The Complete Guide to French Business Entities: SAS vs SARL vs Branch
When expanding into France, one of the first strategic choices a foreign company must make is the type of legal entity to establish. The right structure affects not only taxation and governance but also credibility with clients, ability to raise funds, and long-term flexibility. This guide compares the three most common options for foreign startups: SAS, SARL, and Branch.
1. The Branch (Succursale)
Definition
A branch is an extension of the foreign parent company. It is not a separate legal entity.
Key Features
No minimum capital required.
Simpler to set up than a subsidiary.
Profits are directly taxable in France but linked to the parent.
No legal independence: the parent company is liable for all debts.
Pros
Fast and inexpensive to create.
Simple structure for testing the market.
No need for share capital.
Cons
Limited credibility with clients and investors.
Parent company fully liable.
Harder to raise funds or sign certain contracts.
Best suited for: companies that want to test the French market with minimal investment and do not plan to hire large teams immediately.
2. SARL (Société à Responsabilité Limitée)
Definition
A SARL is a private limited company similar to an LLC. It is widely used for small and medium businesses in France.
Key Features
Minimum 1 euro capital.
2 to 100 shareholders.
Managed by one or more gérants (directors).
More rigid governance structure than SAS.
Pros
Well established, known by banks and institutions.
Limited liability for shareholders.
Suitable for family businesses or small companies.
Cons
Rigid rules: limited flexibility in share transfers and governance.
Less attractive for investors and venture capital.
Image of being more “traditional” than startup-friendly.
Best suited for: traditional SMEs, family businesses, or foreign companies that do not need to raise venture funding and prefer a simple structure.
3. SAS (Société par Actions Simplifiée)
Definition
The SAS is a simplified joint-stock company. It has become the structure of choice for startups, scaleups, and foreign subsidiaries.
Key Features
Minimum 1 euro capital.
Unlimited number of shareholders.
Flexible governance: the bylaws can define decision-making rules.
Managed by a president (can be an individual or a company).
Pros
Maximum flexibility for governance and share transfers.
Can issue different classes of shares (preferred, voting, etc.).
Attractive for venture capital and private equity investors.
Limited liability for shareholders.
Modern image, aligned with startups.
Cons
Slightly more complex to draft bylaws (requires legal help).
Higher accounting and legal fees compared to SARL.
Best suited for: international startups, SaaS companies, and scaleups that want flexibility, fundraising options, and a credible structure.
4. Comparison Table
FeatureBranchSARLSASLegal independenceNoYesYesMin. capital0 €1 €1 €Governance flexibilityN/ARigidVery flexibleShareholdersParent only2–1001–unlimitedLiabilityParent company liableLimited to capitalLimited to capitalFundraising friendlyNoLimitedYesSetup speedFastMediumMedium
5. Taxation
Branch: Profits taxed in France, parent liable abroad.
SARL and SAS: Corporate tax in France (25%). Both structures are eligible for tax incentives (CIR, JEI).
6. Market Credibility
Branch: often seen as temporary or low-commitment.
SARL: solid but traditional image.
SAS: modern, flexible, and attractive to clients, investors, and employees.
7. Timelines to Set Up
Branch: 2–4 weeks.
SARL: 4–6 weeks.
SAS: 4–8 weeks.
8. Recommendation for Foreign Startups
If you just want to test the French market quickly: start with a branch.
If you are building a small, stable, family-style business: SARL can work.
If you are a SaaS company, scaleup, or plan to raise funds: SAS is the clear winner.
Case Example
A US SaaS company wanted to hire a French sales team. At first, they considered a branch to move quickly. However, French clients expressed concern about contracts signed with a non-independent entity. The company switched to an SAS, which gave them credibility, allowed them to open a bank account more easily, and positioned them for a future fundraising round.
How morn Helps
At morn, we guide foreign companies through the entire decision and setup process:
Choosing between branch, SARL, and SAS based on your strategy.
Drafting and filing all incorporation documents.
Securing a registered office and bank account.
Ensuring eligibility for tax incentives like CIR and JEI.
Structuring governance for future fundraising.
Conclusion
France offers several legal structures, but not all are equal for startups. While a branch is simple, and SARL works for traditional SMEs, the SAS is the most flexible and attractive for international startups. By choosing the right entity, you lay a solid foundation for your French expansion.
