Subsidiary, branch or liaison office: the three ways for a foreign company to set up in France

« Subsidiary or branch? » The question is put as if these were two options on the same menu, to be settled on tax grounds. That is the mistake at the outset. They are two opposing legal natures — and there is a third route, the liaison office, which is neither one nor the other. Before comparing costs, you have to understand what each one really is.

Three vehicles, three natures — not three variants

A foreign company that wants a presence in France has a choice between three structures, and the difference between them is not one of degree, it is one of nature.

• The subsidiary is a company governed by French law (SAS, SASU, SARL… — see SASU or EURL when you live abroad) whose capital is held by the foreign company. It has its own separate legal personality, acquired on its registration (code civil, art. 1842): it is a French company in its own right, distinct from its parent.
• The branch has no separate legal personality nor any distinct assets. It is a mere establishment of the foreign company in France. When one « registers a branch », one is in fact registering the foreign company itself in respect of that establishment (code de commerce, art. L. 123-1, I, 3°) — no new entity is created.
• The liaison office (or representative office) has neither legal personality nor tax existence. It is a presence for prospecting and liaison, without any commercial activity.

The word « branch », moreover, is defined by no article of the code de commerce: it is a notion drawn out by practice and case law. The best official reference is the opinion of the Collège stratégique du guichet unique (DGE) of 30 octobre 2024, which sets out its treatment.

Liability: the first real trade-off

This is the point that should decide before any other. In a subsidiary incorporated in a limited-liability form, the parent company is in principle exposed only up to the amount of its contributions: if the French subsidiary fails, the assets of the foreign parent are protected. The code writes it for the SARL (« members bear the losses only up to the amount of their contributions », art. L. 223-1) as for the SAS and the SASU (same wording, art. L. 227-1).

In a branch, there is no partition: the foreign company and its French establishment are one and the same person. Debts contracted in France engage the whole of the foreign company's assets. It is the most far-reaching difference in its consequences, and it is irreversible so long as the structure remains a branch.

A note of honesty, all the same: the partition of the subsidiary is not absolute. It falls away if the parent stands as guarantor, in the event of commingling of assets, of management fault, or of liability for insufficiency of assets (code de commerce, art. L. 651-2). And it depends on the form chosen: a société en nom collectif binds its members without limit. « Limited liability » means limited, not non-existent.

Registration: through the guichet unique, with a few extra documents

Since 1^er janvier 2023, all formalities go through the guichet unique (single business formalities window) of the INPI, whatever the vehicle.

The subsidiary is set up exactly like any French company — it is not « identified as a subsidiary » in the procedure. The only additional documents relate to the fact that the member is a foreign company: an extract from its register of origin, its articles, and the declaration of beneficial owners.

The branch gives rise to the registration of the foreign company at the RCS in respect of its establishment. A counter-intuitive point is worth knowing, because a good deal of false requirements circulate: article R. 123-112 of the code de commerce requires the articles of the foreign company « translated into French if necessary and certified as true by the legal representative ». The code therefore does not impose a sworn translator for the articles — even if some registries (greffes) require one for the extract from the foreign register, which is a matter of their practice, not of any text. For a company from a country outside the European Union and EEA, specific requirements apply to the constitutive acts (art. R. 123-113).

The liaison office, for its part, has no formality to carry out on the guichet unique and does not receive its own SIRET — which is precisely what the opinion of 30 octobre 2024 clarified. It is otherwise as soon as it employs staff in France: it then receives a number (assigned by the INSEE, not by the RCS) and triggers the social obligations of an employer.

Filing of accounts: a constraint specific to the branch

Here is an obligation that almost no one anticipates, and which clearly distinguishes the two commercial structures. The foreign company that opens a first establishment in France must file each year with the registry the accounts it has drawn up, audited and published in its country of origin, within the time limit set by that country (code de commerce, art. R. 123-112).

In other words, a branch exposes to the French registry the accounts of the whole foreign company — not only the French activity. Many groups discover this publicity after the fact. The subsidiary, a French company, files only its own accounts, under the ordinary law. For those who care about discretion over the group's results, the nuance carries weight.

Taxation: taxed in France in both cases, but not in the same way

Contrary to a stubborn received idea, the absence of separate legal personality exempts from nothing: the branch in principle constitutes a permanent establishment, taxed at corporation tax on the profits attributable to its French activity.

The principle is that of territoriality (CGI, art. 209, I): France taxes only the profits of businesses operated in France. Under domestic law, three situations characterise such an operation — an autonomous establishment, a dependent representative, or a complete commercial cycle carried out in France. But beware: the tax treaty between France and your country prevails over domestic law and sets its own definition of the permanent establishment. A German, Italian, Spanish, Portuguese or British reader must refer to their treaty.

The subsidiary, for its part, is a French company fully subject to corporation tax. Do not imagine it taxed on its « worldwide profits »: the same territoriality applies, and its taxation bears in practice on its French activity.

The « branch tax »: the forgotten cost of the branch — and its exemption

It is the most discreet trap of the subject, and it concerns only the branch. Article 115 quinquies of the CGI presumes that the profits made in France by a foreign company are distributed to non-resident members, and subjects them to a withholding tax (art. 119 bis, 2) — on top of corporation tax. A branch may therefore, in theory, be taxed twice: corporation tax on its profits, then the withholding on those same profits deemed to have been sent back abroad.

But — and this is the good news for most of our readers — this « branch tax » does not apply where the company has its place of effective management in a State of the European Union or of the EEA and is there subject to corporation tax without being exempt from it (art. 115 quinquies, 3). A branch of a German, Italian, Spanish or Portuguese company is therefore, in principle, exempt from it. It targets above all head offices located outside the Union and the EEA — including, since Brexit, British companies, but also Swiss companies (Switzerland belonging neither to the EU nor to the EEA) —, subject to the applicable tax treaty.

Two precautions. The rate of this withholding results from a reference in article 187, and tax treaties often reduce it, or even remove it: do not rely on any figure read elsewhere without tying it to your treaty. And this presumption is rebuttable: article 115 quinquies provides for a revision, or even a refund, if the profits have not actually left France.

VAT, dividends: two logics not to be conflated

A reminder that has its own place, because we have devoted a whole article to it: the fixed establishment for VAT purposes is a notion distinct from the permanent establishment for profits purposes. One can be identified for VAT without being taxable at corporation tax, and the reverse. Never deduce one from the other.

For VAT, a company established in the Union does not have to appoint a tax representative; a company outside the Union may be required to (CGI, art. 289 A), except where its country has concluded with France a mutual recovery assistance agreement — which is the case of the United Kingdom, exempted from a tax representative since an arrêté du 16 février 2021. As for the sending back of profits, the dividends that a French subsidiary pays to its parent in the Union may escape the withholding tax under the parent-subsidiary regime (CGI, art. 119 ter), subject to conditions of holding and duration. It is an advantage specific to the subsidiary: the branch, for its part, has no dividends — it has the branch tax.

A final word to dispel a frequent confusion: the transfer pricing of article 57 of the CGI targets legally distinct entities, hence the parent-subsidiary relationship. Internal flows between a branch and its head office fall, for their part, under the rules of attribution of profits to the permanent establishment — a different mechanism. In both cases, it is expert ground, not to be improvised.

The liaison office, and its red line

The liaison office is the lightest structure — and the most fragile. Its safety rests on a single condition: it must confine itself to exclusively non-commercial activities — prospecting, information, advertising, storage, preparatory or auxiliary acts. It does not invoice, does not conclude contracts in the company's name, does not take orders.

The red line is clear: at the first act of commerce, it tips over into a permanent establishment and becomes taxable — on the financial years concerned, including retroactively. « Doing a bit of sales » does not exist. If the French activity has to sell, it is no longer a liaison office that is needed, but a branch or a subsidiary.

How to choose

Once the natures are understood, the choice comes down to two questions, in this order.

• What exposure do you accept? If you want to protect the group's assets, the subsidiary partitions; the branch does not.
• What activity do you really carry on in France? Nothing commercial — a liaison office is enough. A commercial activity in direct extension of the foreign company — the branch. An autonomous activity, set to develop, to recruit, to raise funds — the subsidiary.

The rest — taxation, accounts, formalities — flows from these two answers. And remember the guiding thread: it is the activity actually carried on that governs the regime, not the name given to the presence. Calling a structure that sells a « liaison office » does not protect it; the administration looks at the facts.

On the transformation, finally: one can move a branch towards a subsidiary later, but it is not a simple change of label — it is a contribution of activity to a new company, with a cost and tax consequences to be quantified with a professional. Better to choose rightly at the outset.

What domiciliation settles — and what it does not

The three vehicles need an address in France: the registered office of the subsidiary, the establishment of the branch, the address of the liaison office. The code moreover expressly provides for the domiciliation of an « agency, branch or representation » of a registered foreign company (code de commerce, art. R. 123-167, al. 2).

But let us be clear on what an address does not do. It does not choose the vehicle: subsidiary, branch and liaison office are set apart on liability and taxation, not on the letterbox. It neither creates nor avoids a permanent establishment — neither the profits one, nor the VAT one: those depend on your means and your activity. And it settles neither the registration, nor the documents, nor the filing of the foreign company's accounts, nor the taxation, nor the social obligations as soon as there is staff.

What domiciliation brings is the address — a prerequisite common to all three, nothing more, nothing less. The choice of structure, for its part, is made with an adviser, upstream. For the general context, see our article on running a French company from abroad.

What to remember

• Subsidiary, branch and liaison office are three distinct legal natures, not three variants: only the subsidiary has its own separate legal personality.
• Liability is the first trade-off: the subsidiary partitions the parent's assets (up to the amount of contributions); the branch exposes the whole foreign company.
• The branch does not escape tax: it is a permanent establishment taxed at corporation tax in France — and must in addition file each year the accounts of the foreign parent company.
• The branch tax (art. 115 quinquies) in theory strikes the profits of a branch, but exempts companies whose place of effective management is in the EU/EEA — that is, most European groups.
• The liaison office only holds so long as it does nothing commercial; at the first act of sale, it becomes taxable.
• A French address is required in all three cases, but it does not choose the vehicle, neither creates nor avoids a permanent establishment, and settles neither the registration nor the taxation.

Sources verified as at 4 September 2026: code civil, art. 1842; code de commerce, art. L. 123-1, L. 223-1, L. 227-1, L. 651-2, R. 123-112, R. 123-113, R. 123-167; code général des impôts, art. 115 quinquies, 119 bis, 119 ter, 187, 209, 218 A; BOFiP, BOI-IS-CHAMP-60-10-30 and BOI-INT-DG-20-20-10; avis n° 2024-005 of the Collège stratégique du guichet unique (DGE), deliberated on 30 octobre 2024; entreprendre.service-public.gouv.fr fact sheets. The notion of permanent establishment is fixed by the applicable bilateral tax treaty, which prevails over domestic law: each situation is assessed in the light of the treaty between France and the State concerned, and the European directives cited (parent-subsidiary regime, publicity of branches) are cited without reproduction of text. Domisiège provides an address (its prefectoral authorisation in Indre-et-Loire is being finalised; its references will be published as soon as they are issued); it does not choose the setting-up structure, neither creates nor avoids a permanent establishment and carries out neither registration nor tax advice. This article does not replace the examination of your situation.