Tax in France: How to Use Shareholder Advances to Save in 2024!

When it comes to tax in France, businesses need to carefully navigate the regulations surrounding shareholder advances recorded in the “shareholder current account” (compte courant d’associé). These advances can arise in two key ways:

Amounts owed by the company to its shareholders: This includes deferred payments such as unpaid salaries, expense reimbursements, or dividends that shareholders have agreed to delay.
Voluntary deposits made by shareholders: These are funds shareholders provide to the company to support its cash flow or operations.

In both cases, shareholders essentially extend credit to the company, creating a repayable debt. This debt can accrue interest, and under French tax law, these interest payments are deductible, but only within specific limits. Ensuring compliance with these limits is crucial for optimizing a company’s tax strategy.

For businesses closing their accounts during the fourth quarter of 2024, the maximum deductible interest rates for shareholder current accounts have been set as follows:

For fiscal years ending between September 30 and October 30, 2024: 5.93%
For fiscal years ending between October 31 and November 29, 2024: 5.90%
For fiscal years ending between November 30 and December 30, 2024: 5.87%

These rates define the upper limit for how much interest a business can deduct from its taxable income. Adhering to these limits helps businesses reduce their tax liability while remaining compliant with the tax regulations in France.

Managing interest deductions effectively can be a valuable tool for businesses looking to optimize their tax outcomes. By staying informed about the latest interest rate caps, businesses can take proactive steps to structure their finances in a tax-efficient manner.

If you need expert guidance on navigating tax in France or organizing your business finances, don’t hesitate to contact ESCEC International. We specialize in helping businesses achieve their financial goals while ensuring compliance with local tax regulations.