US start-up: setting up your French subsidiary

Quick answer. A US start-up almost always enters France through a subsidiary (often a SAS), a French company with liability limited to its contribution, rather than a branch. Plan for registration via the INPI one-stop shop, VAT registration, corporate tax at 25 % and close attention to transfer pricing with the parent company.

You run a US company and you want to hire, invoice or sign contracts in France. The question is not only legal: it engages your group's liability, your tax exposure and the way cash will eventually flow back to the United States. This guide walks through the procedure, step by step, from the perspective of a founder or CFO steering the project from abroad.

This is the first call, and it shapes everything else. A subsidiary is a French company with its own legal personality: it is separate from the US company, and the parent's liability is in principle limited to its contribution. A branch, by contrast, is merely an establishment of the US company, with no separate legal personality: the parent remains fully liable for its French commitments.

In incorporation files handled for foreign companies, the subsidiary almost always wins. It ring-fences French risk, reassures clients, banks and future investors, and offers a clear framework to hire and raise funds locally.

The real issue in a US entry is not the corporate form, quickly settled, but the architecture of flows between France and the parent. That is where tax, audit risk and the ability to repatriate cash are decided. A well-formed subsidiary whose management fees and royalties are undocumented is a fragile subsidiary. From the first meeting, we therefore treat incorporation and transfer pricing as a single project.

To dig into group architecture, our analysis of French holding and EU subsidiary structures sheds light on upstream structuring choices.

The SAS, or the SASU if the US company is the sole shareholder, is the leading form for a subsidiary. Its share capital is unrestricted: no legal minimum, one euro is possible in theory, although an amount aligned with the subsidiary's funding needs is preferable. Its governance is flexible and its president is an assimilated employee, attached to the general social security scheme, with no unemployment insurance.

Points to settle before drafting the bylaws:

• The amount and payment of the capital, in line with the subsidiary's cash plan.
• The identity of the president, who may be a US-based executive or a local manager.
• The powers and decision thresholds reserved to the shareholder, that is, the parent company.
• How results will flow back up to the parent.

Our business creation support and our start-up page detail the form choices that fit your model.

Here is the sequence we run for a French subsidiary of a US company:

1. Choose subsidiary or branch. Confirm the subsidiary to limit the parent's liability to its contribution.
2. Pick the form and capital. Select the SAS or SASU, set the unrestricted capital and appoint the president, an assimilated employee.
3. Draft the bylaws and prepare the beneficial owners. Bylaws in French, bank account opening, capital payment, identification of any individual holding more than 25 % through the parent.
4. Register via the INPI one-stop shop. File the bylaws, the legal notice and the beneficial owner declaration to the register; obtain the SIREN.
5. Activate VAT and e-invoicing. Obtain the VAT number, organise the returns and prepare for mandatory e-invoice reception.
6. Frame intra-group flows. Document management fees, royalties and loans under the arm's length principle.
7. Set up accounting and tax. Bookkeeping under French GAAP, annual tax return, corporate tax payment, dividend monitoring.

This is the point US founders most often misread. Corporate tax is 25 % at the standard rate. A reduced rate of 15 % exists up to 42,500 EUR of profit (FTC art. 219 I-b), but under two cumulative conditions: turnover below 10 M EUR and capital held at least 75 % by individuals.

Yet a subsidiary is held by the US company, that is, by a legal entity. The 75 % individuals condition is not met: the 15 % reduced rate in principle does not apply, and the subsidiary is taxed at 25 % from the first euro of profit. Better to budget it in the forecast than to discover it on the first tax return.

As soon as flows exist between the French subsidiary and the US parent, management fees, brand or software royalties, intra-group loans, the arm's length principle applies (FTC art. 57), whatever the group's size. In practice, every price charged between the subsidiary and the parent must match what two independent companies would have agreed.

The full documentation obligation (Tax Procedures Code art. L13 AA) only targets groups whose turnover or gross assets reach 150 M EUR, a threshold lowered from 400 to 150 M EUR for financial years opened since 1 January 2024. Make no mistake though: even below that threshold, an SME must be able to justify its prices in the event of an audit. A start-up charging management fees to its parent with no comparability analysis is exposed to a reassessment.

When the subsidiary distributes a dividend to the US company, a withholding tax applies in France. Its rate is reduced by the France-United States tax treaty of 31 August 1994, depending on the parent's level of participation.

Key point: the withholding tax exemption under the EU parent-subsidiary regime (FTC art. 119 ter) does not apply, since the United States is not in the European Union. The bilateral treaty, and it alone, determines the cost of the upstream flow. Anticipating that cost at incorporation avoids unpleasant surprises once the subsidiary becomes profitable.

The subsidiary keeps its books under French GAAP and files an annual tax return. A statutory auditor becomes mandatory once legal thresholds are exceeded; our note on the statutory auditor during hyper-growth explains that trigger. For an overall legal, tax and HR framework, see our subsidiary creation guide and our international subsidiary feedback.

We regularly support US SaaS publishers opening a commercial office in Paris. The classic pattern: a SASU held by the Delaware company, a local president, a management contract billed by the parent and a brand royalty. The most frequent bottleneck is not registration, which is fast, but the absence of a formalised transfer pricing policy and confusion over corporate tax, the founder expecting the 15 % reduced rate that does not apply. We frame these two points first, then sequence the incorporation.

• E-invoice reception becomes mandatory for any business established in France on 1 September 2026: the subsidiary must be ready from registration.
• The transfer pricing documentation threshold is lowered to 150 M EUR for financial years opened since 1 January 2024, but justification is still expected from every subsidiary.
• The beneficial owner declaration (anyone holding more than 25 %) must reflect the real ownership chain through the US company.

As a French CPA, we work in English with your head office and bridge to your US accounting. Our French CPA engagement is built for foreign companies steering their subsidiary from abroad.