About Creating an Affiliated Company in France
Thinking about creating a company in France? Despite the legendary high social costs and pro-employee labor
laws in France, there are business advantages in choosing France
as a place to do business. Social costs can be controlled by
the judicious use of treaties and by carefully structured compensation
plans; and labor laws when viewed up close may not be as daunting
as legend would have it.
French corporate tax rates compare favorably to other European
countries and the network of treaties that France has with other
countries allow for tax-favored repatriation of after-tax profits.
Visa and work permit rules, while complex, are by-and-large
friendly to new businesses.
Our clients include companies who made the decision to extend
their business into France. The initial level of financial and
administrative commitment must be determined. A distributorship
or a contractual relationship with a commercial agent may suffice,
or else the establishment of a liaison, or representative, office
in order to test the market. If a full-blown commercial or professional
operation is desired, should a separate company or branch office
be used? Each has its pluses and minuses. If a separate company
is decided upon, France offers various possible forms - such
as the SARL, SA, or an SAS. The choice will depend on various
factors, such as capital requirements, management and long-term
objectives. We explain the pros and cons of each form, highlighting
pitfalls in the choice of one form over another.
We discuss basic issues such as license agreements, the ins
and outs of the French labor law and industry-wide collective
bargaining agreements, French social security obligations, tax-effective
executive compensation plans, and the eventual taxation of upstream
dividend payments
We advise and assist in obtaining appropriate commercial or
professional space, as well as other start-up issues.
We help our clients identify an appropriate accounting firm
with cross-border expertise.
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Choice of Entity
- We explain your basic choices and compare the pros and cons
of each in light of your short-term and long-term objectives.
- We create the business entity, and handle all necessary paper
work with the French authorities as well as with management and
other employees.
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Tax and Social Security Issues
- We consider all aspects of operations, compensation, royalty
payments, dividend payments.
- We explain the French stock option rules.
- We explain the French Social Security system and whether some
of the heavy charges imposed on employee compensation can be
lightened.
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Executive Compensation
- We help structure compensation agreements of top and middle
management to minimize the cost of employment for both the
employer and employee.
- We make effective use of the U.S.-France Social Security
Treaty ("Totalization Agreement")
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Labor Issues
We assist the company in hiring and firing, to avoid the many
pitfalls that exist for employers in the French labor law.
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Visa and Work Permits
We obtain the appropriate visa and work permits for executives
and their families entering France.
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