Taxation of a Limited Liability Company (SARL)

A limited liability company (SARL) is a company made up of at least two partners whose liability is limited to the amount of their contributions. The SARL is a very common form of business and is often used for family businesses. It is possible to set up a SARL with a single partner; in this case, it is called an EURL (single-member company with limited liability).

Corporate Taxation of a SARL

By default, a SARL is subject to corporate tax (IS). However, it is possible under certain conditions to opt for income tax (IR). The corporate tax rate is 25%. A reduced rate of 15% applies to small businesses for the fraction of profits up to 42,500 euros.

Tax Filing and Payments

A SARL is required to declare its results annually. Depending on its taxation regime (normal or simplified), it must file different types of declarations. The corporate tax is paid in four installments (quarterly payments) with a final adjustment based on actual profits.

Taxation of the Manager

The manager of a SARL can receive:

• A salary: This is subject to personal income tax and social security contributions.
• Dividends: Taxed under the flat tax (30%) or optionally under the progressive scale of income tax.
• Interest on shareholder current accounts: Subject to income tax and social security contributions if considered a disguised salary.