A foreign company that wants a permanent operating presence in France will often compare two structures: a French subsidiary and a French branch. A subsidiary is a separate French legal entity controlled by its parent, while a branch remains part of the foreign parent and has no separate legal personality or distinct capital. The better structure depends on the planned activity, liability model, governance, tax position, customer requirements and how independent the French operation needs to be.
What is the legal difference between a French subsidiary and a branch?
A French subsidiary is a company incorporated under French law. The foreign parent can hold all or part of its shares, but the subsidiary has its own legal personality, assets, corporate records and governance. Common legal forms include SAS, SASU, SARL and, for larger projects, SA.
A branch, or succursale, is different. French Ministry of Economy guidance describes it as a permanent structure of the foreign company that has its own commercial establishment and local organisation but no separate legal personality or patrimony from the parent. It operates in France through a legal representative while remaining part of the foreign company.
| Question | French subsidiary | French branch |
|---|---|---|
| Separate legal entity | Yes | No |
| Own share capital | Yes, according to the chosen legal form | No separate branch capital |
| Owner | Foreign parent holds shares in the French company | The foreign parent itself operates through the branch |
| Liability structure | Generally sits within the subsidiary as a separate company, subject to applicable law and guarantees | Branch obligations are obligations of the foreign parent |
| French registration | French company incorporation and registration | Registration of the foreign company establishment in France |
| Governance | French corporate governance for the selected form | Local representative acts for the foreign parent |
Does a branch have to be registered in France?
Yes when the foreign company creates the kind of permanent industrial or commercial establishment described by the French authorities. The Ministry of Economy notes that both branches and subsidiaries used to carry on industrial or commercial activity in France are registered in the French business register framework. The supporting file is different because a branch is registering an establishment of an existing foreign legal entity rather than incorporating a new French company.
Before filing, prepare the parent-company information, evidence of legal existence, the French establishment address, the appointed representative and the activity to be carried on in France. Foreign corporate documents may need to be presented in the form required by the registration process. The filing route and documentary requirements should be rechecked at the time of registration.
How does tax treatment differ?
The legal structure and the tax analysis are connected but not identical. A French subsidiary is normally taxed in France on its own taxable profits under the rules that apply to the chosen French company. Transactions between the subsidiary and foreign group companies also need to be commercially and tax-wise supportable.
A branch is not a separate company, but a permanent French operation can create a French corporate-tax presence for the foreign parent. DGFiP explains that the concept of a permanent establishment is central to determining where business profits are taxable and that the applicable tax treaty must be checked. A fixed place of business or, in some situations, a dependent agent able to bind the company can be relevant to that analysis.
Do not choose a branch simply because it appears administratively lighter and assume that French tax obligations disappear. The expected activity, people, premises, contracts and decision-making should be mapped before launch. For a project that will operate without a French legal entity, the foreign company's permanent-establishment position should be reviewed explicitly.
What accounting and reporting should the group plan for?
A French subsidiary needs a French accounting process aligned with its legal form, tax regime and annual closing. The group should organise bookkeeping, invoices, supporting records, VAT where applicable, annual accounts and tax filings from the start rather than waiting for year-end.
A branch also needs accounting information that makes the French activity identifiable and supports the tax declarations connected with the French establishment. Because the branch remains part of the parent company, the group should define how French transactions are captured, how intercompany movements are documented and how the French figures reconcile with the parent company's records.
For a French-company route, see Francosetup's accounting service in France. The separate guide on e-invoicing and e-reporting for foreign companies is also relevant when mapping invoice flows.
What changes if the French operation hires employees?
Both structures can create employer obligations in France. The Ministry of Economy states that liaison offices, branches and subsidiaries that hire employees must comply with French employer formalities. The employing entity, employment contracts, payroll, social declarations and right-to-work checks should therefore be decided before the first hire.
A subsidiary normally hires through the French company. A branch can employ staff as the French establishment of the foreign parent. In either case, payroll should be coordinated with the chosen structure rather than treated as a separate last-minute step. Francosetup's payroll management service covers the recurring French payroll workstream once the employer setup is clear.
Which structure fits the operational model?
The decision is usually easier when the group starts with operational questions rather than a preference for a legal label. A subsidiary can be useful when the French activity needs a distinct company identity, local contracts, clearer separation of assets and governance, or a platform for future investors and growth. A branch can fit a group that wants to operate directly in France through the existing foreign company and is comfortable with the parent remaining directly responsible for the French establishment.
- Will French customers or partners expect to contract with a French company?
- Should liabilities and assets sit in a separate French legal entity?
- Will the French operation need local investors or a future sale?
- Who will sign contracts and make decisions in France?
- Will employees be hired locally?
- How will profits, intercompany charges and financing be documented?
- Does the group need French banking, marketplace or regulated-activity onboarding?
- What does the applicable tax treaty say about permanent establishment and profit attribution?
What should be prepared before choosing?
- Describe the French activity, customers, premises, stock, contracts and staff.
- Decide how independent the French operation needs to be from the parent.
- Map liability, governance and signing authority.
- Review permanent-establishment and corporate-tax consequences with the applicable treaty in mind.
- Plan accounting, VAT, invoicing and payroll before registration.
- Confirm the registered office or establishment address.
- Prepare the parent-company and beneficial-owner documentation needed for the filing.
- Only then finalise the legal form and registration route.
If the decision is to create a French legal entity, Francosetup can coordinate the company formation process. For the broader incorporation steps, see How to Set Up a Company in France as a Foreigner.
Common questions about subsidiaries and branches in France
Is a French branch a separate company?
No. It is an establishment of the foreign company and does not have a separate legal personality from the parent.
Does a branch avoid French corporate tax?
No. A permanent French operation can be taxable in France. The facts and the relevant tax treaty must be reviewed.
Can a foreign company own 100% of a French subsidiary?
Yes in ordinary company structures where the legal requirements are met. A foreign parent can, for example, be the sole shareholder of a SASU or EURL.
Can both structures hire employees?
Yes. French employment, payroll and social obligations still need to be organised for the employing setup.
Do I need a French address before filing?
The French company or establishment needs an address supported by the appropriate evidence for its registration. The exact address setup depends on the structure and activity.