Branch, SARL or SAS: Choosing the Right Legal Structure in France

Foreign founders entering the French market face an early and decisive choice: which legal structure to adopt. The decision has long-term consequences for credibility, liability, fundraising, and operations. France offers several options, but not all are equally suited for startups or scaleups. Understanding the differences between a branch, a SARL, and a SAS is the first step to making the right choice.

The Branch

A branch, or succursale, is the simplest structure to set up. It is an extension of the foreign parent company and not a separate legal entity. No minimum capital is required, and incorporation is relatively fast and inexpensive. Profits generated in France are taxed locally but remain linked to the parent company. The major drawback is that the parent company is fully liable for all debts, which means no legal independence.

The branch is best suited for companies that want to test the French market with minimal investment and without large local teams. However, it offers limited credibility with clients and investors, and it makes fundraising nearly impossible. For a practical look at how credibility affects market entry, see our article on five common mistakes when entering the French market.

The SARL

The Société à Responsabilité Limitée, or SARL, is a private limited company comparable to an LLC. It is widely used in France, especially among small and medium-sized businesses. The SARL requires a minimum of one euro capital, can include between two and one hundred shareholders, and is managed by one or more directors known as gérants.

The SARL provides limited liability for shareholders and is a well-known form, trusted by banks and institutions. However, its governance is rigid, share transfers are more complex, and it is less attractive for venture capital. The SARL is a good choice for traditional SMEs, family businesses, or foreign companies that do not intend to raise venture funding and prefer a straightforward structure.

The SAS

The Société par Actions Simplifiée, or SAS, has become the structure of choice for international startups and scaleups. It requires a minimum of one euro capital, allows an unlimited number of shareholders, and offers maximum flexibility in governance. The bylaws can define custom rules for decision-making, share classes, and investor rights. Managed by a president, who may be either an individual or a company, the SAS provides limited liability to shareholders while allowing complex equity structures.

The SAS is investor-friendly, modern, and aligned with startup culture. It is the most credible option for SaaS companies and technology businesses planning to raise funds and expand rapidly. The only drawback is that the bylaws are more complex to draft, and accounting and legal fees are higher than for a SARL. For a detailed walkthrough of the incorporation process, see our article on why an SAS is the best structure for international startups.

Taxation and Incentives

Branches, SARLs, and SASs all pay corporate tax in France, currently set at twenty five percent. Both SARLs and SASs are eligible for innovation incentives such as the Crédit d’Impôt Recherche and the Jeune Entreprise Innovante program, which can significantly reduce R&D and payroll costs. A branch, however, is often perceived as temporary and lacks the credibility that investors and clients seek.

Market Credibility

In the eyes of clients and investors, not all structures are equal. A branch is often viewed as a temporary test, a SARL as solid but traditional, and a SAS as modern, flexible, and aligned with high-growth ventures. The credibility factor often determines how easily a company can sign contracts, hire top talent, or raise capital in France.

Timelines and Costs

A branch can be created in as little as two to four weeks. A SARL takes four to six weeks, while a SAS takes four to eight weeks depending on banking and administrative processes. Costs vary but typically range from two to five thousand euros including drafting, publication, court fees, and domiciliation.

Case Example

A US SaaS company wanted to hire a French sales team in 2023. Initially, they considered creating a branch to move quickly. However, French clients hesitated to sign contracts with a non-independent entity. The company switched to a SAS, which gave them credibility, simplified the bank account opening process, and positioned them for a future fundraising round. Within months, they were hiring and selling with far fewer barriers.

How morn Helps

morn guides foreign companies through every step of the decision and setup process. The team advises on whether to choose a branch, SARL, or SAS based on your strategy, drafts and files incorporation documents, secures a registered office and bank account, ensures eligibility for tax incentives such as CIR and JEI, and structures governance to prepare for future fundraising.

Conclusion

France offers several legal structures for foreign companies, but the right choice depends on your goals. A branch is simple and fast for market testing, a SARL works for traditional SMEs, and the SAS is the clear winner for startups and scaleups that want credibility, fundraising options, and flexibility. By choosing correctly at the start, you build a solid foundation for your French expansion. With morn as your partner, incorporation becomes efficient and aligned with your growth strategy.