A foreign company specialised in publishing and leisure, with turnover of about €uros 700,000, had no legal structure in France. It received euro-denominated cheques and transfers from its French clients, which it had to convert into its local currency, bearing the exchange rate risk and varying bank fees.
To pay its French service providers, it had to do the reverse, buying euro at a different exchange rate and once again bearing the varying bank fees.
Moreover, foreign companies cannot immediately recover the Value Added Tax payable on the invoices of their French service providers. They can send a request for refund to the DRESG SR – TVA, but the procedure is so long that most of them give up. Not recovering this tax can result in losses of up to €uros 25,000 to €uros 50,000 per year.
Setting up a subsidiary solves this and other issues.