Should my French company be an EURL?

EURL questions
The EURL is the French name for a Sole Proprietorship With Limited Liability. Basically, it is a SARL, but with only a single partner. It is therefore subject to the same rules as a conventional SARL, except for the changes made necessary by the presence of a single partner.

EURL criteria for French businesses

The EURL is the French name for a Sole Proprietorship With Limited Liability. Basically, it is a SARL, but with only a single partner. It is therefore subject to the same rules as a conventional SARL, except for the changes made necessary by the presence of a single partner.


  1. Financial commitment
  2. Liability
  3. How does the EURL function?
  4. The tax regime of the EURL
  5. The social regime of the manager of an EURL
  6. Transferring an EURL
  7. Main advantages and disadvantages of the EURL

1- Financial commitment

The sole associate is free to determine the volume of equity of the company depending on its size, activity, or financial requirements.
Be careful, however! If the volume of equity doesn’t make sense considering the requirements of the project, the personal responsibility of the associate may be incurred.
Contributions can be made either in cash or bank check, or in kind.
At least 1/5th of the contributions have to be paid when the company is created, and they must have been paid in full after 5 years.

2- Liability

The sole partner is only liable up to the volume of his contributions.

However, if he is the manager, in case of management fault, he may become liable up to his personal property.
That could happen, for example, in case of excessive expenses while the company is in deficit, negligence in the payment of insurance premiums, tax fraud, etc.

Furthermore, bankers often ask for the personal guarantee of the partner, and sometimes even that of his spouse. In these cases, their personal assets could be seized in case of payment failure.

3- How does the EURL function?

It is mandatory to define company statues

Several measures aim at simplifying the operating rules of the EURL, when the manager is the same as the sole associate.

Indeed, in these cases, a model of by-laws is provided free of charge by the Center of Formalities of Companies or the Registry of the Commercial Court that receives the application for registration of the company. This model is applied by default, unless different by-laws are presented when registering the EURL.

The sole associate-manager also does not have to:

  • Write a management report each year if the activity does not exceed, at the close of a financial year, two of the following three thresholds:
    • 4 million euros for the balance sheet total
    • 8 million euros for the turnover excluding taxes
    • 50 people for the average number of permanent employees employed during the year,
  • File the management report to the registry of the Commercial Court (if he even has to write one at all). However, he must still make it available to anyone who requests it,
  • Have his financial accounts approved in a General Meeting. This formality is deemed completed by the filing of the annual accounts and the inventory at the registry of the commercial court,
  • Mention, in the company register, the receipt issued by the registry when filing the annual accounts.
The company has to have one or more manager:
  • The manager (s) must be “natural persons” (individuals).
  • They can be either the sole partner, or a third party.
  • In the absence of statutory limitations, the manager(s) have full powers to act in the name and on behalf of the company.
  • Their appointment and their powers are fixed either in the by-laws or by separate document.
The sole associate possesses alone the powers given the associates in the case of an SARL with multiple associates:
  • The associate may be a “natural person” (an individual) or a “legal person” (an entity representing several individuals).
  • He can make unilateral decisions on anything that associates usually decide.
  • These decisions are recorded in a special register held at the registered office of the company.
  • Since July 2014, EURLs are allowed to be the sole associate of another EURL.

4- The tax regime of the EURL

If the sole associate is a “natural person”:

In principle, the social benefits are calculated according to the company’s benefits, but appear in the declaration of income of the associate. It appears either in the Industrial And Commercial Profits (BIC) category for commercial or craft activities, or in the Non-Commercial Profits (BNC) category for a liberal activity.

Since December 9, 2016, the Tax Regime of the Micro-Company also applies to EURLs where the Sole Partner is either a “natural person”, or the manager of his company.

It is possible for the company to be taxed under the Corporate Tax system, and this can be done from the moment the company is created. Be careful however, as once this decision is made, it is not possible to go back on it.

If the sole associate is a legal person (for example an SA, an SARL, an SNC, an EURL, etc.)

In this case, Corporate Tax is mandatory.

5- The social regime of the manager of an EURL

If the Sole Associate is the same as the manager:

In this case, he is regarded as a “Non-Salaried Worker

He can also not never have a work contract, which means he won’t have access to the benefits that come with it.

  • If the company is subject to the Corporate Tax, the proportion of dividends received by the manager or by his spouse, his partner bound by a PACS or his minor children, depends on his social contributions for the fraction greater than 10% of the equity. It depends on issue premiums, amounts paid into current account and the proportion shares that he holds,.
  • If the company is subject to the Income Tax and the manager is placed under the tax regime of the Micro-Company, his social contributions are calculated based on the company’s Turnover, using the same method as Micro-Companies.
  • A Majority Manager (manager holding more than 50% of the shares) can no longer deduct up to 10% of his professional expenses from his remuneration to determine the basis of calculation of his social security contributions. However, deducting the real costs remains possible.
If the position of manager is exercised by a third party

He is regarded as an Employee. As such, he benefits from the social security and the retirement scheme of employees. However, he does not benefit from unemployment insurance, as he does not contribute to it.

He may combine his functions of manager with a contract of employment for separate and real technical functions, but only if it is possible to establish a relationship of subordination between him and the sole partner. In that case, for all intents and purposes, he has the Tax Regime of an Employee.

Additional details to keep in mind:

  • If the spouse of the sole associate is the manager, they will be considered to be a majority manager, and will therefore have the social regime of non-employees.
  • If the manager is a third party, the sole associate is considered to be a Non-Salaried Worker if he has some sort of additional professional activity within the company. It does not matter whether this activity is compensated or not.

6- Transferring an EURL

To transfer an EURL, one must transfer their shares. There are a few extra fees to keep in mind when transferring shares:

  • Registration fees (at the expense of the buyer).
  • Capital Gains Tax (at seller’s expense)

7- Main advantages and disadvantages of the EURL

  • The liability of the associate is limited to his contributions (except in the case of management fault, or of personal guarantee).
  • It’s possible to opt for the Corporate Tax, and therefore reduce the amount on which social contributions are calculated.
  • The entrepreneur’s assets are easy to transfer.
  • It’s easy to transform an EURL into an SARL.
  • Management is simple, especially when the manager and sole associate are the same.
  • It’s possible for a manager that holds more than 50% of the shares of an EURL under the Income Tax regime to opt for the tax regime of the Micro-Company
  • Expenses and formalism when creating the company.
  • There’s a certain formalism to respect when running the company. It becomes less and less prevalent, however.

If you want to learn more about the EURL and how it fares against other company types, you should check out this table detailing the differences between each company type.

And if you want to learn more about one-person companies in particular, this table detailing one-person companies will tell you everything you need to know.

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