What Is a Nominee?

A nominee is a natural or legal person who acts in their own name but on behalf of a third party. On the surface, they appear to hold the rights or manage a company, but in reality, they are acting for someone else.

This arrangement may have been used to circumvent certain administrative or tax constraints. However, with current transparency rules (beneficial ownership registers, KYC/AML banking obligations), its use is becoming increasingly limited.

Is It Legal in France?

Under French law, using a nominee is not illegal in itself, as long as there is no fraud. This technique can be used in certain specific estate or contractual situations.

However, be careful: as soon as it involves concealing the identity of the true beneficiary or evading taxes, the practice becomes illegal.

This is why, when setting up a company abroad, it is always preferable to opt for a clear structure with transparent articles of association and declared beneficial owners.

Risks Associated with Nominees

The main risk is reclassification. If the authorities discover that the nominee is concealing an undeclared beneficial owner, they can impose tax and criminal penalties.

Beyond the legal risk, the nominee also poses a credibility problem:

• Banks systematically refuse this type of arrangement (opening a bank account with a foreign company).
• Business partners are wary of companies that do not clearly display their directors.

Modern Alternatives

Today, there are much safer and recognized solutions:

• Set up a UK LTD or an LLP with full transparency.
• Choose a European jurisdiction such as Bulgaria (10% tax) or Ireland, where taxation is competitive but compliant.
• Strengthen economic substance (office, bank account, contracts) to give the company credibility.
• Use fintechs (traditional banks vs. fintechs) to get started quickly and demonstrate real financial flows.

Conclusion and Recommendations

The nominee is not illegal by nature, but in the current context of tax transparency, it has become risky and lacks credibility.

Modern jurisdictions offer clear and compliant solutions, much better suited to today’s entrepreneurs. A properly structured company with optimized taxation and a well-defined tax residence (tax residence) will always be stronger than a fragile arrangement.

At service-societe.com, we help our clients create solid, recognized, and compliant companies without resorting to obsolete mechanisms.