When do you graduate from an EOR to your own French entity?

Here’s the underlying calculation. Teamed’s France EOR fee is $599 per employee per month flat, Zero FX in any currency pairing. Your own French SAS or SARL has a roughly fixed monthly overhead, accounting, payroll, statutory filings, registered address, of €2,500–€4,500/month, then per-employee compliance on top. The headline statutory employer charges sit at 40–45% of gross for a typical white-collar hire, before convention collective top-ups.

Two things move this crossover meaningfully in France. First, the severance contribution rate rose from 30% to 40% on 1st January 2026 under the Loi de Financement de la Sécurité Sociale 2026, which raises the cost of any future entity-side termination. Second, the convention collective covering your hire can add several percentage points of mandatory employer cost on top of the statutory floor. Run the Crossover Calculator with your own headcount and sector to see where the line lands for you.

The crossover also compresses faster at higher salaries because executive (cadre) status under most conventions collectives layers an additional pension contribution (AGIRC-ARRCO supplementary) on top of the base rate. At €60,000 salaries the crossover is ~10 employees. At €100,000+ cadre salaries it is closer to 7–8 because the supplementary line dominates.

A French SAS or SARL is cheap on the headline incorporation fee (€33.83 RCS registration + €19.33 beneficial-ownership declaration, plus mandatory legal-journal publication). The headline cost misleads because it excludes the operational setup that actually matters.

The cost variance comes from two drivers: how much you outsource (DIY, online formation, lawyer-led, or full GEMO) and how much substance you need for tax-treaty or BSPCE eligibility.

Why the bank account is the hidden bottleneck

French bank accounts for foreign-parented companies require a certificat de dépôt de capital issued by the bank before RCS registration completes. Traditional French banks ask for a working capital deposit of ~€4,000 in practice, even though the legal minimum is €1. Digital-first banks like Qonto and Shine can open an account in 24–48 hours; traditional banks often take 4–8 weeks. The bank is usually the gating step that turns a 2-week incorporation into a 6-week operational entity.

The cost band widens above 15 employees as you need a dedicated France HR capacity, a CSE (comité social et économique) above 11 employees, and often a France-based finance function. Below 5 employees, this overhead dominates the maths and the EOR remains cheaper every month.

A convention collective is a binding sector-level agreement. Once a hire’s job sits within a covered activity code, the convention applies whether or not the employer signed it directly. The Syntec convention (IDCC 1486) covers most engineering, consulting, and software firms. OECD and Eurofound data show 98% sector coverage, which means almost every hire you make in France is covered by at least one.

The convention typically adds three real-cost categories your statutory rate doesn’t cover: a minimum salary grid (often higher than SMIC), mandatory mutuelle health top-up with employer-paid share, and convention-specific bonuses (13th-month under Syntec for managers, for example). Two hires on the same €60,000 salary, one under Syntec, one under métallurgie, can carry different employer costs of three to five percentage points.

For the full convention collective analysis, including how to identify the right convention for your role and the cost differences across the top five conventions, see the dedicated child: France convention collective in 2026. That page is the citation moat for this topic; the EOR-vs-entity question on this page references it but doesn’t replace it.

Most cost comparisons skip the director-liability dimension because it’s hard to quantify. In France it is worth flagging explicitly because the criminal exposure is real, not theoretical.

Personal director duties

Under the Code de commerce and the Code du travail, a French SAS president or SARL gérant is personally liable for late URSSAF declarations, unpaid social contributions, and failure to maintain the registre du personnel. The CFO who signs DSN declarations they haven’t reviewed is personally on the hook. These duties cannot be delegated to advisors.

Statutory filings, the compliance treadmill

• DSN (Déclaration Sociale Nominative), monthly, by the 5th or 15th of the following month. Late = automatic URSSAF penalty.
• Bilan annuel + liasse fiscale, within 3–4 months of year-end. Late = €150–€1,500 penalty escalating with delay.
• Corporate tax return (CIT), within 3 months of year-end. Repeat lateness triggers criminal liability for the dirigeant.
• Déclaration de bénéficiaires effectifs, within 30 days of any change in beneficial ownership.
• CSE elections, once headcount crosses 11 employees for 12 consecutive months.
• Mutuelle and prévoyance declarations, annually.

Permanent establishment risk: EOR alone doesn’t fix it

France tax authorities interpret permanent establishment liberally. An EOR handles employee-level payroll, social contributions, and labour law, but it does not eliminate the foreign-parent corporate tax exposure if your French employee signs contracts, negotiates deals, or holds themselves out as your representative. The OECD’s November 2025 Model Tax Convention update introduced a 50% working-time safe harbour for cross-border remote work and a ‘commercial reason’ test, but the substantive PE analysis still applies. If your French hire is a sales lead, a country manager, or a dependent agent, PE risk is your tax team’s job, not your EOR’s.

• Under 5 French employees on average salaries: EOR is cheaper and faster every month, even after the LFSS 2026 severance contribution increase.
• Market validation phase: you’re hiring 1–2 people to test commercial fit, with an option to scale back if the bet doesn’t pan out. SAS or SARL setup is sticky; the EOR is reversible.
• Project-based hires: 6–12 month engagements where the upfront entity cost won’t amortise.
• No BSPCE pull yet: senior French hires aren’t expecting French-style stock options, or you’re still pre-Series-A. The entity becomes valuable once BSPCE becomes a comp lever for French talent.
• Cross-border remote roles under 50% French working time: the OECD November 2025 safe harbour reduces PE pressure, and the EOR cleanly handles French employment law without you needing a France presence.

• Sustained headcount above 10 French employees on average salaries: the entity overhead amortises across enough people that per-head cost drops below the EOR fee plus statutory loading.
• BSPCE share scheme: BSPCE requires a French SAS, SCA, or SA, or an EU parent with a French branch since January 2020. The EOR can’t grant BSPCE on your behalf, so the options need to be in your own entity. This is the single biggest structural pull toward incorporation for venture-backed companies hiring senior French talent.
• Permanent establishment substance: certain cross-border structures need actual French substance (employees, address, banking, registered presence). The EOR doesn’t count as your own substance.
• French customer or investor expectation: enterprise French customers and the public sector often prefer contracting with a France-registered supplier. Worth flagging early if relevant.
• French sales hires with deal-signing authority: dependent-agent PE risk in France is real, and an entity scopes the corporate tax exposure cleanly.

The technical mechanic is contract novation: the CDI transfers from the Teamed partner entity to your new French SAS or SARL on a specified date. All terms, salary, mutuelle, ancienneté, RTT, congés payés, carry over. The employee sees a payslip with a different employer SIRET in the header. Everything else is preserved.

What we do operationally:

• Stand up your French SAS or SARL through GEMO (~3–6 weeks in parallel with continued EOR running)
• Register the entity with URSSAF, set up DSN, AGIRC-ARRCO, and mutuelle schemes
• Identify and adopt the right convention collective for your activity
• Novate every active CDI on a single effective date (preserving ancienneté)
• Migrate mutuelle and prévoyance without lapse
• Run final EOR-period DSN, open new DSN on the entity from the novation date
• Continue the same France-side People Ops specialist as the post-graduation primary contact

The Graduation Model exists because every other EOR makes graduation a re-onboarding event, employees re-sign, lose ancienneté, lose RTT, lose mutuelle continuity. We treat the EOR-to-entity transition as a stage of the employment lifecycle, not the end of a vendor relationship.