Doing Business in France: Legal, Tax, and Employment Guide for Czech Companies

We assist Czech and Slovak clients in France on a regular basis through ARROWS International.  Here you will find information regarding company formation under French law, employment law risks, and new tax obligations for 2025 and 2026 to help you avoid costly mistakes. Learn how to effectively overcome banking barriers, how to draft commercial contracts for maximum protection, and why professional representation by our Prague-based law firm is essential for the smooth operation of your business activities in France.

Quick Summary for Managers from ARROWS

• Strategic Choice of Entity: For subsidiaries, the simplified joint-stock company (SAS) is most suitable due to its extreme contractual freedom, whereas the SARL form is often too rigid for the needs of an international holding.
• Key URSSAF Risks: French employment law is uncompromising regarding the 35-hour work week and employee registration; failures in this area lead to fines reaching hundreds of thousands of euros and criminal liability for management. See below for more on how this is addressed.
• Banking and Administrative Barriers: Opening a corporate account remains the largest practical obstacle to expansion, which can often only be overcome by utilizing the "right to an account" (droit au compte) through the central bank.
• 2026 Tax Revolution: Mandatory B2B e-invoicing from September 2026 and the gradual abolition of the CVAE tax require timely technical and procedural preparation of your finance departments.
• Contractual Stability: The French Commercial Code strongly protects established relationships, meaning that even terminating a contract in accordance with its terms may be deemed unlawful by a court if "reasonable" notice is not provided.

Strategic Choice of Legal Form: SAS, SARL, or Branch?

When entering the French market, international corporations must first resolve the dilemma between establishing a full subsidiary and registering a mere branch (succursale). While a branch may appear administratively simpler at first glance, from a legal perspective it does not constitute a separate entity, meaning the parent company is directly liable for all obligations, debts, and torts arising in France. Most investors therefore choose the subsidiary route, which allows for effective risk isolation and better tax planning within an international structure. In this area, our Prague-based attorneys provide comprehensive services for international law and expansion consultancy. 

The most popular form for subsidiaries is currently the SAS (Société par Actions Simplifiée). Its main advantage is that the law leaves shareholders almost complete freedom to define the rules of internal operation in the articles of association (statuts). Within an SAS, you can freely set voting rights, conditions for the entry of new shareholders, and the powers of the company president, making it an ideal tool for corporate governance. 

Conversely, the SARL (Société à Responsabilité Limitée), which is the historical equivalent of a Czech s.r.o. or German GmbH, is in many respects bound by the rigid rules of the French Commercial Code (Code de Commerce). In an SARL, for example, transfers of shares to third parties are strictly regulated and the statutory body (gérant) must always be a natural person. If you plan a future sale of shares or the involvement of an investor, the SARL form can be a significant obstacle during transaction negotiations due to its statutory inflexibility. Details on risks during asset transfers can be found in the article cross-border share deals: tax and legal traps for foreign investors. 

For large investment projects, there is the SA (Société Anonyme) form, which requires a minimum share capital of EUR 37,000 and a complex structure with a board of directors. However, this form is unnecessarily costly and administratively bloated for standard commercial expansion. Our Czech legal team has extensive experience in setting up optimal holding structures and will help you choose the form that best protects your capital and allows for smooth management from your headquarters. Our experts on corporate law, holdings, and structures can assist you with this. 

FAQ – Legal Tips for Choosing a Legal Form

• Can a Czech s.r.o. be the sole shareholder of a French SAS? Yes, French law allows for the existence of single-member companies (SASU), where the sole shareholder is a Czech legal entity. To set up these structures, please contact our Prague-based attorneys at You might also be interested in commercial contracts of Czech companies with Romanian partners and mistakes to avoid if you are planning expansion into other countries.:office@arws.cz.
• Is it necessary to pay up the registered capital in full immediately? For an SAS, at least 50% of the cash contribution must be paid upon incorporation; for an SARL, 20% is sufficient, with the remainder to be paid within five years. If you need advice on capital structure under Czech or French law, write to office@arws.cz.

The Registration Process: From Articles of Association to the SIREN Identification Number

The administrative process of establishing a company in France underwent radical digitalization in 2023 through the "guichet unique" portal. Although the system appears simplified, it presents a barrier for foreign entities due to the requirement for documents in official translation and specific requirements for proof of registered office. The backbone of every company is its Articles of Association (statuts), which must be precisely drafted in French to pass inspection by the registration court.

Every company must have a registered address in France (domiciliation). For firms that do not yet require physical offices, a contract with a virtual office provider is an ideal solution. However, the authorities require strict proof of the right to use this address. Without a properly documented registered office, the company will not be entered into the Commercial Register (RCS) and will not obtain its SIREN identification number, which is essential for any invoicing.

Upon successful registration, you will receive an Extrait Kbis, which is the official extract from the register serving as the company's "ID card." This document will be required by all institutions – from banks to energy suppliers. Most authorities require a Kbis no older than 3 months, meaning the process of updating information in the register must be continuous. 

An important part of registration is also the announcement in the official gazette (journaux d'annonces légales). This obligation ensures public awareness of the creation of a new legal entity and is a necessary condition for completing the registration. In the real world, the registration process is full of minor procedural details and dependencies that a layperson often overlooks, and neglecting them can delay company formation by many months.

FAQ – Legal Tips for Company Registration

• What are SIREN and SIRET numbers? SIREN is a nine-digit identification number for the entire company, while the fourteen-digit SIRET identifies a specific establishment or registered office. To ensure registration with the relevant registers, contact our Czech legal team at office@arws.cz.
• Can I choose any company name? No, you must conduct a search with the national institute INPI to ensure you do not infringe on existing trademark rights. Our Prague-based attorneys can help you verify the name at office@arws.cz.

The Banking Paradox and the "Right to an Account" for Non-residents

The greatest practical challenge when entering France is not the law itself, but the internal policies of commercial banks. To establish a company, you must deposit the registered capital into a temporary account, but French banks often refuse to open accounts for entities whose directors do not reside in France. This situation often leads to a stalemate where you need an account for company registration, but the bank requires an existing registration to open the account. 

If you encounter repeated rejections from commercial banks, French law provides a tool in the form of the "right to an account" (droit au compte). In such a case, you submit an application to the central bank (Banque de France), which will mandatorily designate a banking institution that must open at least a basic account for you. ARROWS attorneys regularly navigate this process with clients and help them overcome barriers within the strict KYC and AML procedures that banks apply to non-residents. 

When opening an account, prepare for an extremely detailed screening of your business plan and ownership structure (UBO – Ultimate Beneficial Owners). Banks require the personal presence of the director and the submission of complete documentation in perfect French. Lack of preparation for the bank interview or incomplete documentation can lead to immediate rejection, which is then recorded in the system and complicates negotiations with other institutions. 

Thanks to the ARROWS International network, we handle cases with international elements daily and can connect clients with banking partners accustomed to working with foreign investors. Our experience shows that proper preparation of the bank file shortens the account opening process from months to weeks. 

Employment Law: The 35-hour Week and URSSAF Pitfalls

The French Labour Code (Code du Travail) is one of the most complex in the world, and a lack of familiarity with it can have severe consequences for Czech companies. The standard working week is set at 35 hours. It is important to understand that 35 hours is not an absolute limit, but a threshold above which every additional hour must be paid as overtime with a significant premium. In France, the statutory working week is standardly 35 hours – however, this is not a prohibition on working more, but rather the point at which overtime typically arises (with mandatory premiums or compensatory time off, often in the form of RTT). In practice, companies commonly operate beyond 35 hours, provided it is correctly handled legally; for managerial and professional positions, the forfait jours regime is often used, where work is measured in days per year rather than hours.

Supervision of compliance with social regulations is carried out by the URSSAF authority, which focuses particularly on combating so-called "hidden employment" (travail dissimulé). If a Czech company posts its employees to France, it must fulfill a range of obligations, including registration via the SIPSI portal and ensuring A1 forms are in place. During an on-site inspection, employment contracts and payslips must be immediately available in an official French translation; otherwise, there is a risk of immediate work stoppage and heavy fines. 

Sanctions for labor law violations are draconian. Failure to provide an employee declaration (DPAE) can result in fines amounting to hundreds of thousands of euros, and in cases of proven intentional evasion of the law, even imprisonment for the company director. Furthermore, in the construction sector, a worker identification card (Carte BTP) is mandatory, without which an employee will not be allowed onto the construction site at all. 

Another specific feature is collective bargaining agreements (conventions collectives), which are binding for most sectors. These agreements often set a minimum wage higher than the national SMIC and determine specific allowances for meals or transport. Our Czech legal team at ARROWS can help you correctly classify your employees according to the relevant collective agreement, thereby eliminating the risk of future lawsuits for back pay. 

FAQ – Legal tips for employment

• What is the minimum wage in France in 2025? As of January 1, 2025, the gross minimum wage (SMIC) is set at EUR 11.88 per hour. To check compliance with collective agreements, contact us at mailto:office@arws.cz.
• Does a posted worker need a French contract? No, a Czech contract with a bilingual posting addendum is sufficient, but it must meet French standards regarding rest periods and wages. Our Prague-based attorneys can assist you with documentation review at mailto:office@arws.cz.

Tax System: Corporate Taxes and E-invoicing 2026

While France is gradually reducing the corporate tax burden, it is simultaneously introducing new technological requirements for transaction monitoring. The standard corporate income tax (IS) rate is 25%. A promising tool for small and medium-sized enterprises is the reduced rate of 15% on the portion of profits up to EUR 42,500, provided the company's turnover does not exceed EUR 10 million. 

A fundamental change arrives in September 2026, when a blanket obligation for electronic invoicing for all B2B transactions will be introduced. This is not merely about sending PDFs, but about transferring data in structured formats (e.g., Factur-X) via approved platforms directly to the state. This reform requires timely adaptation of your ERP systems, as invoices issued after this date using old methods will not be eligible for VAT deduction and will expose you to sanctions. 

Another important update is the gradual abolition of the CVAE tax (corporate value-added tax), which primarily burdened manufacturing companies. In 2026, its maximum rate will drop to 0.09%, and it will be abolished entirely in 2028. This relief significantly increases the attractiveness of France for Czech exporters establishing their own production plants or warehouse centers. In the real estate sector, it is necessary to monitor developments in property tax (taxe foncière). A major revision of cadastral bases is being prepared for 2026, which will likely lead to tax increases for many commercial properties. ARROWS legal and tax advisory can help you optimize your tax burden and protect you from unnecessary levies and fines during audits. 

Commercial Contracts and Protection Against "Sudden Termination of Relationship"

French commercial law contains a specific provision in Article L. 442-1 of the Commercial Code that is a nightmare for many suppliers. It prohibits the sudden termination of an established commercial relationship without providing sufficient written notice. Courts often rule that even if you have a three-month notice period agreed in the contract, you must provide, for example, a one-year period given the duration of the cooperation; otherwise, you are liable for damages. 

This principle also applies to situations where the cooperation was not supported by a written contract but had been ongoing long-term. An "established relationship" is considered any stable and regular commercial exchange. Before any change of supplier or termination of distribution in France, it is therefore essential to conduct a legal risk analysis to avoid lawsuits for loss of profit.

Furthermore, attention must be paid to the Loi Hamon, which regulates relationships between suppliers and distributors. This law places great emphasis on the supplier's General Terms and Conditions (GTS), which are considered the starting point for all negotiations. The law also strictly limits invoice payment terms (usually 60 days), with violations of these limits punished by high administrative fines of up to EUR 375,000. 

Within ARROWS International, we daily handle negotiations with French business partners and the preparation of contracts that comply with this specific case law. Our Prague-based attorneys can set up contractual mechanisms so that your position is maximally protected even if you decide to exit the market or change strategy. 

Legal Tips for Commercial Relationships

• What is "rupture brutale"? This refers to the sudden termination of a business relationship without adequate notice. The length of a "reasonable" notice period depends on the duration of the relationship and the degree of economic dependence. For an assessment of your specific case under French and Czech law, please contact us at mailto:office@arws.cz.
• Does a commercial contract have to be in French? For B2B relationships between two companies, the law does not strictly require French, but a high-quality French translation is crucial for any potential litigation in French courts. 

Real Estate Law: The Ten-Year Guarantee and the Role of the Notary

Investing in French real estate requires an understanding of specific guarantees, the most important being the garantie décennale. This ten-year guarantee obliges every contractor involved in construction or renovation to be liable for defects that compromise the stability of the building or render it uninhabitable. When purchasing property, it is absolutely critical to verify whether the seller or contractor holds valid assurance décennale insurance; otherwise, you assume the risk of costly repairs yourself. 

The process of purchasing real estate in France is conducted exclusively through a notary, who holds a monopoly in this process. While the notary represents the state and the transaction itself, their role is not to act as your attorney advocating for your specific commercial interests. It is therefore standard practice to have your own legal advisor from our Prague-based law firm to review the purchase agreement (compromis de vente) and ensure all conditions precedent, such as obtaining financing or building permits, are properly addressed. 

A specific element is the municipal right of first refusal (droit de préemption urbain). After signing the reservation agreement, the municipality has two months to decide whether to purchase the property for public purposes instead of you. This risk should not be underestimated, especially in city centers, and must be accounted for in the funding schedule. 

In the case of commercial leases (bail commercial), the rules are heavily weighted in favor of the tenant. The tenant has the right to renew the lease after 9 years (the 3-6-9 rule), and if the landlord refuses, they must pay the tenant compensation for the loss of clientele. This protection is an advantage for Czech companies during expansion, but for investors in yield-generating real estate, it represents a significant factor that must be correctly handled in the contract. 

International Reach and the ARROWS International Network

Legal issues in France are significantly more complex in practice than they appear at first glance. It is not just about the letter of the law, but a deep understanding of case law and local customs, which have hidden exceptions and procedural links in the real world. The ARROWS law firm handles these matters daily, allowing us to significantly reduce time for our clients and minimize the risk of errors that a layperson might overlook. 

Thanks to our unique ARROWS International network, which we have been building for over ten years, we cooperate with proven French partners. This allows us to manage your legal affairs directly from Prague, but with an impact in any French department. Coordination through a single point of contact at ARROWS saves your management's time and ensures that information is not lost in translation between different teams of advisors. 

Our experience includes extensive projects in acquisitions, establishing subsidiaries, and resolving complex disputes arising from commercial contracts with French partners. Our portfolio includes more than 150 joint-stock companies and 250 LLCs that we assist with international growth, while we pride ourselves on speed and high-quality outputs. 

We also commonly partner with in-house legal counsel to resolve special cross-border matters where a combination of Czech and French legal expertise is required. It is safer for the client to have the matter professionally secured by our firm, which is insured for damages up to CZK 500,000,000. 23

FAQ – Most Frequent Legal Questions on Doing Business in France

1. How long does it take to set up a company in France? If everything goes smoothly, registration takes 3–4 weeks; however, the biggest delay is usually opening a bank account, which can take months. Our Czech legal team can help you accelerate the process via mailto:office@arws.cz.
2. Can a Czech citizen be a director of a French company without residing in Paris? Yes, the non-residency of a director is not a legal obstacle, but it can be a complication for practical operations and relationships with banks. 
3. Do I risk a fine for not paying social security contributions in the Czech Republic when posted to France? If you have an A1 form, you pay contributions in the Czech Republic. However, the absence of this form in France leads to an immediate assessment of contributions by the local URSSAF authority. 
4. How will e-invoicing work from 2026? Companies will have to issue and receive invoices via certified platforms (PDP) or the state portal in a specified data format. Contact us at mailto:office@arws.cz and leave the solution to our specialists.
5. What is "droit au compte" in practice? It is the right to a basic bank account at a bank designated for you by the Banque de France after presenting rejection letters from commercial banks. 
6. Is it true that a contract termination can be invalid even if the notice period is observed? Yes, if a court finds that the notice period was not reasonable given the history of the relationship (rupture brutale). 

Conclusion: A Secure Bridge for Your Business in France

Expanding into the French market is a strategic milestone for international entrepreneurs, yet it requires more than just a high-quality product. It demands legal certainty in an environment historically designed to protect employees, tenants, and long-term business partners. To avoid the risk of fatal errors, drastic sanctions from the URSSAF authority, or protracted litigation in French courts over the validity of terminations, it is essential to have a partner with deep international experience by your side. 

The Prague-based law firm ARROWS offers you comprehensive services – from identifying and vetting business partners to preparing and reviewing contracts and representing you before registries and regulatory authorities. Our goal is for you to experience expertise and security in every step we take, allowing you to focus fully on developing your business while our Czech legal team ensures your legal and tax protection.

As part of our services, we also connect clients with one another when they have interesting investment or business opportunities in the French market. We are happy to listen to your business ideas and help you find suitable financing or business partners through our extensive international network. Entering France with ARROWS means speed, quality, and the certainty that your interests are protected by a top-tier team of specialists.

Do not hesitate to contact our law firm in Prague and entrust your French projects to the hands of professionals – contact us at office@arws.cz.

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