Brexit has introduced significant barriers to trade between the UK and the EU. Many companies are struggling with increased red tape, delays, and complex restrictions, making cross-border business more challenging than ever.
To mitigate these difficulties, a growing number of UK businesses are considering establishing a branch office or subsidiary in France. With its streamlined processes and strategic location, France offers one of the quickest and most practical solutions for maintaining an EU presence.
In this guide, we’ll explain the differences between a branch and a subsidiary, walk you through the setup process, and outline key legal considerations.
Branch vs. Subsidiary: Which is right for your business?
Choosing between a branch and a subsidiary depends on your business goals. Each structure has its advantages and legal implications.
What is a Branch?
A branch is an extension of your UK company rather than a separate legal entity. It has no independent legal personality, simplifying the setup process.
Benefits of a French branch:
- Faster and easier setup
- No need to draft new statutes or incorporate a separate entity
- Cost-effective compared to a subsidiary
Key requirements:
- Provide certified French translations of company documents (e.g., Articles of Association)
- Register with the French Commercial Court Registry
- Publish an announcement in a legal journal
What is a subsidiary?
A subsidiary, unlike a branch, is an independent legal entity incorporated under French law. While it requires more administrative effort, it offers greater legal protection and operational flexibility.
Benefits of a French subsidiary:
- Separate legal responsibility from the parent company
- Easier to establish business contracts with French companies
- Enhanced credibility in the French market
Key steps to set up a subsidiary:
- Draft company statutes
- Open a corporate bank account in France
- Register the company with the Commercial Court
- Appoint a legal manager and accountant
Hiring employees for your French Office
Both branches and subsidiaries can employ staff. However, French employment law will apply, and it’s crucial to comply with local regulations. During the initial phase, you can second employees from your UK company for up to 12 months, subject to renewal in certain cases.
Important Considerations:
- Employment contracts must meet French legal standards
- French law mandates public order rules that cannot be waived
- Provide competitive salaries and benefits in line with French norms
Navigating French Commercial law Post-Brexit
Since Brexit, many French companies prefer formal contracts governed by French law. It’s essential to understand key principles in French commercial law, including:
- Duty to inform: Businesses must disclose critical information during negotiations.
- Abuse of dependency: Contracts may be invalidated if they result from an imbalance of power.
- Unilateral price setting: Allowed in framework contracts, provided prices are justified.
- Imprévision: Contracts may be renegotiated in the event of unforeseen circumstances.
- Contract termination rights: Contracts without end dates are terminable without notice.
Resolving commercial disputes in France
Commercial disputes in France are handled by specialised Tribunaux de Commerce, ensuring faster, cost-effective resolutions. The Paris Commercial Court even has an international division with English-speaking judges, providing a practical option for UK businesses.
Partner with French legal experts
Setting up a branch or subsidiary in France can provide significant advantages in navigating Brexit trade challenges. Our specialist French Avocat Hervé Blatry offers tailored legal support, guiding you through every step of the process.
Contact us today to explore how we can help your business succeed in France.
