Branch or incorporated entity: which one should I choose?
In English, ‘branch’ is often used as a general term to refer to the subsidiary of a parent company, regardless of its legal structure. However, in France, a ‘branch’ refers to a specific type of legal structure. It is important to understand the difference between this structure and a fully incorporated entity so that you can make the best decision for your company as you expand into France.
- A branch is fully dependent on the parent company and the parent company retains liability for the entity in France
- The accounts of the parent company must be deposited in the French commercial court
- A branch can carry out full commercial activity, and offers visibility and credibility for your operations in France, but there is no need to contribute any share capital or to appoint a separate director
- It is therefore a good option for companies looking to quickly expand into France but who wish for the parent company to retain control
Fully incorporated company (SAS or SARL)
- A fully incorporated SAS or SARL structure benefits from complete autonomy from the parent company
- An SAS in particular offers a flexible corporate structure: there can be one or many shareholders, there is no minimum share capital, and you can draw up your own by laws
- The incorporation process requires more time and paperwork than the registration of a branch, and it will be necessary to open a French corporate bank account alongside the incorporation
- It is therefore a good option for companies looking for a permanent solution in France who predict significant operations in the country and want the entity to be independent from the parent company
For more information or for help with your payroll requirements in France, get in touch using the address [email protected]