A simple identification at social bodies or a liaison office: how to choose?

If starting business in France boils down to hiring one or two staff(s) aimed at collecting information on potential clients, a couple of options are made available to foreign companies.

Getting a SIRET Number (with no liaison office)…

The first is to simply get a SIRET Number, which allows you to be identified towards all French social bodies. The main advantage is that the process of creation is easier than in the second option. The main drawback is that the company needs to process on its own payments to the social bodies.

…Or creating a liaison office

A second option consists in having a liaison office. Unlike the first option, the company is identified in France towards not only social bodies but also all other third parties. This situation entails 4 advantages. First, processing payroll is a less complicated as the accounting firm will process the payment of social expenses on the company’s behalf. Second, the company can open accounts at utilities (such an Internet providers, cells phones) to directly pay these expenses incurred by employees in France. Third, the company can strike a lease agreement in France. This may be key if all staffs need to work in the same location to be efficient. Finally, being identified towards potential clients allows to strike deals with them more easily.

This second option has 3 drawbacks. First, processing the creation is heavier.  The foreign company needs (ii) to have an official address at a registered office (consider 1 200 € per annum) and (iii) to open a bank account in France (consider 600 € per annum)

How to choose between the two options?

The first option will suffice if (i) the company does not anticipate a significant increase in its business in France, briefly said thinks it is going to level off rapidly and/or (ii) the employee(s) can work home.

This second option is recommended if (i) the company wants to open a branch in a foreseeable future (as switching from a liaison office to a branch is simple) and/or thinks (ii) having a liaison office will increase the likelihood of striking deals. This may be the case with some very large accounts and public ones.

 

Summary

The aforementioned writings can be summed up as follows:

 

Liaison office in France

Liaison office

Jean-Claude ARMAND and Partners advices you to choose the establishment structure in France (liaison office, branch, subsidiary company).

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