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Running a business on an international scale is not solely reserved for big corporations.

SMEs and Startups are no longer confined to one location until they expand and often, a global presence is a key aspect of their business structure. France is an attractive entry point to the European market, so it comes as no surprise that an average of 25 foreign investment projects per week were confirmed in 2017.[1] There are many reasons a company would want to recruit in France- the highly skilled workforce, the positivity towards Startup projects, or to establish a presence in France.

Employers are not at all obliged to move their company (or themselves) to France in order to begin hiring. There are many circumstances in which a company shouldn’t spend time and money on officially moving operations to France simply to hire employees.

If you are a Startup or a small business in its early days of expansion, the move to France could be far too expensive. As a non-resident employer, you would avoid the costs associated with setting up a permanent establishment, from setting up a bank account to leasing an office.

Companies hiring employees for a temporary period have little to no incentive on settling in France. Employers risk wasting time going through the administrative system designed to help companies move permanently. For example, a US-based scientific research project hiring a French specialist would have no need for a French subsidiary once the project is completed. Furthermore, temporary employees often work remotely, thus eliminating the need for the foreign company to set up a permanent establishment.

A small number of employees hired overseas also justifies a remote approach in management. If you are planning on hiring 1-5 employees, perhaps even spread around different locations in France, managing your employees from the headquarters would likely be cost efficient and simpler.

There are 3 options foreign companies can choose when hiring as a non-resident employer, varying in scale:

1. Bank transfer from parent company account

If the employee is working few hours, and will not be receiving a significant salary, transferring their salary directly from the parent company could be the simplest approach. For example, a web engineer that your company hires for a few hours a month does not necessarily require an official company title. Hiring an employee as an independent contractor is highly recommended for remote hires. As long as the employee is correctly declaring their income in France, and similarly your company account declarations are clear. Make sure you are aware of the tax withholdings applicable in your country for hiring foreign employees.

2. Outsource the payroll process to a service provider

A payroll provider such as Maupard is able to facilitate the process to a simple one-month payment for the foreign company. The provider takes care of registering for the appropriate social contributions and taxes and creates and sends payslips to every employee. Paying employees is difficult in France, the many subsections of a payslip only partly demonstrate the complexity of administrative obligations. Foreign companies often opt to avoid this stress with an external payroll provider.

3. Create a branch

A branch is the strongest approach of the 3 options and grants your company the most visibility on the French market. The address helps build relations with clients and suppliers and is certainly a great option if your company is intending to permanently expand into France. While more tax and accounting obligations come with opening a branch, the chance for commercial activity is attractive. A branch is directly associated with the parent company overseas, and requires minimal attention once set up. Employees can be hired under the branch and payroll can still be outsourced.

Opening a branch is obligatory if you would like your employees to rent a car or lease office space under the company name. This is because most rental agencies require a K-bis extract when providing rentals.

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Lastly, there is a high likelihood that French culture could put your company off the move to France. Fine wine, cheese and boulangeries gets tiresome. Hundreds of museums and the Mediterranean doesn’t turn any heads. Frankly, Eiffel Tower is as impressive as its fridge magnet replica. So why bother make the move when one has so many options as a non-resident employer?

If you have any questions regarding recruitment and payroll in France, do not hesitate to contact us via telephone +33 (0) 1 53 93 94 20 or [email protected]. Our team of experts will happily assist you with any queries you might have.

 

Sources

Maupard website

https://www.shrm.org/resourcesandtools/hr-topics/global-hr/pages/paying-employees-abroad.aspx

https://timelesstime.co.uk/knowledgebase/employing-foreign-workers-abroad

[1] Business France https://www.businessfrance.fr/Media/Default/PROCOM/Dossier/Internationalisation%20de%20l’%C3%A9conomie%20FR%20(Bilan)/UK/key_info_in_10_points_2017_Annual_Report_foreign_investment_UK_PAGE-1.pdf