Entering the French market often looks straightforward on paper. In reality, things tend to unfold differently once operations begin. Financial assumptions, regulatory constraints and local practices quickly reshape the initial plan.
What is often perceived as a financial gap is, in many cases, the result of choices made early on in structuring and implementation.
For this issue, we chose to compare perspectives. We asked Jorge Miranda, Partner at SOGECC, a French accounting and advisory firm working closely with international clients, to share what he actually sees on the ground. His insights reflect a very practical experience of foreign groups entering the French market, which we complement with our legal perspective.
1. From business plan to cash reality: where does it go wrong?
As Jorge Miranda explains,
the biggest initial difference usually comes from an uptake that is not as pronounced as initially expected, generating a need for financial support from the parent company.”“the biggest initial difference usually comes from an uptake that is not as pronounced as initially expected, generating a need for financial support from the parent company.
Revenue assumptions are often too optimistic in the early stages. He also notes that “compliance costs are also underestimated in many cases,” which increases pressure on cash flow from day one.
From a legal standpoint, these issues are not only timing-related. They often stem from insufficient anticipation of structuring constraints, particularly around incorporation, banking processes and contractual readiness.
2. Misconceptions about French tax and accounting
Perceptions around taxation are often misleading.
As Jorge puts it,
businesses tend to think that corporate taxation will be higher and harder to manage compared to other countries than it actually is in practice.
Certain mechanisms are even seen as favourable, such as “being able to pay VAT only once you've been paid on services.
However, this is offset by another reality. Jorge highlights that “social security charges on salary tend to be an unpleasant surprise factor whose magnitude is not always well understood at the outset.” In practice, the real difficulty lies less in taxation itself than in the overall cost of employment and the surrounding regulatory framework.
3. Early warning signs of a miscalibrated market entry
The first warning signs tend to appear quickly. Jorge observes that “the lack of revenues within the first few months compared to initial projections or a high level of labour relations costs are usually initial signs that things are not going well in terms of market adaptation.”
These financial indicators are often accompanied by operational friction. Companies may struggle to align with local business practices or to structure employment relationships effectively, which can accelerate the gap between projections and reality.
4. One key recommendation before entering France
Jorge’s recommendation is straightforward:
Do not make assumptions about the regulatory environment.” He insists on the importance of “a detailed market assessment from a practical functioning and compliance standpoint.
In practical terms, this means anticipating operational constraints. As he notes, “opening a local company to launch operations can take time for foreign nationals or corporations because of bank verifications,” and certain steps such as signing a lease should be anticipated to avoid delays.
From a legal perspective, this is where structuring becomes essential. Choosing the right vehicle, organizing governance and securing key contracts early can significantly reduce execution risk.
5. What surprises foreign executives the most?
Once operations begin, certain surprises remain consistent. Jorge notes that “the difficulty to hire and fire is a recurring topic across the board.” He also highlights a more subtle gap:
There is often a surprise about the gap between the legal requirements set out by EU rules and how commercial practices work in France.
He gives a concrete example: “many clients want to sign contracts only with locally established legal entities and not with foreign legal entities even if they’re otherwise properly registered in France for tax purposes.”
This reflects a broader point. Beyond the legal framework, France operates with its own market expectations.
Being compliant is not always enough in practice. How a business is structured and presented locally often plays a decisive role in whether it can effectively operate.
— Eric Kopelman, Partner – Axipiter | Corporate M&A France Unlocked is published by Axipiter’s M&A team, focused on providing actionable legal insight for cross-border investors.