{"id":794,"date":"2021-05-31T08:59:51","date_gmt":"2021-05-31T07:59:51","guid":{"rendered":"https:\/\/www.cf-international-ecovis.com\/us\/?p=794"},"modified":"2021-08-25T09:02:12","modified_gmt":"2021-08-25T08:02:12","slug":"branch-or-subsidiary","status":"publish","type":"post","link":"https:\/\/www.cf-international-ecovis.com\/us\/information-sheets\/branch-or-subsidiary\/","title":{"rendered":"Branch or subsidiary ?"},"content":{"rendered":"

You have a commercial or industrial activity<\/strong> and want to develop your activity in France ? You will face two types of structure which must be registered for the French Trade and Companies Register (RCS) : the branch<\/strong> and the subsidiary<\/strong>.<\/p>\n

It is essential to dissociate these two types of setting-up because they can meet different types of objectives that you have set for yourself.\u00a0 Do you want to develop a new activity <\/strong>? Extend<\/strong> the existing one? Ke<\/strong>ep a close eye<\/strong> on the operation of your business ? Al<\/strong>low a great deal of autonomy <\/strong>?<\/p>\n

It is from the precise analysis of your project<\/strong> that you will have to make a choice between these two options available.<\/p>\n

In order to help you and make this decision easier, we suggest you discover the pros<\/strong> and cons<\/strong> of these two forms of setting-up.<\/p>\n

 <\/p>\n\n\n\n\n\n
<\/th>\nBranch<\/strong><\/th>\nSubsidiary<\/strong><\/th>\n<\/tr>\n
Pros<\/strong><\/td>\n\u2022 There are less administrative formalities for a branch than for the creation of a subsidiary :<\/p>\n
    \n
  • Creating a branch only required the filing of the by-laws of the company on which it depends, the publication of a legal notice in a relevant newspaper, the filling of the registration file with the Registry.<\/li>\n
  • The branch is not required to file the annual accounts with the Registry of the Commercial court.<\/li>\n
  • It is not subject to the statutory audit of its accounts in France.<\/li>\n<\/ul>\n

    \u2022 Low cost of setting up.<\/p>\n

    \u2022 The branch allow you to “test” the market before thinking about setting up a subsidiary.<\/p>\n

    \u2022 The branch’s dependence on the parent company simplifies the management of the entity.<\/td>\n

\u2022 Enables better management of a business growth.<\/p>\n

\u2022 Generates savings : the subsidiary reduces the expenses incurred by an entire group.<\/p>\n

\u2022 Optimizes the fiscal framework. Creating a subsidiary makes it possible to benefit from the tax group system and the parent-subsidiary system.<\/p>\n

    \n
  • The tax group system can reduce the amount of income tax.<\/li>\n
  • The parent-subsidiary system implies the absence of tax on dividends in France. Dividends are taxed only in the country of the parent company, i.e. in the United States.<\/li>\n<\/ul>\n

    \u2022 Low cost of setting up.<\/p>\n

    \u2022 It has legel autonomy.<\/td>\n<\/tr>\n

Cons<\/strong><\/td>\n\u2022 As with a French company, the branch is subject to all commercial taxes.<\/p>\n

\u2022 The branch must keep accounts, although it does not own any asset separate from the foreign company to which it is attached.<\/p>\n

\u2022 In the event of economic or commercial failure, the parent company is fully liable. The risk is therefore fairly high for a group to set up a branch for an activity involving financial or commercial risks.<\/td>\n

\u2022 Creating a subsidiary involves more administrative formalities :<\/p>\n