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An EURL can opt for corporate income tax in its articles of association

Published on March 19, 2024 by Pierre Belhache - 4 mins reading time
Professionals Self-employed Companies Case law Procedures

A one-man limited liability company (EURL) that elects to be subject to corporate income tax (impôt sur les sociétés - IS) in its articles of association and files its income tax returns under this system from the first financial year is deemed to have duly opted for this tax.

A possible option for corporate income tax

An EURL is a limited liability company with a single shareholder. It is therefore subject to the same legal rules as a SARL.

If the partner is an individual, the company's profits are subject to income tax, as specified inarticle 8 of the French General Tax Code. These must be declared as :

  • industrial and commercial profits (BIC) when income is derived from a commercial or craft activity,
  • non-commercial profits (BNC) when income is derived from a self-employed activity,
  • agricultural profits (BA) when income is derived from rural property.

If the partner is a legal entity, the company is subject to corporate income tax.

The sole shareholder who is an individual may still opt to be subject to corporate income tax. To do so, they must submit a request by post to their local Service des Impôts des Entreprises (SIE). The request must be made before the end of the first quarter of the financial year in which you wish to be treated as an EURL. This is not without consequence. Indeed, opting for corporate income tax means that the company is taxed at the standard rate of 25%, which can be reduced to 15% under certain conditions.

Declaration of the option for corporation tax in the articles of association: clarifications from the Conseil d'État

In a ruling handed down on February 5, 2024, the Conseil d'Etat clarifies the option available to EURLs to opt for corporate income tax. It points out that this choice must be made by notification before the end of the 3rd month of the financial year in respect of which the company wishes to be taxed for the first time, or by completing the form submitted to the company formalities center (CFE) or the commercial court clerk's office.

In this case, the administrative court of appeal rejected the claim of an EURL that had opted for the income tax system. The manager had ticked the BIC box on the form submitted to the CFE. However, the company's articles of association stipulated that it was subject to corporate income tax.

The Conseil d'Etat upheld the appeal decision, ruling thatan EURL can declare that it is subject to corporate income tax in its articles of association. The option is deemed to have been duly applied when the company prepares its income tax returns under this regime from its first financial year. In this case, the choice to opt for corporate income tax was unambiguous.