{"id":2131977,"date":"2026-09-26T20:56:12","date_gmt":"2026-09-26T18:56:12","guid":{"rendered":"https:\/\/kohenavocats.fr\/2026\/09\/26\/foreign-company-france-permanent-establishment-register-challenge-abroad\/"},"modified":"2026-09-26T20:56:12","modified_gmt":"2026-09-26T18:56:12","slug":"foreign-company-france-permanent-establishment-register-challenge-abroad","status":"publish","type":"post","link":"https:\/\/kohenavocats.fr\/en\/2026\/09\/26\/foreign-company-france-permanent-establishment-register-challenge-abroad\/","title":{"rendered":"Your Foreign Company Earns Money in France With No Branch or Subsidiary: Permanent Establishment, Registration and How to Challenge the Tax Bill From Abroad"},"content":{"rendered":"

You run a company in London, New York, Berlin or Dubai. A French client signs. An employee works from Lyon. A warehouse stores your goods near Paris. Money flows in from France, but your company is registered nowhere in France: no French company number, no French tax filings, no French payroll. One morning, a letter from the French tax administration arrives at your foreign head office, or worse, at your French client’s premises, asking why your company never declared its French profits. This is the permanent establishment trap, called \u00e9tablissement stable<\/em> in French tax law, and it is the single most expensive mistake foreign businesses make in France.<\/p>\n

French tax law taxes only profits connected to France, but it reads that connection very broadly. A warehouse, a dependent sales agent, a building site lasting more than a few months, or even one employee who habitually closes deals on French soil can be enough for the tax office to treat your foreign company as if it had a French branch. The bill then covers several years of corporate income tax, called imp\u00f4t sur les soci\u00e9t\u00e9s<\/em> and shortened to IS, plus value added tax, called taxe sur la valeur ajout\u00e9e<\/em> and shortened to TVA, plus late interest and penalties of 40 percent or more. The administration can also order on-site visits and seizures at your French premises to gather proof, even before any formal reassessment, when it suspects hidden activity.<\/p>\n

This guide explains, for a business reader with no French legal background, when your activity becomes taxable in France, which legal vehicle fits your situation \u2014 SAS, SARL, branch (succursale<\/em>) or subsidiary (filiale<\/em>) \u2014 how to register properly from abroad, and how to answer an audit and challenge the bill without flying to France. Every French acronym is explained the first time it appears. Every decisive legal statement is tied to an official text or court decision you can open and check.<\/p>\n

I. Does my foreign company already have a taxable presence in France?<\/h2>\n

A. When does your activity become an establishment stable that France can tax?<\/h3>\n

French domestic law starts from a simple territorial rule. Article 209, I of the General Tax Code, the Code g\u00e9n\u00e9ral des imp\u00f4ts<\/em> shortened to CGI, provides that corporate tax takes into account only profits made in France, in the exact statutory words: “en tenant compte uniquement des b\u00e9n\u00e9fices r\u00e9alis\u00e9s dans les entreprises exploit\u00e9es en France”<\/a>. A foreign company is therefore liable to French corporate tax only on the profits of an enterprise operated in France, plus certain French-source income listed in the code and profits attributed to France by a double tax treaty. The persons liable are defined broadly: article 206 of the same code states that the following “sont passibles de l’imp\u00f4t sur les soci\u00e9t\u00e9s, quel que soit leur objet”<\/a>, which covers public limited companies, partnerships limited by shares, limited liability companies and, in practice, any foreign legal person carrying on a profit-making operation in France.<\/p>\n

The same logic extends beyond corporate tax. Article 164 B of the CGI treats as French-source income, in its own words, “Les revenus d’exploitations sises en France”<\/a>, meaning income from businesses located in France, and for VAT the place-of-supply rules point to France whenever the customer or the fixed establishment receiving the services is in France: article 259 of the CGI opens with the sentence “Le lieu des prestations de services est situ\u00e9 en France”<\/a> in a series of defined cases, including where the client has its business seat or a fixed establishment in France to which the services are supplied. For goods sold online from another European Union member state to French customers, article 258 A adds that “Le lieu de livraison de biens exp\u00e9di\u00e9s ou transport\u00e9s \u00e0 partir d’un autre Etat membre \u00e0 destination de la France dans le cadre de ventes \u00e0 distance intracommunautaires est r\u00e9put\u00e9 se situer en France”<\/a> once the applicable threshold or option conditions are met. The official English-language pages of the French tax administration, the Direction g\u00e9n\u00e9rale des finances publiques<\/em>, confirm this approach in plain language: a foreign company with activity in France but no registered establishment still has French tax duties, and a company with no establishment stable in France must still declare the corresponding profits and register for VAT where the rules require it, as explained on impots.gouv.fr, foreign company with activity in France<\/a>.<\/p>\n

In practice, the tax auditor looks for physical and human footprints, not for your intentions. A fixed place of business \u2014 an office, a workshop, a warehouse, a building site \u2014 is the classic case. But French auditors also rely on the dependent agent theory: a person in France who habitually negotiates or concludes contracts in your company’s name can create a taxable presence even if you rent no premises at all. A single sales representative working from home in Bordeaux, a French consultant who is economically dependent on your company and signs deals for it, or a local manager who takes the real commercial decisions while the foreign board only rubber-stamps them, can each trigger a finding of an establishment stable. Digital businesses are not sheltered either: servers alone rarely suffice, but staff in France who develop, market and support the product sold to French customers routinely do. If a double tax treaty applies, its own definition of permanent establishment controls the allocation of taxing rights, and most treaties signed by France follow the OECD model with detailed construction-site, agency and services clauses \u2014 yet the treaty never exempts you from French registration and filing duties where France keeps a taxing right, it only limits them.<\/p>\n

The courts give this analysis sharp teeth. In two published decisions of 15 February 2023, the Commercial Chamber of the Court of Cassation, the Cour de cassation<\/em>, approved dawn-raid style tax visits against foreign companies suspected of hiding a French establishment. In the first case, concerning a Luxembourg company, the Court held that “Une soci\u00e9t\u00e9 de droit \u00e9tranger est tenue, lorsqu’elle exerce une activit\u00e9 en France par l’interm\u00e9diaire d’un \u00e9tablissement stable, aux obligations r\u00e9sultant des articles 54, 209 et 286, I, 3\u00b0, du code g\u00e9n\u00e9ral des imp\u00f4ts”<\/a>, meaning a foreign company operating in France through a stable establishment must keep accounting records capable of justifying its French taxable operations, and that ignoring French filing duties lets the judge presume deliberate accounting omissions. In the second case, concerning a Belgian finance company of a well-known group, the Court held that “l’article L. 16 B du livre des proc\u00e9dures fiscales n’exige que de simples pr\u00e9somptions, en particulier de ce qu’une soci\u00e9t\u00e9 \u00e9trang\u00e8re, en l’esp\u00e8ce la soci\u00e9t\u00e9 LFB, exploiterait un \u00e9tablissement stable en France en raison de l’activit\u00e9 duquel elle serait soumise aux obligations fiscales et comptables pr\u00e9vues par le code g\u00e9n\u00e9ral des imp\u00f4ts en mati\u00e8re d’imp\u00f4t sur les b\u00e9n\u00e9fices et\/ou de taxes sur le chiffre d’affaires”<\/a>, so the administration needs only presumptions, not full proof, to obtain judicial authorisation for visits and seizures on premises likely occupied by the foreign company or its French connections. The lesson for a foreign founder is blunt: by the time you receive the audit notice, the administration may already hold documents seized in France, and arguing that everything was decided abroad will not help if the paper trail shows French negotiations, French signatures and French customers.<\/p>\n

Five everyday patterns account for most reassessments seen in practice. First, the travelling founder who spends half the year in Paris, meets clients there and signs contracts there while invoicing from the foreign head office. Second, the French salesperson hired as a contractor who works full time for one foreign principal and cannot show any other client. Third, the warehouse or returns hub in France presented as mere logistics while staff there handle after-sales, quality control and refunds. Fourth, the building or installation project that overruns past the treaty deadline, turning a sheltered site into a taxable presence retroactively. Fifth, the French subsidiary described as fully independent while emails prove the foreign parent dictates prices, margins and customer terms day by day. Each pattern ends the same way: the auditor reconstructs several years of French profits, adds VAT, interest and the 40 percent penalty for deliberate failure, and in serious cases refers the file for criminal tax fraud. Voluntary registration before the audit, by contrast, usually limits the bill to the tax due plus moderate interest, which is why the rest of this guide turns now to choosing and registering the right vehicle.<\/p>\n

B. SAS, SARL, branch or subsidiary: which vehicle matches your presence?<\/h3>\n

Once you accept that your French activity needs a registered home, four vehicles compete, and the choice shapes liability, taxation, banking and hiring. The two French companies are the SAS, the soci\u00e9t\u00e9 par actions simplifi\u00e9e<\/em> or simplified joint-stock company, and the SARL, the soci\u00e9t\u00e9 \u00e0 responsabilit\u00e9 limit\u00e9e<\/em> or limited liability company. The commercial code defines them in nearly identical opening words: the SAS “peut \u00eatre institu\u00e9e par une ou plusieurs personnes qui ne supportent les pertes qu’\u00e0 concurrence de leur apport”<\/a>, and the SARL “est institu\u00e9e par une ou plusieurs personnes qui ne supportent les pertes qu’\u00e0 concurrence de leurs apports”<\/a>. In both cases shareholders risk only their contributions, and both become full legal persons only upon registration: article L. 210-6 of the Commercial Code states that “Les soci\u00e9t\u00e9s commerciales jouissent de la personnalit\u00e9 morale \u00e0 dater de leur immatriculation au registre du commerce et des soci\u00e9t\u00e9s”<\/a>, the registre du commerce et des soci\u00e9t\u00e9s<\/em> shortened to RCS, which today feeds the single national company register, the registre national des entreprises<\/em> shortened to RNE, through the online one-stop portal, the guichet unique<\/em> operated with the INPI, the Institut national de la propri\u00e9t\u00e9 industrielle<\/em>.<\/p>\n

The SAS is the vehicle most foreign founders choose, for concrete reasons. Its bylaws, the statuts<\/em>, can allocate voting rights, vetoes, preferred dividends and exit clauses almost without restriction, which suits investor term sheets and joint ventures between a foreign parent and French partners. Its president, the pr\u00e9sident<\/em>, can be a foreign individual or a foreign company, and day-to-day social charges on the president’s pay are lighter than in a SARL as long as the president holds no employment contract, though the president still falls under the general social security system once paid. Transfer of SAS shares is normally unrestricted unless the bylaws add an approval clause, the clause d’agr\u00e9ment<\/em>, which keeps future sales simple. The SARL, by contrast, runs on a rigid statutory scheme: decisions follow fixed majority rules, the manager, the g\u00e9rant<\/em>, carries personal compliance duties, and any sale of shares to a third party requires the formal approval of the existing shareholders. That rigidity protects small teams of founders who know and trust each other, and the SARL’s majority manager pays social contributions as a self-employed person, the travailleur non salari\u00e9<\/em> shortened to TNS, which can cost less than the SAS president’s regime at modest profit levels but offers thinner pension and health coverage. For a foreign group that wants full control with minimal friction, the SAS, often with a single shareholder as a SASU, the soci\u00e9t\u00e9 par actions simplifi\u00e9e unipersonnelle<\/em>, is usually the better company form.<\/p>\n

The other two options keep your foreign company itself on the French stage. A branch, the succursale<\/em>, is not a separate legal person: it is your foreign company acting in France under its own name, registered in France and able to hire, invoice with a French VAT number and be sued in France, but every French debt is your company’s debt without limit. Registration is lighter than incorporating a company, which tempts groups testing the French market, yet banks, landlords and big clients often prefer contracting with a French company, and closing a branch later still requires settling all French tax and payroll accounts. A subsidiary, the filiale<\/em>, is a French SAS or SARL owned by your foreign company: it is a separate person, it shields the parent from French business debts in principle, it earns its own Kbis, the extrait Kbis<\/em> being the official identity certificate of a French company issued by the registry office, the greffe<\/em> of the commercial court, and it can later take on French investors, French bank loans and French tax consolidation. The price of that shield is real substance: the subsidiary needs its own accounts, its own annual meeting, its own filings, and transfer prices with the parent must be set at arm’s length and documented, or the auditor will adjust them.<\/p>\n

Choose with three questions. First, how permanent is the project: a short market test with no staff can sometimes run through a branch, while any hiring plan, fundraising plan or multi-year contracts point to a subsidiary. Second, how much risk stays in France: regulated work, consumer sales, construction and any activity that can generate claims belong in a limited-liability subsidiary rather than a branch that exposes the whole group. Third, how will profits come home: a subsidiary pays French corporate tax then distributes dividends to the parent, with treaty relief on withholding, while a branch’s French profits are taxed in France directly and remitted to head office without dividend mechanics, which changes both the tax calendar and the paperwork. Whatever you choose, register before the activity starts, because a vehicle chosen after the reassessment is only damage control: the auditor taxes the hidden past years under the establishment-stable theory, then watches your new structure with the attention of a creditor who has already been disappointed once. The practical registration steps, and the fight against the tax bill if you arrive too late, are the subject of the second part.<\/p>\n

II. How do I register, pay and fight the reassessment from abroad?<\/h2>\n

A. How do you register the company, the VAT number and the bank account from abroad?<\/h3>\n

Registration runs through the guichet unique<\/em>, the single online portal for all French business filings, and it can be completed from abroad with a legal representative or a lawyer holding a power of attorney, the pouvoir<\/em> or procuration<\/em>. The file for a SAS or SARL contains the signed bylaws, the list of directors, proof of the registered office \u2014 a lease, a domiciliation contract with an approved provider, or the foreign parent’s French branch address \u2014 the deposit certificate for the share capital, and identity documents for each director and shareholder. Foreign public documents usually need an apostille, the international authentication stamp created by the Hague Convention, plus a sworn translation into French, the traduction asserment\u00e9e<\/em>, before the registry office accepts them; files are rejected every week because a foreign birth certificate or company extract arrives without either. Once the registry validates the file, it issues registration, and the company receives its SIREN number, the unique French business identifier, and its Kbis certificate, which banks, clients and administrations will ask for at every step. Key corporate events are then published in the BODACC, the Bulletin officiel des annonces civiles et commerciales<\/em>, the official gazette where company registrations, insolvencies and sales of businesses are announced to third parties, and the beneficial owners, the b\u00e9n\u00e9ficiaires effectifs<\/em>, must be declared to the RBE register, the registre des b\u00e9n\u00e9ficiaires effectifs<\/em>, within days of incorporation.<\/p>\n

Tax registration follows automatically in theory and painfully in practice. A company carrying on taxable transactions must declare its existence for VAT: article 286 of the CGI requires that every taxable person, in the statutory phrase, “Dans les quinze jours du commencement de ses op\u00e9rations, souscrire au bureau d\u00e9sign\u00e9 par un arr\u00eat\u00e9 une d\u00e9claration conforme au mod\u00e8le fourni par l’administration”<\/a>, and keep day-by-day records with supporting invoices. In the current system the tax office normally activates the VAT number after the company filing, but foreign-owned files face extra checks on the reality of the registered office and the identity of the directors, and the number can take weeks while the administration asks for leases, bank details and explanations of the business model. Meanwhile the corporate tax registration, the social registrations with URSSAF, the Union de recouvrement des cotisations de s\u00e9curit\u00e9 sociale et d’allocations familiales<\/em> which collects French payroll contributions, and the pension and health bodies must be opened before the first payslip, because hiring in France without prior declarations exposes the company to hidden-work penalties. The official business portal entreprendre.service-public.gouv.fr, opening a branch or subsidiary in France<\/a> lists the filing steps and the supporting documents for foreign companies, and it should be read before any filing rather than after a rejection.<\/p>\n

The bank account is the most frequent bottleneck, and it must be planned as a critical path, not an afterthought. French banks apply strict anti-money-laundering checks to foreign shareholders and directors: expect certified passports, proof of address, the foreign parent’s registry extract with apostille and translation, the French company’s draft bylaws, the business plan and the source of the funds. The capital deposit, which conditions registration, can be placed with a bank, a notary, the notaire<\/em>, or since recent reforms with certain authorised online providers, but many banks refuse non-resident files or answer after two months of silence. When every bank refuses, French law offers a safety net through the right to an account, the droit au compte<\/em>, under which the Banque de France designates a bank that must open a basic account \u2014 a procedure that works but takes time and delivers limited services at first. Practical founders therefore run two tracks in parallel: a capital-deposit solution that unblocks the Kbis within days, and a full operating account with a bank that accepts foreign ownership, while keeping every refusal letter as evidence for the right-to-account procedure. Never let a blocked account stall the whole calendar: sign the domiciliation, file the company, open the tax and payroll accounts, and keep the commercial launch conditional on the operating account rather than the reverse.<\/p>\n

Two traps deserve special attention because they return every year. The first is the social status of the director who lives abroad: an unpaid foreign president of a SAS with no French employment contract generally owes no French payroll contributions on that role, but the moment the same person draws pay, signs an employment contract for real subordinate duties, or works physically in France, URSSAF can claim full French contributions with retroactive effect, and the line between a corporate mandate, the mandat social<\/em>, and a job is drawn by facts, not by titles. The second trap is the calendar: annual accounts must be approved within six months of year-end, filed with the registry within roughly one to two months after approval, corporate tax returns and balances paid on fixed spring and summer dates, VAT returns monthly or quarterly depending on the regime, payroll declarations each month through the DSN, the d\u00e9claration sociale nominative<\/em>, and the local business tax, the cotisation fonci\u00e8re des entreprises<\/em> shortened to CFE, every autumn. A founder living abroad who discovers these deadlines from a penalty notice has already lost the cheapest battle, which is simply filing on time through a French accountant, the expert-comptable<\/em>, with a standing calendar and direct-debit mandates from a funded French account.<\/p>\n

B. How do you answer a tax audit and challenge the bill without flying to France?<\/h3>\n

A French tax audit, the v\u00e9rification de comptabilit\u00e9<\/em> for companies or the examen de comptabilit\u00e9<\/em> conducted from the office, always starts with paper before it touches money. The auditor sends an audit notice, appears on the premises or requests the electronic accounting file, the fichier des \u00e9critures comptables<\/em> shortened to FEC, and at the end of the work holds a closing meeting, then sends a reassessment proposal, the proposition de rectification<\/em>. That proposal is the most important document of the whole procedure, because the law forces the administration to motivate it: article L. 57 of the Tax Procedures Book, the Livre des proc\u00e9dures fiscales<\/em> shortened to LPF, provides that “L’administration adresse au contribuable une proposition de rectification qui doit \u00eatre motiv\u00e9e de mani\u00e8re \u00e0 lui permettre de formuler ses observations ou de faire conna\u00eetre son acceptation”<\/a>. Every figure must be explained so that you can answer, and a vague or purely assertive proposal can be annulled by the judge. For a company run from abroad, the operational rule is simple: appoint a French representative on day one of the audit, centralise every request and deadline in one file, never let an auditor collect originals without a receipt, and answer each point in writing within the thirty-day window, which can be extended once by thirty more days on request before it expires.<\/p>\n

The establishment-stable reassessment follows a predictable script, and each step offers a defence. First the auditor asserts the French footprint: leases, badge records, email signatures, calendar invitations, CRM logs showing negotiations in France, and testimony from staff or clients. Challenge this base by mapping every contract signature, every pricing decision and every key negotiation to dated evidence, and show where the real decision-makers sit; where a treaty applies, test each treaty condition, especially the agency and construction clauses, rather than conceding the label. Second, the auditor reconstructs the French profits, often by applying the foreign group’s margin to French sales or by rejecting transfer prices between the parent and the French operation. Answer with segmented accounts, comparable-company analysis and the group’s transfer-pricing documentation, and force the administration to justify its own method figure by figure. Third, VAT is added on the reconstructed turnover, with the administration arguing the services were used in France by French clients. Test the place-of-supply analysis client by client against article 259 and the related provisions, because business-to-business services to French taxable clients and services to foreign clients follow different rules, and a single error in the auditor’s sample can unravel a whole VAT reassessment. Fourth, penalties are stacked: late interest, currently 0.2 percent per month, plus 40 percent for deliberate failure or 80 percent for abuse of law or fraud. Contest the penalty level separately from the tax principal, because the administration must prove the intention behind the failure, and voluntary disclosure before any audit, documented advice followed in good faith, and the genuine novelty of the legal question all argue for relief.<\/p>\n

Procedure is your second line of defence, and it works from abroad through counsel. After your written observations, the administration must reply with reasons before issuing the final assessment; you can then seize the departmental or national appeal commissions for accounting and transfer-pricing disputes, file an administrative claim, the r\u00e9clamation contentieuse<\/em>, generally within the end of the second year following the assessment, and finally petition the administrative court, the tribunal administratif<\/em>, with appeal to the administrative court of appeal and the Council of State, the Conseil d’\u00c9tat<\/em>. Ask for a payment deferral with guarantees, the sursis de paiement<\/em>, when you challenge the bill, so that enforced collection stops while the case is examined. Where documents were seized during L. 16 B visits, have counsel check the authorisation order, its territorial and temporal scope, and the inventory of seized items, because the Court of Cassation reviews these orders closely and an annulment can remove the evidence the whole reassessment rests on \u2014 while remembering the 2023 lesson that courts accept such visits on mere presumptions of a hidden French establishment. Parallel criminal exposure must be handled with equal care: never destroy, backdate or fabricate any record once an audit starts, and route all sensitive communications through counsel so that defence strategy stays protected.<\/p>\n

Distance changes organisation, not rights. A foreign company can give its French lawyer a written mandate to receive all correspondence, attend the closing meeting, sign observations and file claims; hearings before the administrative court can be prepared with sworn translations and, increasingly, held with remote participation arrangements agreed with the court. Keep a single evidence room \u2014 cloud folder with restricted access \u2014 holding the bylaws, the Kbis, leases, employment contracts, board minutes, travel records, email exports showing decision circuits, transfer-pricing reports, VAT returns and every audit letter with proof of receipt, because cases are won on dated documents, not on recollections. Set internal alert thresholds: any auditor request about French staff roles, any question about who signs French contracts, any statistical VAT cross-check from a client’s data should trigger a privileged review before the answer goes out. And if the audit ends with no adjustment, do not waste the outcome: ask for written confirmation, regularise whatever secondary point the auditor mentioned informally, and convert the lessons into registration fixes \u2014 a branch filing, a VAT number, a payroll account \u2014 so the next audit finds a compliant company instead of a hidden one.<\/p>\n

Conclusion<\/h2>\n

Earning revenue from France without a registered vehicle is a bet that the tax office will never look, and the 2023 court decisions show it looks, obtains search powers on presumptions alone, and reconstructs years of profits with penalties. The compliant path costs less than one reassessment: determine honestly whether your offices, staff, agents or sites create an establishment stable under domestic law and the applicable treaty, choose the vehicle that fits \u2014 usually a SAS subsidiary for a lasting business with hiring and fundraising plans, sometimes a branch for a short testing phase \u2014 register the company, the VAT number and the payroll accounts before invoicing, and keep the annual calendar filed on time through a French accountant. If the audit letter arrives first, treat the reassessment proposal as the battlefield: answer every factual claim with dated proof, test the profit reconstruction and the VAT analysis line by line, contest the penalty level separately, and use each procedural remedy from observations to the administrative court without missing a deadline. Run from abroad with a mandated counsel, a single evidence file and funded French accounts, and a frightening French tax letter becomes a manageable dispute with several exits. The companies that pay the heaviest bills are rarely those that made the worst mistakes; they are those that answered late, answered vaguely, or never registered at all.<\/p>\n

Need a quick opinion on your case<\/h2>\n

Telephone consultation in 48 hours with a lawyer of the firm: telephone consultation 80 EUR TTC, first analysis 80 EUR TTC. Call +33 6 46 60 58 22<\/a> or write through the contact page of the firm<\/a> with your audit letter, your French contracts and your registration documents. For related reading on the full setup path, see Setting Up a Company in France as a Foreign Founder: Bank Account, Kbis, VAT and Your First Hire<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

A foreign company that sells, hires or stores goods in France can be taxed as a permanent establishment even with no French office. 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