Once you decide to grow your company in France, you’ll have many factors to consider, and among them will be the critical decision of whether to establish a subsidiary. To help you decide, here is everything you need to know about setting up a subsidiary in France.
How to set up a France subsidiary
France is an economic powerhouse in Western Europe due to its location and membership in many European organizations. The government also supports international investors, making the country an excellent place to scale a company. France has a stable and modern business climate perfect for startups and other organizations looking to make their mark.
You’ll want to consider several different factors during the France subsidiary setup process, such as what industry or type of company you want to organize. Do you have any trade agreements or important relationships? You’ll need to answer all of these questions before you begin the process of establishing your subsidiary.
The most common form of subsidiary is a private limited liability company (LLC) called a SARL (société á responsabilité limitée) in France. It is mostly used by small and medium businesses and does not require a minimum share capital. The maximum number of shareholders cannot exceed 100.
To set up a private LLC, you’ll need to:
- Check the availability of your company name.
- Open a commercial bank account.
- Establish a physical office in France.
- Appoint an auditor.
- Publish your subsidiary’s incorporation in the official journal.
- Register your company for taxes, social security, and insurances.
- Stamp your company books at the Commercial Court.
France subsidiary laws
You’ll need to follow a variety of laws when preparing to set up your subsidiary, including various accounting and tax regulations. If your company is outside the European Union (EU), the withholding tax on dividends is 25%, but you can get lower taxes because of double tax treaties signed by France.
According to France subsidiary laws, you’ll need:
- At least 2 individuals or corporate bodies to form the subsidiary.
- At least 1 euro as minimum share capital.
- A manager who is a resident of France or from the European Economic Area (EEA), which includes countries in the EU plus Iceland, Liechtenstein, and Norway.
- No more than 100 shareholders.
Benefits of setting up a France subsidiary
Setting up a subsidiary in France takes both time and money. Each step of the process has time constraints, which means you’ll likely have to visit France several times. Before you decide to set up a subsidiary, you should understand all the money and resources it will take to scale your company — whether it’s capital or numerous high-level employees to send back and forth to France.
You will also need extensive knowledge of France’s subsidiary laws to make sure you are staying compliant.
Other important considerations
Opening a subsidiary is one of the most common ways international investors scale in France long-term. A limited liability subsidiary is an independent legal entity that is owned by a parent company. However, the parent company is not liable for any of the subsidiary’s debts or other obligations.
This limited liability structure also means the subsidiary can operate independently of the parent company. Once you set up your subsidiary in France, you are free to create your own bylaws or create a company culture shaped by local customs. However, it can take months to set up a subsidiary in France, leading potential job candidates to look for other positions.
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