How to use a corporate

In France

VAT

US wage status

TAX SYSTEM

Whatever the situation, the US company is the unique incorporated legal entity which depends on the tax system of the State where it is incorporated ($50 annual franchise tax return in Delaware).

Even if the US comapny has registered a "Representative Office" in France,

this is not the incorporation of an independent agency:
it is still the US corporation itself, a US legal entity.

French example :
A "SARL" with its head office in Paris opens a shop in Marseille. This shop is only a secondary establishment of the only French SARL in Paris.
This is not a different company, there is no manager (just an agency head) and this establishment has no proper accounts (except possibility for internal use).
There can be several shops that will all be attached to the SARL.

That is what happens with a US corporation.

There is only one US company with local premises:

• This is not the incorporation of a company (either US or French)
• There is no executive (but a legal representative)
• There is no accounts (since they are managed at the Head Office)

 

Tax regulations in the country where the economic activity is.

The representative office is not supposed to have any economic activity.

The regulation is respected : no activity in France means no French tax.

The representative office only represents the US corporation: it takes orders, is a driving belt, an information office.

 

Sometimes, a Holding is more appropriate.

The French or European company (subsidiary) is taxed according to the norms in force in the country where it is established.

In case of dividend payment to shareholders (chargeable on income), the European shareholder gets 1% of dividend (income liable to tax), which amounts to almost nothing and the "Holding" shareholder gets 99% of dividends.

 

TO SUM UP:

No activity in France (Consultant, Services...):

• Representative office
• No balance sheet, no corporation tax
• US tax system

Declared activity in France (Trade, industry….. ) :

• Holding
• French subsidiary taxed normally
• US results = US Tax system
• Dividends :
  * FR shares => FR Income tax

  * US shares => US tax system