Setting up in France: subsidiary or branch, VAT, payroll and ongoing compliance for US companies

For a US company, setting up in France comes down to three decisions taken in the right order: the legal form of the French presence, the registrations that allow it to invoice, hire and pay tax, then the obligations that come back every year. This page sets out each step from the French side, with the official sources, and how our firm handles it. US federal and state filings stay with your US advisers.

Sources: economie.gouv.fr guide to setting up a foreign company in France; Infogreffe; French Commercial Code, art. R. 123-112.

Three points usually decide:

• Liability and standing. A subsidiary ring-fences the risk to its share capital and contracts in its own name; French customers, landlords and banks generally deal more easily with a French company.
• Disclosure. A branch files, at registration, a translated copy of the US company's articles and then, every year, the US company's accounting documents as prepared, audited and published in the United States (art. R. 123-112). A subsidiary files its own accounts; the option that lets a small company keep its profit and loss account confidential is not available to companies that belong to a group (art. L. 232-25).
• Tax. Subsidiary and branch both pay French corporate income tax on the French profit. The difference lies in what happens to that profit afterwards: dividends for a subsidiary, a deemed distribution for a branch (see the tax section below).

A liaison office only suits a prospecting phase: as soon as the French team sells, signs contracts or runs a full business cycle, the activity is commercial and the question becomes subsidiary or branch. A structure that is not declared can also be treated as a permanent establishment by the tax authority, with the French profit reconstructed and an 80% surcharge applicable to undisclosed activity (French Tax Code, art. 1728).

Yes. A company based abroad, with no establishment in France, can hire an employee who works in France: the employee is then covered by French social security, and the company registers, declares and pays contributions through URSSAF's foreign companies service. As soon as the company has an establishment in France (a branch or a subsidiary), contributions are paid under the ordinary rules to the URSSAF of that establishment.

Hiring without an entity does not settle the tax question: a person in France who negotiates and signs on behalf of the US company can create a permanent establishment. We look at the employee's actual role before the contract is signed.

For a US employee sent temporarily to France, the US-France social security agreement allows an initial secondment of up to five years: the US employer requests form SE 404-02 from the Social Security Administration, and the employee stays under the US scheme during that period (CLEISS). The agreement provides no extension; an exceptional derogation can be requested.

1. Name, registered office and articles. The articles (statuts) are drafted in French. The share capital is set freely by the shareholders, with a minimum of EUR 1 (service-public.fr). The registered office can be leased premises or a domiciliation contract.
2. President. In a single-shareholder SASU, the president can be the sole shareholder itself, so the US company can hold the office, or a third party can (service-public.fr). Managing a French company does not require living in France; a residence permit is only required to actually and habitually carry out that activity on French soil (service-public.fr).
3. The US parent's documents. When a company from outside the European Union is appointed president, the registry asks for a copy of its articles in force, translated into French and certified by its legal representative, and an official document proving its legal existence; its legal representative is declared to the registry and provides the same documents as an individual president, including an identity document and a sworn statement of non-conviction (Infogreffe).
4. Share capital. Cash contributions are deposited on a blocked account with a credit institution located in France, the Caisse des dépôts or a notary; the depositary issues a certificate, and the funds are released on presentation of the Kbis extract (Infogreffe). In practice, opening the French bank account often sets the timetable.
5. Legal notice and filing. A notice of incorporation is published in a legal announcements medium (French Commercial Code, art. R. 210-4), then the file goes through the INPI one-stop portal (formalites.entreprises.gouv.fr), which forwards it to the registry, INSEE, the tax office and URSSAF (economie.gouv.fr).
6. Beneficial owners. The individuals who hold, directly or indirectly, more than 25% of the capital or voting rights, or who control the company by other means, are declared at registration; failing that, the legal representative is declared (service-public.fr). For the subsidiary of a US group, this means tracing the ownership chain up to individuals.
7. Registration numbers. The company receives its Kbis extract, its SIREN and SIRET numbers and its VAT number; it then opens its access to the e-invoicing, payroll and tax platforms.

Registering the branch at the commercial registry requires a copy of the US company's articles in force, translated into French and certified by the person in charge of the branch, an original extract from the US company's public register less than three months old, translated, proof of the branch premises (lease or domiciliation), and the identity documents and sworn statement of non-conviction of the person in charge in France (Infogreffe). Opening a branch is exempt from prior declaration and authorisation as a foreign investment (economie.gouv.fr); some acquisitions in sensitive sectors remain subject to prior authorisation.

After registration, the branch keeps French accounts for its activity, files French VAT and corporate income tax returns, and the US company files its own annual accounts with the French registry every year.

• Subsidiary or branch: the VAT number is assigned at registration, and the French entity files its returns with its local tax office.
• No establishment in France: a US company that makes taxable transactions in France (for example sales of goods stored in France) registers with the tax office for foreign businesses (SIEE) and, because the United States is not among the third countries listed by the order of 15 May 2013, it must appoint a tax representative accredited in France, jointly liable for the VAT (French Tax Code, art. 289 A; BOFiP; impots.gouv.fr).
• Imports: since 1 January 2022, import VAT is self-assessed on the VAT return by every business identified for VAT in France; a business without a French VAT number must obtain one before importing (French customs).
• E-invoicing: since 1 September 2026, every business subject to VAT in France must be able to receive electronic invoices through an accredited platform, including a newly registered subsidiary or a branch; the issuing obligation applies to large companies and mid-caps since 1 September 2026 and to SMEs and micro-businesses from 1 September 2027 (impots.gouv.fr).

Once the subsidiary or branch is registered as an employer, each hire is declared before the start date (DPAE), salaries are paid and declared every month through the DSN, and the employer applies the collective agreement of its activity and sets up the mandatory supplementary health cover for its employees (French Social Security Code, art. L. 911-7). We run French payroll from the first hire, with reports in English for HQ: see our payroll and HR service.

For a manager or employee relocating from the US, the French impatriate tax regime can apply under conditions (French Tax Code, art. 155 B); we review it as part of the French CPA engagement.

• Corporate income tax. The standard rate is 25%. The reduced 15% rate on the first EUR 42,500 of profit only applies if revenue is below EUR 10 million and the capital is fully paid up and at least 75% held by individuals, directly or through a company itself at least 75% held by individuals (service-public.fr). A subsidiary held by a US corporation generally does not qualify, unless the ownership chain meets that test.
• Dividends to the US parent. The France-US tax treaty limits French withholding tax to 5% of the gross dividend when the US company holds at least 10% of the capital, and to 15% in other cases; it removes it when the US company has held at least 80% of the capital for twelve consecutive months and meets the limitation-on-benefits tests (treaty, art. 10; BOFiP BOI-INT-CVB-USA-10-30).
• Branch profits. The profits of a French branch are deemed distributed and subject to a 25% withholding tax under French law (French Tax Code, art. 115 quinquies and 119 bis); the treaty limits it to 5% and removes it when the US company meets one of the same limitation-on-benefits tests (BOFiP).
• Intercompany flows. The arm's length principle applies from the first euro invoiced between the French entity and the group (French Tax Code, art. 57); the annual transfer pricing return (form 2257-SD) is due from EUR 50 million of revenue or gross assets, and full documentation from EUR 150 million. These thresholds are also tested at the level of the company that holds more than half of the French entity's capital or voting rights: the subsidiary of a US group that meets them is covered, whatever its own size (French Tax Code, art. 223 quinquies B; Tax Procedures Code, art. L13 AA; BOFiP).

Sources: service-public.fr (CFE, approval and filing of accounts); French Commercial Code, art. R. 123-112 and D. 221-5; French Tax Code, art. 223 quinquies B; Tax Procedures Code, art. L13 AA.

The recurring work (bookkeeping, VAT, payroll, annual accounts, group reporting) is what our French CPA engagement covers.

Our engagement covers France: the French entity, French taxes, French payroll, French filings. The US company's federal and state returns, and the US treatment of the French entity, stay with your US CPA; we provide the French figures and documents they need, in English.

Disbursements (registry, legal notice, beneficial owners declaration) are re-invoiced at cost. Every engagement is covered by a written engagement letter. Request a quote.

1. Scoping: the planned activity in France, the hires, the flows with the US company and the structure that fits.
2. Engagement letter: drafted in French, explained in English.
3. Incorporation or registration, then VAT, employer and e-invoicing set-up.
4. Ongoing work: French GAAP bookkeeping, returns, payroll, annual accounts and reporting to HQ in English.

A US software company with no presence in Europe signs its first French customers and hires a sales lead in Paris. Hiring first through URSSAF's foreign companies service would leave a permanent establishment risk as soon as the employee negotiates contracts: the company chooses a French SASU, with the US parent as president. The parent's articles are translated into French and certified by its legal representative, the capital is deposited with a French bank, the notice of incorporation is published and the file goes through the INPI one-stop portal. The SASU receives its VAT number at registration, declares its first hire before the start date, invoices its French customers in euros and, from its first year, documents at arm's length the services re-invoiced by the US parent. Its annual accounts are approved by the US parent, then filed with the registry.

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• Subsidiaries outside Paris: Lyon, Marseille, Bordeaux, Lille, Toulouse, Nantes, Nice, Strasbourg