The different locations of a business in France by a foreign company
The foreign company wishing to settle in France has the choice between different forms of establishment.
The liaison office
The liaison office is a form of domiciliation that is suitable for foreign companies wishing to carry out non-commercial activities in France. This is the case of companies that prospect the French market, that carry out advertising activities, or that wish to supply their professional network; generally before exercising a commercial activity there. French taxation and registration requirements do not apply.
The branch
The branch is located in France by the parent company located abroad. It does not have its own legal personality and assets. However, the legal representative has some autonomy in the management of the establishment. Registration of the branch is also mandatory. French tax legislation applies to the branch. On the other hand, there is no double taxation in the country of origin when a convention has been signed between France and that country.
The subsidiary
This is the most successful form of implantation. Indeed, the subsidiary is a legal structure in its own right that has its own legal personality and assets under French law. Consequently, it must be constituted under one of the existing legal statutes under French law (SARL, SAS, etc.). The accounting and tax obligations that apply to any French company are necessary.
The obligations of French companies towards their partners
If a foreign company wishes to work with French companies, they have obligations to verify its situation.
Labour law audits
A French company that uses a co-contractor (subcontractor, various service providers…), must require the latter to provide a document attesting to its legal existence and another attesting to its compliance with the obligations of declaration and payment of social security contributions. Otherwise, the French company will be jointly and severally obliged to pay the taxes, taxes, social security contributions, remuneration and other charges of its co-contracting party, if the latter has resorted to undeclared work. There is also a criminal risk of complicity in undeclared work (the main penalties are: if you are a natural person, maximum 3 years in prison and 45 000 euros fine; if you are a company or group, a maximum fine of 225,000 €).
Human rights audits
A French law on the duty of vigilance of parent companies and ordering companies imposes on large groups (5,000 employees in France or at least 10,000 employees worldwide) take reasonable vigilance measures to identify and prevent serious violations of human rights, fundamental freedoms, the health and safety of persons and violations of the environment. This obligation concerns the activities of the company, the companies it directly or indirectly controls, as well as the activities of its subcontractors and suppliers.
Moreover, this law creates an obligation of vigilance against the risks of corruption by imposing on companies with at least 500 employees and on companies belonging to a group with at least 500 employees and whose turnover is more than 100 million to implement procedures to prevent and detect the commission, in France or abroad, acts of corruption or influence peddling.
Article written by
Amaury SONET
Avocat à la Cour
Association d’Avocats (AARPI)
10, square Beaujon
75008 Paris – Palais P 496
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