You live in London, New York, Dubai or Singapore and you want to trade, hire or invoice in France. The first question your French lawyer will ask is not about tax rates or visas. It is about the vehicle: will you create a French company, and in which form, or will you extend your existing foreign company into France through a branch? The answer shapes who can bind the business, who bears the losses, how profits are taxed, how easily you can sell or bring in an investor, and how painful an exit will be. This guide compares the four routes foreign founders actually use: the SAS (société par actions simplifiée, simplified joint-stock company), the SARL (société à responsabilité limitée, limited liability company), the branch (succursale) and the subsidiary (filiale). It then explains how to register through the single filing portal and how to change vehicle later without destroying contracts, jobs or the bank relationship.
Every French acronym below is explained on first use: Kbis (the official company identity certificate issued by the clerk of the commercial court, called the greffe), RNE (Registre national des entreprises, the national business register), RCS (Registre du commerce et des sociétés, the trade and companies register now fed into the RNE), SIREN and SIRET (the national identification numbers of the company and of each of its premises), BODACC (Bulletin officiel des annonces civiles et commerciales, the gazette where company events are published), URSSAF (the body collecting social contributions), and IS (impôt sur les sociétés, corporate income tax). Our companion guide to the practical setup steps, Setting Up a Company in France as a Foreign Founder: Bank Account, Kbis, VAT and Your First Hire, covers the bank account, the Kbis and the first hire in detail, while this article focuses on choosing the right legal vehicle and keeping the right to change it.
I. Should a foreign founder create a French SAS or SARL, and what does each choice cost in control and exit?
When a foreign founder decides to create a company that will itself be French, with its own legal personality, its own assets and its own liability shield, the choice is in practice between two forms: the SAS and the SARL. Both limit the liability of their members to their contributions. Both can be formed by a single person, in which case the SAS is called a SASU (société par actions simplifiée unipersonnelle) and the SARL is called an EURL (entreprise unipersonnelle à responsabilité limitée). Both are subject to French corporate tax under the same gateway provision. The difference lies in governance, in the transfer of shares, in the status of the manager and in the drafting effort required on day one.
A. How does a SAS give a foreign founder flexible control, and where are the traps in the articles?
A SAS can be formed by one or several persons who bear losses only up to their contributions, since Article L227-1 of the Commercial Code provides 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.” The same article explains that a single-member SAS is run by its sole member, the associé unique, who exercises the powers given to the members whenever the chapter requires a collective decision. For a foreign founder starting alone from abroad, the SASU is therefore a natural vehicle: one shareholder, full control, limited liability, and the later ability to bring in partners or investors by issuing new shares or transferring existing ones.
The defining feature of the SAS is contractual freedom. Article L227-5 of the Commercial Code states that “Les statuts fixent les conditions dans lesquelles la société est dirigée.” In plain English, the articles of association (statuts) decide how the company is managed. The founder can create a president with broad powers, add one or several general managers (directeurs généraux), set up committees, define bespoke voting rights, attach double votes or veto rights to certain shares, organise staged investment rounds, and write tailor-made clauses on the admission of new members, the forced exit of a disruptive partner or the sale of the whole company. No other French company form gives this room for manoeuvre, which is why venture capital funds, business angels and foreign groups expanding into France almost always require a SAS before they invest.
Representation towards third parties follows the same logic. Article L227-6 of the Commercial Code provides that “La société est représentée à l’égard des tiers par un président désigné dans les conditions prévues par les statuts.” The president holds the widest powers to act in the name of the company within the limit of the corporate purpose, and the company remains bound even by acts beyond that purpose unless it proves the third party knew or should have known. Any internal limitation of the president’s powers is unenforceable against third parties. A foreign founder who stays abroad should understand the consequence: whoever is named president in the publicly available articles can sign contracts, open accounts and commit the company, and a private side letter restricting that person will not protect the company against a good-faith supplier or landlord. Choose the president carefully, publish only what must be published, and put the real limits in supervised delegations of authority rather than in secret instructions.
Collective decisions work the same contractual way. Article L227-9 of the Commercial Code states that “Les statuts déterminent les décisions qui doivent être prises collectivement par les associés dans les formes et conditions qu’ils prévoient.” The articles must reserve certain matters to the members, such as capital increases, mergers, dissolution, transformation, appointment of auditors, approval of annual accounts and allocation of profits, but the forms, quorums, majorities, remote voting and written consultation are for the drafter to define. Freedom here is a double-edged tool. Well-drafted articles give a foreign majority shareholder fast remote decision-making by video call and electronic signature. Poorly drafted articles produce deadlocks, contested valuations and annulled meetings, with the dispute litigated in Paris while the founder sits in another time zone.
The most dangerous trap concerns exclusion and voting rights. Founders often ask for a clause allowing the majority to expel a minority partner who competes, blocks decisions or damages the brand, while depriving that partner of the vote on his own exclusion. The Court of Cassation has shut that door. In its judgment of 29 May 2024, case no. 22-13.158, published at https://www.courdecassation.fr/decision/6656c52f67f9f2000812249e, the Commercial Chamber held, on the combination of Articles 1844 and 1844-10 of the Civil Code with Article L227-16 of the Commercial Code, that “toute stipulation de la clause d’exclusion ayant pour objet ou pour effet de priver l’associé dont l’exclusion est proposée de son droit de voter sur cette proposition est réputée non écrite.” In plain terms, any exclusion clause whose object or effect is to deprive the targeted member of his vote on his own exclusion is deemed unwritten. The court annulled an exclusion voted without the targeted member and recalled that every member has the right to take part in collective decisions and to vote, with the articles able to depart from that principle only where the statute allows. A foreign founder who wants an exclusion mechanism must therefore draft it with defence rights, valuation method, payment terms and suspension effects spelled out, and must let the targeted partner vote, failing which the whole operation collapses in court years later.
Transferability is the other great strength of the SAS. Shares (actions) are in principle freely transferable financial securities, and restrictions such as prior approval (agrément), pre-emption rights or inalienability for a capped period must be written into the articles to be enforceable. That makes the SAS the vehicle of choice where the founder plans to sell part of the company, bring in an American or British co-founder, grant equity to a Paris-based manager, or prepare a resale to a competitor. The price of this flexibility is paid upfront: unlike the SARL, whose regime is largely supplied by statute, the SAS requires long, precise articles. Copying a template found online, leaving the presidency, the voting rules or the transfer clauses vague, or mixing French and foreign legal concepts without advice, creates the very disputes that flexible drafting was meant to prevent. Budget for proper drafting on day one; it is cheaper than one contested shareholders meeting.
A final practical point for founders living abroad: the president of a SAS, whether paid or not, belongs to the general social security scheme as an assimilated employee (assimilé salarié) when remunerated, without unemployment insurance, and pays French social contributions on French-source remuneration. Dividends distributed to a non-resident shareholder may suffer French withholding tax, with the rate and refund depending on the applicable tax treaty and on proof of foreign residence. Structure the mix of salary and dividends only after checking the treaty of your country of residence and the French rules on withholding, and keep the payroll file clean, because the first URSSAF audit always starts with the director’s pay slips.
B. When does a SARL protect a foreign founder better, and why is it harder to sell or transfer?
A SARL is formed by one or several persons who likewise bear losses only up to their contributions, since Article L223-1 of the Commercial Code provides that “La société à responsabilité limitée est instituée par une ou plusieurs personnes qui ne supportent les pertes qu’à concurrence de leurs apports.” Where only one person forms it, that person is called the associé unique and exercises the powers of the meeting of members. The single-member version, the EURL, is the workhorse of small French businesses run by one owner-manager. For a foreign founder who will personally manage a shop, a restaurant, a craft activity or a consultancy in France, the SARL or EURL gives a tested statutory framework, lighter drafting costs and predictable court solutions.
Management belongs by statute to one or several managers (gérants), who must be natural persons. Article L223-18 of the Commercial Code states that “La société à responsabilité limitée est gérée par une ou plusieurs personnes physiques.” The managers may be chosen outside the membership, are appointed by the members in the articles or by a later act, and hold towards third parties the widest powers to act in the name of the company, with the company bound even by acts beyond the corporate purpose unless it proves the third party knew or could not have been unaware. Clauses limiting the managers’ powers are unenforceable against third parties, and where several managers exist each holds these powers separately. The lesson for a founder abroad mirrors the SAS warning: the published gérant can commit the company, so name a person you trust, define internal co-signature rules for the bank, and never rely on a private restriction to undo a contract signed with a good-faith counterparty.
Decision-making in a SARL is statutory rather than contractual, which protects unsophisticated members but slows down distant owners. Article L223-29 of the Commercial Code provides that “Dans les assemblées ou lors des consultations écrites, les décisions sont adoptées par un ou plusieurs associés représentant plus de la moitié des parts sociales.” If that majority is not reached, and unless the articles say otherwise, the members are convened or consulted a second time and decisions are taken by a majority of the votes cast, whatever the number of voters, and decisions taken in breach of these rules can be annulled at the request of any interested person. Ordinary management therefore needs only half the capital, while amendments to the articles, changes of nationality of the company or transformations require reinforced majorities defined by statute. A foreign majority holder keeps control, but every information right, every meeting notice and every written consultation must follow the statutory ritual, failing which a minority member or an unpaid creditor can seek annulment.
The closed character of the SARL (société fermée) is its main drawback for founders who plan to raise funds or exit. Membership units (parts sociales) are not freely negotiable securities. Transfers to third parties outside the family circle require the approval of the members holding at least half the capital, and the articles may tighten that lock further. An American founder who wants to sell 30 percent to an investor, or two foreign co-founders who later disagree, discover that the buyer must be approved, that refusal triggers a buyback procedure with expert valuation, and that the timetable stretches over months. Families and artisans value this lock because it keeps strangers out. Founders chasing growth usually suffer from it and later pay to convert the SARL into a SAS before the funding round.
The social regime of the gérant also differs from the SAS presidency and deserves attention before choosing. In short, a gérant who personally holds more than half the capital belongs to the self-employed scheme, with lower contributions but thinner cover, while a minority or non-member gérant belongs to the general scheme as an assimilated employee. A foreign founder who moves to France and takes a majority gérance to save contributions sometimes discovers limited daily allowances, no unemployment cover and pension gaps. A founder who stays abroad and remains a non-resident gérant without French remuneration may owe nothing in France but must check residence, permanent establishment and treaty exposure in his home country. Do not choose the SARL over the SAS, or the reverse, on contribution rates alone; the right comparison includes health cover, retirement, the cost of an audit, the price of a later conversion and the marketability of the securities to the investors you will need in three years.
II. Should a foreign company open a French branch or a subsidiary, and how do you switch vehicle later?
Some foreign founders do not need a French company at all at the start. They already run a British limited company, an American LLC or corporation, a German GmbH or a Gulf holding, and they want a French footprint: a Paris office, a warehouse near Lyon, a team prospecting French clients, the right to sign French contracts and to hire under French law. Two routes exist, and confusing them is the most expensive mistake in this field. A branch (succursale) extends the foreign company into France without creating a new legal person. A subsidiary (filiale) creates a new French company, usually a SAS or SARL, controlled by the foreign parent. The tax, liability and accounting consequences diverge sharply, and so does the paperwork.
A. What changes between a branch with no legal personality and a subsidiary that owns its assets?
The branch has no legal personality of its own and no assets of its own. The French Ministry for the Economy describes it in its guide to setting up a foreign business in France, available at https://www.economie.gouv.fr/entreprises/creer-une-entreprise/implanter-une-entreprise-etrangere-en-france-mode-demploi, in these terms: the branch has no legal personality of its own and no assets separate from the parent company. The branch manages business premises distinct from the head office by its location and its own material organisation, is run by a legal representative who is most often an employee, and works like an agency attached to the head office without particular formalism in decision-making. Because the branch is only an emanation of the foreign company, the parent is directly liable for the branch’s debts, its contracts and its employment obligations. A supplier unpaid in Paris can sue the foreign parent, and a French court can seize French assets of the branch while the parent discovers that French employee protection, French commercial leases and French tort law apply in full to the local operation.
For tax purposes, however, the branch is not invisible. The same official guide warns that as a permanent structure of the foreign company, the branch is subject to the French tax regime, while its profits avoid double taxation in the home country where a bilateral treaty against double taxation exists with France. In practice the French branch of a foreign company is liable to corporate tax (IS) on the profits attributable to the French permanent establishment, must register for VAT (TVA, taxe sur la valeur ajoutée) when its activity requires it, files returns in France and can be audited in France. Founders sometimes choose a branch believing no French tax will arise while contracts are signed abroad; the tax administration looks at where people work, where decisions are executed and where the value is created, and requalifies light structures into taxable establishments with back taxes and penalties. Take treaty advice before choosing, and keep time sheets, email trails and board minutes consistent with the chosen model.
The subsidiary is the opposite construction. Unlike the branch, it is a fully separate legal company, as the Ministry for the Economy guide explains. Although majority-controlled by the parent, the subsidiary has its own assets and acts in its own name. It follows French rules for the available company forms, SAS, SARL or public limited company, with the same tax and social consequences as any French company. Liability stops at the subsidiary, except where the parent gave guarantees, committed faults in management, or mixed assets in ways that let creditors pierce the shield. Contracts, leases, loans and employment agreements are signed by the subsidiary itself, which reassures French banks, landlords and key hires who prefer a French employer and a French balance sheet. The price is a full company to run: articles, president or gérant, shareholder meetings, annual accounts, audit thresholds, beneficial-owner filings and the annual legal calendar.
Between the two sits the liaison office (bureau de liaison), which deserves a warning rather than a recommendation. A liaison office may only prospect, advertise and prepare the parent’s business; it may not sign commercial contracts, invoice clients or provide paid services in France. Founders who invoice through a liaison office to save registration costs commit the classic requalification fault: the administration treats the office as a disguised branch or subsidiary, assesses corporate tax, VAT and payroll charges, and the director faces personal exposure for undeclared work. If the French activity sells, delivers or bills, register a branch at minimum, and in most cases create a subsidiary.
The registration trigger is the same in all cases: no French business exists legally before it is declared and identified. Article L210-6 of the Commercial Code states that “Les sociétés commerciales jouissent de la personnalité morale à dater de leur immatriculation au registre du commerce et des sociétés.” For a subsidiary, personality starts with registration. For a branch, the foreign company must likewise declare its French establishment before hiring, signing a lease or invoicing, and receives its own SIRET number attached to the French address. Anyone who acts in the name of a company being formed before registration is personally and jointly liable for those acts, unless the regularly formed and registered company takes over the commitments, which are then deemed entered into by the company from the start. Sign a Paris lease or a major supply contract before the Kbis exists only through a formal takeover mechanism (reprise des actes) written into the articles or voted just after registration.
B. How do you register through the Guichet unique, run the legal calendar, and convert the vehicle without killing contracts?
Since January 2023 all French business formalities pass through a single online portal, the Guichet unique des formalités des entreprises, run by the INPI (Institut national de la propriété industrielle, the French intellectual property and business-registration institute), which feeds the RNE. Article L123-33 of the Commercial Code provides that “Ce dossier est déposé par voie électronique auprès d’un organisme unique désigné à cet effet.” One electronic file covers creation, modification and cessation, and filing counts as a declaration to each competent authority once the file is complete and regular towards that authority. A foreign founder therefore no longer files separately with the commercial court, the tax office and the social bodies; the portal routes the file, but the founder remains responsible for every missing exhibit. Rejected files are the leading cause of delayed Kbis for foreign applicants, usually for predictable reasons: unsigned articles, no valid French address (commercial lease, domiciliation contract with an approved provider, or acceptance by the parent’s premises), no capital deposit certificate from the bank, no proof of identity of the foreign director with sworn translation, no apostille or legalisation of the foreign parent’s documents, no declaration of beneficial owners (registre des bénéficiaires effectifs, the RBE), and no statement of the activities and the hiring plans that trigger the right tax and social options.
The file differs by vehicle. For a SAS or SARL subsidiary, prepare the draft articles, the list of subscribers with contributions, the capital deposit certificate showing the funds blocked by the bank, the address title, the identity and criminal-record declarations of the president or gérant, the RBE declaration identifying every natural person holding more than 25 percent of capital or voting rights, and for the foreign corporate shareholder its own good-standing certificate with sworn French translation and apostille where required. For a branch, prepare the foreign company’s constitutional documents, the resolution deciding to open the French establishment, the powers of the French representative, the French address, and the same translations and legalisations. In both cases, request the SIREN and SIRET numbers, the APE activity code (activité principale exercée, used for collective bargaining and statistics), VAT registration where needed, and affiliation of the director and the first employees to the right schemes. Publication in a legal notices journal (journal d’annonces légales) and then in the BODACC follows, and the Kbis, the company’s identity card showing the SIREN, the address, the capital, the directors and the activity, is issued once registration is complete. The Kbis is what the bank, the landlord and the notary will ask for before releasing funds or signing; nothing strategic should be scheduled before it arrives.
Tax entry follows registration automatically but needs active choices. Article 206 of the General Tax Code makes companies liable to corporate tax in broad terms, since “sont passibles de l’impôt sur les sociétés, quel que soit leur objet” the listed companies including limited liability companies and, by extension through the company-law references, the SAS. The standard rate, the reduced rate on the first profits of qualifying small and medium companies, the instalment calendar, the loss carry-forward rules and the VAT thresholds change almost every Finance Act, so the numbers must be checked for the current year rather than memorised from a guide. Branches pay corporate tax on French-attributable profits under treaty allocation rules, subsidiaries on their worldwide French-company profits with group relief only where a French tax group exists. Dividends from a French subsidiary to a foreign parent suffer withholding tax subject to treaty reduction and to European exemption regimes where their strict conditions are met, which is why the holding structure should be drawn before the first profitable year rather than repaired during the first audit.
Running the vehicle from abroad then means respecting the annual legal calendar: closing the accounts, approving them within six months of year-end, filing them with the greffe within the following months, holding the members’ meeting even by remote means where the articles allow, filing corporate tax and VAT returns, operating payroll through the DSN (déclaration sociale nominative, the monthly payroll return) with payslips and prior hiring declaration, paying the local business tax (CFE, cotisation foncière des entreprises), and updating the RNE for every change of director, address, capital or activity. Our legal-calendar guide details each deadline and the late-filing fixes, and its logic applies equally to subsidiaries; branches follow a lighter but real equivalent for accounts publication, tax filings and representative updates. A founder who returns home after incorporation and ignores French mail for a year typically rediscovers the company through penalty notices, a blocked bank account and a director disqualification file. Appoint a French correspondence address, open the tax and social online accounts, and diary every deadline in the week of incorporation.
Vehicles can be changed, and the law facilitates it. The founding principle of French company law is that the company is born from agreement: Article 1832 of the Civil Code states that “La société est instituée par deux ou plusieurs personnes qui conviennent par un contrat d’affecter à une entreprise commune des biens ou leur industrie en vue de partager le bénéfice ou de profiter de l’économie qui pourra en résulter.” Because the contract continues, its form can evolve. Article L210-6 of the Commercial Code adds that “La transformation régulière d’une société n’entraîne pas la création d’une personne morale nouvelle.” A compliant transformation does not create a new legal person. Concretely, a SARL can be transformed into a SAS by a members’ decision with an auditor’s report on the net assets, keeping the same SIREN, the same contracts, the same employees and the same bank accounts, while the articles, the governance and the transfer regime switch to the SAS model. Groups do this routinely before a funding round or a sale, because buyers and funds prefer SAS shares to SARL units. The reverse transformation, SAS into SARL, is rarer but follows the same continuity, useful where a family wants to lock the capital after buying out the investors.
Moving between branch and subsidiary is heavier because legal personality changes. Turning a branch into a subsidiary means creating the new French company, contributing or selling the branch business (fonds de commerce, contracts, stock, equipment) to it, transferring or seconding employees under the employment-transfer rules, assigning or novating leases and key contracts with each counterparty’s consent, re-registering for VAT and payroll, and closing or deregistering the branch. Turning a subsidiary into a branch means dissolving the French company without liquidation by universal transfer of assets to the foreign parent where the parent holds all the shares, or liquidating and transferring the business to a newly declared branch, with creditor opposition periods, tax on latent gains and employee information duties. Both directions trigger tax on the transfer of the business, social audits on the payroll history, and landlord consent on the lease. Never announce the conversion to clients before the notary, the auditor and the payroll provider have sequenced it; a mistimed announcement produces resignations, terminated contracts and a bank that freezes the accounts pending the new Kbis.
Disputes during the life of the vehicle follow the forum of the French establishment. A minority shareholder frozen out of a SAS sues for abuse of majority or breach of the shareholders’ agreement before the commercial court of the company’s seat. A dismissed gérant challenges his removal and claims damages. An employee of a branch sues the foreign company before the French employment tribunal (conseil de prud’hommes) under French employment law, whatever the home-country contract says. Keep the shareholders’ agreement, the articles and the employment contracts under French law and French jurisdiction where the operations sit in France; parallel foreign-law documents that contradict the French filings help only the opposing party.
Conclusion
Choose the SAS, normally as a SASU at the start, where outside investors, foreign co-founders or a resale within a few years are likely, because only the SAS gives bespoke governance, remote decision-making and transferable securities, at the price of careful drafting and strict respect for voting rights, including on exclusion. Choose the SARL or EURL where one owner-manager runs a stable local business and values a protective statutory framework with lower drafting costs, accepting that future sales and buy-ins will be slower and subject to approval. Choose the branch where a foreign company wants to test France quickly with one establishment, no separate capital and direct control, accepting that the parent answers for every French debt and that French tax applies to French profits. Choose the subsidiary where France is a lasting market, because French counterparties, banks and hires trust a French balance sheet and a French employer, and because liability stays local. In every case, register through the Guichet unique with a complete file, secure the Kbis before committing, diary the legal calendar from week one, and draft the articles as if you will one day convert, sell or close, since founders who plan the exit on entry pay less tax, lose fewer contracts and keep control of the timetable when the opportunity or the crisis arrives.
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