Compensation for SARL managers: the Complete Guide 2021!

A Limited Liability Company (SARL) brings together partners whose liabilitý is limited to their personal contribution, and whose powers (voting rights, rights over profits, etc.) are proportional to the share of capital held.

A SARL (limited liability company) is a very popular and versatile legal status, as it can be adapted to a wide range of business projects. It requires at least 2 partners and a minimum share capital of €1. In 2019, 34% of companies created were SARLs, compared with 57% in 2014.

The SARL is managed by one or more managers, who may receive remuneration for their corporate mandate or employment contract.

Let's find out everything you need to know about compensation for SARL managers in 2021!

Is it compulsory to pay a manager?

A SARL manager may work for remuneration or free of charge. For example, some managers decide not to receive any remuneration when they launch their company, in order to reduce their expenses.

This means that you can receive regular or one-off income in a variety of forms, relatively freely, throughout the life of your SARL.

How do you set a manager's remuneration?

The decision to remunerate the managing director and, if applicable, the amount of this remuneration must be taken by the shareholders of the SARL.

It must be voted on at an Ordinary General Meeting by the associates present. This decision is recorded in the minutes of the meeting. This remuneration can be written into the SARL's articles of association.

How can a manager be remunerated?

The manager of an SARL can be remunerated in several ways. Firstly, he or she may receive a fixed remuneration. Alternatively, he or she may be paid in proportion to the SARL's operating performance.

He can deduct actual expenses, i.e. all those related to his professional activity.

Any benefits in kind, year-end bonuses and retirement bonuses must also be taken into account when calculating taxable remuneration.

How is a manager taxed on the income he or she earns?

If the SARL is subject to corporate income tax:

• If the manager is a minority shareholder, he or she is taxed as a salary and benefits from a 10% deduction.
• If the manager is the majority shareholder, he or she is taxed in the executive income category, and benefits from a 10% deduction. In this case, it is only possible to deduct the manager's remuneration from taxable income if he or she is actually doing the work, and if the remuneration is commensurate with the company's financial capabilities.
• If the manager is not a partner, he or she is taxed in the executive income category, and benefits from a 10% deduction.

If the SARL is subject to corporate income tax:

• If the manager is a partner, he or she is taxed on the share of profits received as industrial and commercial profits. In this case, his remuneration is not deductible from company profits.
• If the manager is not a partner, he is taxed as a salary and benefits from a 10% deduction. In this case, remuneration is deductible from taxable income.

Remuneration must be proportionate to the company's sales or profits.

If this is not the case, the law may classify the practice as misuse of corporate assets. In this case, the managing director is liable to up to five years' imprisonment and a fine of up to 3.75 million euros, in addition to dismissal without compensation.