Headquarters in France or Canada: which strategy to apply?
- Noham Layani
- 1 hour ago
- 4 min read
You are a growing and/or exporting French SME, and you have your sights set on Canada: a stable, innovative market, benefiting from a favorable bilateral framework.
However, a successful implementation involves much more than just an office: it requires a detailed understanding of the fiscal, social, and organizational issues to avoid turning this opportunity into a source of excessive costs.
So, where should you locate your company headquarters: France or Canada? A strategic choice with major fiscal and social implications that will determine your growth potential, your credibility in the local market, and your costs.
In this article, Blendy international CPA based in Paris and Montréal, compares two models - headquarters in France with a Canadian subsidiary or headquarters in Canada with a French subsidiary - and guides you towards the optimal structure, for both French and Canadian SMEs.
OPTION 1: Maintain your head office in France with a subsidiary in Canada
For whom?
French digital/SaaS SMEs seeking to control costs.
Canadian SMEs targeting the EU/France: same logic reversed.
Benefits:
Labor costs controlled thanks to French invoicing: employer contributions ~45% of gross, employee ~20-23%.
Administrative simplicity: management remains concentrated in France, avoiding permanent establishment and double tax obligations.
Flexibility: billing in € and rates adapted to the national market without high Canadian costs.
Disadvantages:
No access to Canadian SR&ED (research and development) credits.
Risk of double contributions for employees active in both countries, although the France-Quebec agreement can limit this double contribution if the secondment is well organized; otherwise, Canadian contributions are capped at around 16%.
Reduced field visibility, which can penalize local credibility with customers and partners.
OPTION 2: Transfer the head office to the United States and transform the French entity into a subsidiary
For whom?
Canadian companies targeting the EU.
French SMEs with a significant market in Canada locally.
Benefits:
Eligibility for Canadian tax incentives:
Reduced tax rate (9-12%) on the first CAD 500,000 of profit depending on the province
Access to SR&ED credits (federal + provincial up to ~35%).
Strong local presence: credible permanent establishment, improves your positioning in Canada.
Tax optimization by benefiting from the local business rate (26% federal plus 2.5-16% provincial)
Disadvantages:
Canadian social security contributions: CPP contributions 11.9%, EI 1.66% capped.
Potentially higher wage costs depending on salary level and provinces.
Administrative complexity: formalities for transferring headquarters, tax on the branch (25% on transfers not reinvested).
Comparison of social security contributions: France vs. the United States
It's also worth noting that choosing the location of your head office also has significant implications for your social security contributions. Here's what you need to remember:
In France:
In France, social security contributions represent an extremely heavy item: according to the OECD, employer contributions amount to approximately 26.6% of the total cost of labor, with a total (employer + employee) approaching 35% of gross salary, one of the highest levels in the OECD.
Taking into account the entire payroll, contributions amount on average to 44.3% of gross remuneration.
In short, for an employee paid €100 net, the total cost to the employer is around €235, including charges.
In Canada:
Conversely, in Canada (outside Quebec), the contribution to the Canada Pension Plan amounts to an employer rate of 5.95% of salary (same for the employee), and employment insurance represents 1.66% of the capped salary.
For the province of Quebec, the provincial plan replaces the federal one: the pension contribution (QPP) reaches 6.4% for the employer, with employment insurance at 1.32% for the employee and a provincial parental contribution of 0.692% for the employer.
In summary, the total charges on a gross salary are around 13% for the employer, and generally lower for the employee, which represents a much lower level than in France.
For example, in Quebec, the annual ceiling for employer contributions to employment insurance is set at CAD 1,204.94, and that of federal employment insurance at CAD 1,508.47. This structure allows for better control of labor costs.
In conclusion, French social security contributions often represent more than four times those of Canada for the employer. This significant difference can weigh heavily in your decision regarding the location of the head office and your salaried teams.
So, which option should you choose?
If your primary business is SaaS/digital (Europe or North America) and the Canadian market is secondary: option A.
If you operate extensively on Canadian soil , or you are Canadian targeting the EU: option B.
If you have a balanced mix or want to remain agile: the hybrid model guarantees performance, economy and legitimacy.
And our recommendation clearly goes towards the binational hybrid model.
Why this model is a winner
You get the best of both countries:
In France, costs, euro billing, innovation aid.
In Canada, low taxes for local activity, credibility on the ground, access to subsidies.
You remain flexible, adjusting management/sales proportions according to market developments.
You optimize social security contributions by placing the payroll in the most economical territory.
How Blendy supports you
Customized diagnosis: evaluation of your model, localized financial projections.
Legal structuring: assistance with incorporation (SAS/SARL in France, Corporation in Canada).
Complete social/tax management: social security contributions, URSSAF/RPC, agreements, VAT, GST/HST.
Continuous monitoring and optimization: R&D credits, LTSN, bilateral developments.
Binational support: French + Canadian team nearby, facilitating HR and management.
Contact us today to discuss your project to set up in Canada.
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