TheEURL can be defined as a SARL, but with a single shareholder. Other distinctions come into play, such as thedefault tax regime of income tax (IR) for the EURL and corporation tax (IS) for the SARL.
However, EURLs can opt for IS if they so wish. The tax rules for SAS and SASU are the same, so the choice between these two legal forms will depend on your company's project, and whether you want to go it alone or form a partnership.
Focus on the tax provisions inherent in each of these legal forms
First of all, let's focus on SARLs and EURLs in terms of taxation of profits. In the case of the EURL, the corporate income tax (IS) regime is automatically applied, but it is possible to opt for the income tax (IR) regime.
If the company is taxed on a corporate income tax basis, the manager's remuneration will be subject to income tax, but in the case of executives, aprofessional expense allowance capped at 10% will be calculated on actual expenses.
If the manager prefers to pay income tax, the situation is different if he or she is also a partner. In this case, his remuneration will be taxable and will not be deducted from his company profits.
If the manager is not a partner, his remuneration will be deductible from the EURL's profits.
For SARLs, the default tax regime is the corporation tax (IS), so that partners benefit from the same taxation as employees. The remuneration received by each partner is deductible from social security contributions and bonuses paid during the year.
In certain cases, family SARLs can benefit from the unlimited partnership regime.
The SAS and the SASU are fully aligned in terms of taxation. They will both be subject tocorporate income tax by default, with an option to opt for personal income tax.
This choice needs to be made at the time of creation, or within the next five years.
The IR option for SAS or SASU will be available for industrial, commercial, liberal or agricultural activities, in certain specific cases:
- Created less than five years ago
- Have fewer than 50 employees.
- Annual sales or balance sheet total, both below ten million euros.
- Do not own any securities traded on a financial market.
- At least 50% of shares must be held by individuals, and at least 34% by all executives.
This choice of corporate income tax will only be possible if unanimously agreed by the structure's partners. The tax department must be notified of this decision within the first three months of the first fiscal year.
The advantage of IR is that it taxes the sole partner or several partners, rather than the SAS or SASU directly. This type of taxation will thus be relative to the amount of share capital held by the partner(s).
The choice of legal form for your company will come into play when you decide to launch your business. SARL, EURL, SAS or SASU, it all depends on your personal project, and above all whether you want to start your business alone or as a partner.
It is essential to take into account all the parameters relating to each of these structures in order to make the wisest possible choice.
Written by our expert Maeva Girardot
February 26, 2018
