Types of secondary establishment
With no legal personality
Liaison offices facilitate new contacts, building up local knowledge, and raising a business's profile.
Commercial agents introduce a business's products into a new country following a study of the market.
Opening a foreign branch offers the advantages of both geographical expansion and relationships with clients abroad.
A foreign subsidiary is a legal entity registered in the country of establishment. More than half of its capital belongs to the parent company.
'European company ' status (Societas Europaea - SE), created in 2004, is now being applied in France.
There are two types of local partner:
- joint ventures (two or more people or companies join forces to pursue a project);
- European economic interest groupings (EEIGs), which facilitate and encourage cross-border cooperation.
Many of the requirements and procedures for opening a secondary establishment are the same as for starting up a business.
The Services Directive: Points of single contact
The Services Directive is a European law that aims to make life easier for businesses that wish to provide services in the European Union – in their home country or abroad. The Directive defines the rules that apply to entrepreneurs wishing to establish a business or perform temporary services in the EU/EEA area (the 27 EU member states, plus Iceland, Liechtenstein and Norway). It obliges member states to eliminate unnecessary bureaucracy, simplify formalities for businesses and make public administrations more efficient.
For the implementation of the Directive, each member state had to set up ‘Points of Single Contact (PSC)’, e-government portals which help businesses complete their administrative procedures on-line. The PSCs provide comprehensive information on all administrative matters related to setting up or expanding a services business in a given country. This includes for example:
- Which licences, notifications or permits do I need to obtain to start a business (at home or abroad)?
- What do I need to do when I want to offer my services abroad on a temporary basis?
- What do I need to do to apply for a licence? Which authority is responsible?
- Are the licences subject to a fee? What kinds of deadlines apply?
- Which acts and decrees apply in my sector?
- What do I need to do to establish, for instance, a restaurant or a shop? Or to work as a tour operator in another country without actually setting up a company?
- Where can I turn for personalised advice and further information?
With the PSCs, you no longer need to approach various authorities one by one!! The PSC allows you to find all relevant information and to send in your online applications to the responsible authority through one single contact point, the PSC. You can complete your administrative formalities electronically through the PSC. Just contact the PSC of the country that you want to do business in.
All PSCs are part of the European EUGO network ; through a central website you can easily access all PSCs in Europe. Of course, the services of the PSCs are optional. You may always address yourself directly to the relevant authorities, too.
Management contracts with commercial agents are either fixed-term or open-ended. The agent pays tax in the country of establishment. In France, non-commercial profits (BNC) can be taxed if the agent does not operate in a company liable for company tax (IS). The agent is also liable for VAT on fees and reimbursements of expenses.
Once a parent company's board of directors or shareholders decides to set up a subsidiary, it must choose an appropriate legal form.
Profits made by the subsidiary established in France are subject to French taxation. Tax systems in France include:
- consolidation schemes;
- parent company-subsidiary preferential treatment schemes;
- global profits;
- consolidated profit schemes;
- provisions for overseas establishment schemes.
Joint venture procedures involve collaboration contracts along with other contracts and the joint venture's legal form.
Liaison offices set up in France must be:
- registered in the trade and company register (RCS);
- notified to the business start-up centre.
To open a branch in France, businesses must submit two copies of the following documentation to the office of the commercial court:
- the parent company's articles of association;
- the branch's registration application;
- certifications and authorisations required;
- copies of documents proving the right to use the premises where the business is located;
- a document appointing the branch manager.
RCS registration follows within 15 days of the branch's opening.
Businesses must file a declaration with the tax authorities if the investment is worth over €1.5 million.
They must also have a statement certifying that no criminal convictions are held and an affiliation certificate if they come from a non-EU member country.
Most of the requirements and procedures for opening a secondary establishment are the same as for setting up a business.
There are many instruments available for helping businesses, including:
- the union of French chambers of commerce and industry (CCI) abroad, which has a directory of French CCIs outside France.
- the CCI portal, which lists subsidies granted to business start-ups.
- the 'Euridile' national trade and company register, which provides legal information on French businesses.
- the European business register (EBR) portal, offering legal information on European businesses.
Free zones offer an effective, low-cost way of setting up a business and also provide tax breaks under certain conditions.