter of a liaison office is real but conditional. Doing no sales and working exclusively for its foreign head office, the representative office is not subject to VAT (TVA). It also escapes local business taxes tied to commercial premises (impôts locaux) as long as it stays within its role. But the shelter evaporates the day the office carries on even a marginal commercial activity: it is then reclassified as a stable establishment (établissement stable) and subjected to the same legal, tax and accounting obligations as a branch. French courts apply this test in substance, not on paper. In a 2024 ruling against a Quebec company that claimed it had no French establishment, the Nantes administrative appeal court recalled the treaty definition word for word: “désigne une installation fixe d’affaires par l’intermédiaire de laquelle une entreprise exerce tout ou partie de son activité”, adding that the expression “comprend notamment : a) un siège de direction ; b) Une succursale ; c) Un bureau”, and it upheld the reassessment, ordering “La requête de la société Groupe Conseil Eurocan Incorporated est rejetée.” The lesson for a founder is blunt: a Paris desk whose employee habitually negotiates and concludes contracts is a branch in the eyes of the auditor, with three years of corporate tax, VAT and withholding tax to pay. If your French representative needs authority to bind the company, skip the liaison office and register a branch from the start.
So which vehicle fits your situation? Choose the liaison office only for pure exploration: market studies, trade fairs, finding distributors, with all contracts signed abroad and no French billing. Choose the branch as soon as anyone in France negotiates, bills or delivers in your name. Choose the subsidiary when you want liability contained, French investors or partners on board, or a structure that survives a change of strategy. Many groups follow exactly this ladder: liaison office in year one, branch when revenue starts, subsidiary when France becomes a core market. Each rung has its own registration moment, and skipping one is what creates the hidden-establishment files that end up in court.
II. How Are Your French Branch, Its Staff and Its Profits Taxed, and How Do You Close or Convert It?
Once the branch trades, France taxes it almost like a French company, minus the legal personality. Corporate income tax, VAT, payroll charges and local business tax (cotisation fonciere des entreprises, CFE) all apply, and the parent’s home-country accounting does not replace French books. The second half of this guide maps each tax, the payroll duties that surprise foreign owners most, and the two exits every founder should plan from day one: closing the branch cleanly or converting it into a French subsidiary, plus how to fight a reassessment from abroad when the auditor knocks.
A. Corporate Tax (IS), VAT and Payroll: What Does a Branch With Foreign Owners Really Pay in France?
Corporate income tax (IS) is the first question every foreign owner asks, and the answer starts with territoriality. French tax law provides that “en tenant compte uniquement des bénéfices réalisés dans les entreprises exploitées en France”, plus “ceux dont l’imposition est attribuée à la France par une convention internationale relative aux doubles impositions”. In plain terms: France taxes the profits your business makes through its French operation, and the applicable double-tax treaty (convention fiscale) may add or refine that right. The scope of the tax is deliberately wide, since “sont passibles de l’impôt sur les sociétés, quel que soit leur objet, les sociétés anonymes, les sociétés en commandite par actions” and comparable entities, and a foreign company operating a French branch falls inside that net for its French-source profits. Your branch therefore files its own French corporate return, keeps French books, and pays IS on its French profit at the standard rate, with instalments (acomptes) during the year and a balance (solde) after closing, exactly like a French company. Losses of the branch belong to the French computation and cannot simply be mixed with the parent’s foreign results.
Treaty protection exists but must be claimed properly. Most treaties signed by France give it the right to tax the business profits attributable to a permanent establishment (établissement stable) on its territory, and define that establishment to include a branch, an office and a place of management. The Nantes case above shows how courts reason: fixed place of business plus activity carried on through it, with contract-signing authority as the classic trigger. If no treaty covers your home country, or if the treaty allocates the profit to France, the French assessment stands and double taxation is relieved only at home through a foreign tax credit, if your home law allows one. Founders from treaty and non-treaty countries should therefore map the treaty before signing a Paris lease, not after the first audit.
Dealings between the branch and its head office attract a second layer of scrutiny: transfer pricing (prix de transfert). French law orders that “les bénéfices indirectement transférés à ces dernières, soit par voie de majoration ou de diminution des prix d’achat ou de vente, soit par tout autre moyen, sont incorporés aux résultats accusés par les comptabilités”. Management fees charged by the parent to the branch, royalties for the brand, interest on internal funding and cost-plus recharges for shared services must all be priced as if the branch dealt with a stranger (at arm’s length, pleine concurrence), documented, and actually paid for with real services in return. Auditors love branch files precisely because head-office charges are easy to inflate; keep time sheets, service descriptions and benchmark studies from the first year.
VAT follows the same logic of looking at economic reality. French law states that “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.” A branch that sells goods or services in France is a taxable person (assujetti) in France: it charges French VAT, recovers VAT on its costs, files French VAT returns (often monthly, declarations CA3) and obtains a French VAT number. For services, the place-of-supply rules turn on where the customer sits: “Le lieu des prestations de services est situé en France” notably “Lorsque le preneur est un assujetti agissant en tant que tel et qu’il a en France” its seat of economic activity or the stable establishment receiving the services. A branch receiving head-office services in Paris therefore often self-assesses French VAT under the reverse charge (autoliquidation), a mechanism foreign owners discover painfully during their first audit. Register for VAT early, map every cross-border flow, and keep the invoices that prove it.
Payroll is where foreign owners face the steepest learning curve. Anyone working in France for your branch, whatever their nationality, is in principle covered by French social security, since the statute provides that “Sont affiliées obligatoirement aux assurances sociales du régime général, quel que soit leur âge et même si elles sont titulaires d’une pension, 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, pour un ou plusieurs employeurs et quels que soient le montant et la nature de leur rémunération, la forme, la nature ou la validité de leur contrat ou la nature de leur statut.” Before the first payslip, the branch registers as an employer, declares each hire to URSSAF (Unions de recouvrement des cotisations de securite sociale et d’allocations familiales, the agency collecting social charges) through the pre-hiring declaration (déclaration préalable à l’embauche, DPAE), runs French payroll with payslips meeting French mandatory items, and pays employer and employee charges monthly or quarterly. Posted workers (salaries detaches) sent temporarily from another EU state may stay under home social security with a valid A1 certificate and a prior SIPSI declaration (systeme d’information sur les salaries detaches, the posting declaration portal), but a permanent Paris team joins the French system with no grace period. Add the annual milestones every French business meets: approving accounts, filing the tax return (liasse fiscale) through an accredited channel, paying the CFE assessed by the commune where the premises sit, and publishing certain corporate events in BODACC (Bulletin officiel des annonces civiles et commerciales, the official gazette where company registrations and insolvency openings appear). A branch that misses these steps accumulates penalties faster than its revenue grows.
B. How Do You Close a Branch, Convert It Into a Subsidiary (SAS) or Challenge a Tax Reassessment From Abroad?
Closing a branch is simpler than liquidating a company, but it is still a formal procedure with creditors, staff and the tax office to satisfy. The parent’s competent body votes the closure, a closing file is filed on the INPI single window, and the branch is struck off the RCS (radiation), which is then announced in BODACC so third parties learn the establishment has gone. Employment contracts do not vanish with the registration: French dismissal rules (licenciement), notice periods, severance (indemnité de licenciement) and, above a headcount threshold, collective redundancy safeguards apply in full, and the labour court (conseil de prud’hommes) hears disputes even after the branch closes. The commercial lease must be terminated or assigned under its own terms, with the three-six-nine lease (bail 3/6/9, the standard nine-year commercial lease with three-year break options) often dictating the timetable and the cost. On the tax side, closure triggers a final corporate return and final VAT return, payment of any balance, and frequently a closing audit; keep the branch’s books and supporting documents available for the statutory retention period, because striking the branch off the register does not strike off the limitation period for reassessment. Pay every supplier first: remember that the branch’s debts are the parent’s debts, and a creditor unpaid in Paris can pursue the parent abroad under the applicable jurisdiction and enforcement treaties.
Conversion into a subsidiary is the natural graduation when France works. The standard path runs in four steps. First, create the French company, usually a SAS for its contractual freedom: French law recalls that “Une société par actions simplifiée peut être instituée par une ou plusieurs personnes qui ne supportent les pertes qu’à concurrence de leur apport.”, which gives the foreign parent the limited liability the branch never offered. Second, transfer the branch business (fonds de commerce: clientele, lease rights, equipment, brand licence) to the new company by sale (cession) or contribution (apport), with an independent valuation, registration of the deed and publication so creditors are informed. Third, move or re-hire the staff, transfer or assign the key contracts with the counterparties’ consent, and migrate the VAT number, bank mandates and insurance policies. Fourth, close the branch as described above once the transfer is effective. Each step has its own tax event, transfer duties (droits d’enregistrement), potential capital gains on the business, VAT treatment of the transfer of a going concern, and, where head-office charges existed, a final transfer-pricing true-up, so run the calendar with your accountant before signing anything.
When the dispute has already started, because the auditor treats your liaison office as a branch or your branch’s profit as understated, act fast and in the right order. A French tax reassessment follows a strict paper trail: a rectification proposal (proposition de rectification) inviting your observations within thirty days, then a formal assessment (avis de mise en recouvrement), then collection. From abroad, you can answer every step by appointed representative (mandataire) or counsel, request the departmental review (recours hiérarchique) and the intervention of the departmental interlocutor, and file a formal claim (réclamation contentieuse) with the tax office (direction générale des finances publiques, DGFIP) within the statutory deadline, generally 31 December of the second year following the assessment. If the claim is rejected, expressly or by silence, appeal to the administrative court (tribunal administratif) within two months, then to the administrative appeal court (cour administrative d’appel) as in the Nantes ruling above, where the judges re-examined the stable-establishment evidence file by file. Ask the court to suspend collection (sursis de paiement) by offering guarantees where required, and never let a deadline pass while negotiating: in French tax litigation, a late claim is a lost claim. Keep every contract, email showing where decisions were really taken, travel record and board minute that proves where your business was managed, because the seat of effective management (siège de direction effective) is where many hidden-establishment cases are won or lost.
Paris and the Ile-de-France region (Paris and its surrounding region, the country’s main business jurisdiction) deserve a final practical word. A branch in Paris registers through the Paris business court registry, litigates commercial disputes before the Paris commercial court (tribunal de commerce de Paris) or the Paris judicial court (tribunal judiciaire de Paris) depending on the matter, answers employment claims before the Paris labour court, and faces auditors from the Paris tax directorates who see more branch files than anywhere else in France. Deadlines run the same nationwide, but expect faster dockets, stricter document checks and higher rents: budget the lease, the payroll and the audit defence together. Whatever Residence or nationality the founder holds, French procedure runs in French and French time limits apply, so give your local counsel a standing mandate before the first letter arrives.
Conclusion
A foreign company does not need a French subsidiary to start working in France, but it always needs the right vehicle. Use a liaison office for exploration only, with no contracts and no billing from France. Register a branch the moment anyone acts commercially in your name, file it on the INPI single window with translated, certified documents and a manager entitled to be registered, and run it like a French company for tax, VAT and payroll. Convert to a SAS subsidiary when liability, growth or partners demand a separate legal person, and close the branch formally when the mission ends. At every stage, the question the administration will ask is the same: who really acted, where, and for whose profit. Answer it with documents, not assumptions, and France becomes what it should be for a foreign founder: a large market with demanding but predictable rules.
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