France and Germany are mutually important trading partners. For many German – and French – companies, the other country is a (if not the most) significant market.
When you do business across this particular border, it is crucial to know what legal and tax-related issues you should be aware of. This particularly applies if you are gradually moving your company closer to the French market. The classic first step in this process is to post employees to France – on a visit to a French business partner or to work temporarily on a project there, for example. This is frequently followed by a permanent presence in France, starting with sales staff, moving on to a warehouse, and culminating in a permanent establishment or subsidiary. Preparing preliminary VAT returns and tax returns, setting up an accounting system, preparing annual financial statements in both Germany and France, and preparing German and French payrolls quickly become very important.
It is not just companies – in their capacity as both business partners and employers – who have numerous things to think of: the same applies to employees from Germany and France who, as “frontier workers” (Grenzgänger), literally cross borders to go to work. Every day over 25,000 frontier workers travel in both directions between France and the German border regions of Baden, Südpfalz and Saarland and need to reflect this in their income tax returns.