Weigh up the pros and cons of a French entity set up versus using a global PEO partner when expanding your business internationally.
Expanding your business into France means you will need to set up an in-country entity. While setting up a legal entity establishes your long-term interest in a country, it can be a time-consuming and costly process. Therefore, many businesses prefer to use a PEO when expanding into France to save time, money and ensure compliance. Here we look at who needs to set up an entity, how to set up a legal subsidiary and how a PEO can help you expand into France without a legal entity.
Who needs to set up a French entity?
Any business with a physical presence in France must set up a legal entity. It is also worth noting that if you wish to set up an entity in France you must either have a residence permit or be an EU citizen.
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How do I set up a subsidiary in France?
France has a number of different entity types with each type impacting your company's tax and social security status.
While each entity requires a different registration process, for the most common type of company structure in France, a private limited liability company or Société à responsabilité limitée (SARL), you will need to:
- Set a company name and ensure this is not used as a domain, trademark or company name
- Establish a business address
- File all shareholders on the National Register
- Set up a French corporate bank account and deposit at least one Euro
- Obtain a Certificate of Authentication
- Give a brief description of your company's proposed activity in France
- Publish registration of the French subsidiary in the Official Gazette. Following this, all the necessary documents must be filed at the Centre de Formalites des Enterprise.
This is by no means an exhaustive list nor does it include all the requirements outlined by the Commercial Code, the Civil Code and the Monetary and Financial Code that companies must comply with. More details can be found on Guichet-entreprises.fr which is the national website of the National institute of industrial property (INPI).
French entity laws
Subsidiaries in France must abide by requirements outlined in the Civil Code, Commercial Code and the Monetary and Financial Code.
This ensures the correct taxation of foreign companies and ensures that documentation is compliant. Meanwhile, annual financial reports will be audited to ensure continued compliance with French employment legislation.
Failure to comply with regulations outlined in the Commercial Code, the Civil Code and the Monetary and Financial Code can result in significant penalties for businesses operating in France.
As you can see, compliance with French entity laws is an ongoing process. From initial registration processes to the company's ongoing operation, continued compliance is a must when you have a French subsidiary. Compliance requires an in-depth knowledge of the Commercial Code, the Civil Code and the Monetary and Financial Code which can cost you considerable time, money and resources. Failure to comply can result in significant penalties for businesses and can even lead to the end of your business operations in France.
The benefits of setting up a French entity
France is known for its strong, diverse economy both within the EU and internationally. Therefore, setting up an entity here gives you ample business opportunities and establishes your businesses as a new yet secure company in France.
Meanwhile, once established, a French subsidiary can be eligible for tax incentives and benefits from the French government as well as being placed on the same legal standing as local companies.
Why use a PEO partner instead of setting up a legal entity?
While setting up a legal entity has its benefits, it is also a costly, time-consuming and risky venture. With multiple regulations to comply with, expanding companies need to dedicate repeated resource, money and time to setting up an entity in France. This is in addition to onboarding employees, running payroll, applying for work permits and writing employment contracts.
By outsourcing your business expansion to a PEO or EOR, you can start reaping the benefits of France's thriving business network without the burden of a legal entity. This provides more flexibility for expanding businesses as well as saving you much-needed time and resources. Likewise, opting for a PEO over a legal subsidiary doesn't limit your business opportunities. Instead, it lets you focus on the key aspects of business growth knowing that the logistics of business set up are taken care of.
At Leap29, our French PEO team have in-depth knowledge and first-hand experience of the French business market meaning that they can be fully relied upon to compliantly navigate your expansion in France.
If you want to find out more about how our PEO Services in France can support your international expansion, call our experts today on +44 (0) 1625 537 555 or email [email protected].
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"For the last few years, we have worked very closely with Simon and the team at Leap29 on a number of different projects in multiple countries across the globe. Leap29 have been a fantastic partner for us and are always willing to think with us to find the best solution. The communication with the team at Leap29 has always been excellent and Simon, in particular, is great to work with! They come highly recommended from us!"
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