When expanding into France, one of the first decisions international businesses must make is choosing the right legal structure from the various types of entities available.
In this guide, we’ll explore the main types of legal entities in France, highlight their key features, and help you determine which structure best aligns with your goals.
What Are the Types of Legal Entities in France?
There are 9 types of legal entities in France:
French Legal Entity |
French Name |
Shortform |
|---|---|---|
Sole Proprietorship
|
Entrepreneur individuel
|
EI
|
Single Member Limited Liability Company
|
Entreprise unipersonnelle à responsabilité limitée
|
EURL
|
Limited Liability Company
|
Société à responsabilité limitée
|
SARL
|
Simplified Single Person Joint Stock Company
|
Simplified Single Person Joint Stock Company
|
SASU
|
Simplified Joint Stock Company
|
Société par actions simplifiée
|
SAS
|
Public Limited Company
|
Société anonyme
|
SA
|
General Partnership
|
Société en nom collectif
|
SNC
|
Simple Limited Partnership
|
Société en commandite simple simple
|
SCS
|
Limited Partnership with Shares
|
Société en commandite par actions
|
SCA
|
Let’s explore each type one by one.
Sole Proprietorship (EI)
If you’re planning to launch a business alone, sole proprietorship, is one of the simplest types of entities in France. It is one of the easiest types of entity to set up and requires the least number of formalities.
Unlike other types of legal entities in France, a sole proprietorship does not create a separate legal entity. Instead, the business is legally tied to the entrepreneur.
Liability Scope
One of the key benefits of this French legal entity is the separation of personal and professional assets. While you are personally liable, your individual business protects certain personal property, such as savings accounts or a secondary residence, from being seized for business-related debts.
Taxation Rules
As a sole proprietor, you are subject to personal income tax (Impôt sur le Revenu or IR). Your earnings are based on the profits your business generates, and you can choose how much to withdraw as income after covering taxes, social contributions, and business expenses.
There’s flexibility in determining how you’re paid: you can opt for a fixed salary or adjust it monthly based on your available cash flow. Importantly, taxes are calculated on your business’ turnover.
Note: You can choose to be taxed under the corporate income tax system (Impôt sur les Sociétés or IS), treating your business similarly to an EURL (a limited liability company with a single associate).
Social Security Contributions
As a self-employed entrepreneur under this French company type, you fall under the social security regime for independent workers. Your social charges are roughly 45% of your net business income and are calculated based on your declared earnings.
Single Member Limited Liability Company (EURL)
The EURL (Entreprise Unipersonnelle à Responsabilité Limitée) is a popular choice among the various types of entities in France for individuals looking to operate a commercial, artisanal, or liberal activity on their own.
Number of Partners
An EURL is formed with just one partner, who can be either a natural person or a legal entity. This makes it ideal for entrepreneurs who want limited liability while retaining full control of the business.
Share Capital Requirements
There is no minimum capital requirement to form an EURL in France, offering great flexibility. The share capital can include:
- Cash contributions (money)
- Contributions in kind (e.g., equipment, vehicles)
- Industrial contributions (skills or know-how, though these do not count toward capital)
Cash contributions must be paid in two phases:
- A minimum of 20% at the time of incorporation
- The remaining 80% within five years of business registration
Liability
As a limited liability structure, your personal risk is restricted to the amount of your capital contribution. However, in cases of mismanagement or if you’ve given personal guarantees, your liability may extend beyond your investment.
Taxation of Profits
By default, EURL profits are taxed under personal income tax (Impôt sur le Revenu – IR). However, you have the option to elect corporate tax (Impôt sur les Sociétés – IS), giving you more control over how profits are taxed. This is especially advantageous if you plan to reinvest earnings into the company.
Social Security
The social security scheme applied to the EURL depends on who manages the company:
- Sole partner and manager: Covered under the self-employed (TNS) regime.
- Non-partner manager (external): Classified as an assimilated employee, similar to traditional employees for social contributions.
- Silent partner (non-manager): Also falls under the self-employed scheme but with fewer administrative duties.
Taxation of Manager
As the manager of an EURL, your income is generally taxed under one of the following categories:
- BIC (Industrial and Commercial Profits) or BNC (Non-Commercial Profits), depending on the activity
- Alternatively, under wages and salaries if treated as an assimilated employee
Limited Liability Company (SARL)
SARL is suitable for entrepreneurs looking to launch a commercial, industrial, craft, or liberal activity with one or more partners. It combines flexibility with limited liability, making it a preferred structure among the various types of entities in France.
Number of Partners
A SARL must have at least 2 partners and can have up to 100. Partners can be natural persons or legal entities, providing room for individual entrepreneurs and corporate investors alike.
Share Capital Requirements
- No minimum capital is legally required to form a SARL.
- Capital may consist of:
- Cash contributions (money)
- Contributions in kind (e.g., equipment, vehicles)
- Industrial contributions (skills or services, though these do not count toward share capital)
Cash contributions must be paid as follows:
- At least 20% at the time of incorporation
- The remainder within five years of registration
Liability
The liability of each partner is limited to their capital contribution, unless they personally guarantee loans or are found guilty of mismanagement.
Taxation of Profits
- By default, SARLs are subject to corporate income tax (Impôt sur les Sociétés – IS).
- Under specific conditions, a SARL may opt for personal income tax (Impôt sur le Revenu – IR):
- The SARL is a family business (commonly referred to as SARL de famille)
- It was created less than 5 years ago
- It meets the following criteria:
- Operates mainly in industrial, commercial, craft, or professional sectors
- Is owned at least 50% by individuals, with 34% held by the director and their tax household
- Is not listed on any regulated stock market
- Employs fewer than 50 people and has a turnover or balance sheet under €10 million
Social Security
The manager’s social security affiliation depends on the percentage of shares held:
- Minority or Equal Partner (≤ 50%):
- Affiliated with the general social security regime if they are paid
- Majority Partner (> 50%):
- Falls under the self-employed (TNS) social regime
- Contributions are based on professional income from the previous year
Taxation of Manager
- The manager’s salary is taxed under the salaries and wages category.
- Managers can choose between a 10% standard deduction for expenses or claim actual professional expenses with documentation.
- If the manager receives dividends, these fall under income from movable capital (RCM) and are subject to the flat tax (PFU) at 30%.
Simplified Single Person Joint Stock Company (SASU)
The SASU (Société par Actions Simplifiée Unipersonnelle) is a widely used French legal entity for individuals who want to operate a commercial, craft, industrial, or liberal activity on their own.
It is essentially the single-partner version of the SAS.
Number of Partners
A SASU has only one partner, who may be either a natural or legal person.
Share Capital Requirements
- There is no minimum capital requirement, though it must be at least €1.
- The share capital may consist of:
- Cash contributions (money)
- Contributions in kind (equipment, vehicles, real estate, intellectual property, etc.)
- Industrial contributions (know-how or labor, though these are not counted as capital)
- Current account contributions, which are not part of the share capital
Release of Capital:
- At least 50% of the cash contributions must be paid upon incorporation.
- The remainder must be paid within five years after registration.
If contributions in kind are made, an independent contribution auditor (commissaire aux apports) is required when:
- A single contribution is valued at over €30,000, and
- The total contributions in kind exceed 50% of the share capital
Liability
The partner’s liability is limited to the amount of capital contributed, except in cases of proven mismanagement or personal guarantees.
Taxation of Profits
- Corporate income tax (IS) applies by default to SASU profits.
- However, the company may opt for personal income tax (IR) for up to five years, if the following conditions are met:
- The business is less than 5 years old
- Employs fewer than 50 people
- Has a turnover of less than €10 million
- In this case, profits are taxed directly at the partner level.
Social Security
- The president (director) of a SASU is affiliated with the general social security regime (like regular employees), regardless of whether they are the sole partner.
- If no remuneration is paid, there is no affiliation with the system.
Taxation of Director
- The president’s salary is taxed under the “salaries and wages” category.
- If the business opts for income tax (IR), profits are taxed directly as part of the partner’s personal income.
Simplified Joint Stock Company (SAS)
Among the most flexible types of entities in France, the SAS (Société par Actions Simplifiée) is ideal for individuals or groups looking to engage in commercial, industrial, craft, or liberal activities.
Number of Partners
A minimum of 2 shareholders is required with no upper limit. Shareholders may be either natural or legal persons.
Share Capital Requirements
- No minimum capital requirement, the amount is freely decided by the shareholders.
- Capital contributions can be made in the form of:
- Cash contributions (money)
- In-kind contributions (assets like equipment, vehicles, real estate, or patents)
- Industrial contributions (skills or expertise), although these do not count toward the share capital
- Current account contributions (not included in share capital but used in financing)
Cash contributions must be handled as follows:
- At least 50% must be paid at incorporation
- The remaining amount must be paid within five years of the company’s registration
Liability
Shareholders’ liability is limited to the amount of their contributions, which protects their personal assets in the event of business debt or insolvency.
Taxation of Profits
- By default, SAS profits are subject to corporate income tax (IS).
- However, the company may opt for personal income tax (IR) for up to five years, provided it meets the following conditions:
- It has been established for less than five years
- Employs fewer than 50 employees
- Has annual turnover or balance sheet total below €10 million
Social Security
- The President of an SAS is classified as an assimilated employee, which means they are covered under the general French social security system.
- This provides access to health insurance, retirement, and other benefits similar to salaried employees, though unemployment insurance is not included.
Taxation of President
- The President’s salary is taxed under income tax (IR) in the salaries and wages category.
- A 10% standard deduction or actual professional expenses (e.g., meals, travel, lodging) may be deducted before tax is calculated.
Public Limited Company (SA)
The Société Anonyme (SA) is a common legal form among French company types, especially designed for businesses aiming to raise capital publicly or seek stock market listing.
Number of Partners
- Minimum of 2 shareholders for unlisted SAs
- Minimum of 7 shareholders for listed SAs
- There is no legal maximum number of shareholders
- Shareholders can be natural or legal persons
Share Capital Requirements
- A minimum share capital of €37,000 is mandatory.
- At incorporation, at least 50% of the cash contributions must be paid into a business account.
- The remaining 50% must be paid within five years of the company’s registration.
- Share capital can be formed through:
- Cash contributions (money)
- In-kind contributions (e.g., vehicles, real estate, intellectual property)
Note:
- All in-kind contributions must be valued by an independent contributions auditor (commissaire aux apports).
- Industrial contributions (skills or know-how) are not permitted for SA formation.
Liability
The shareholders’ liability is strictly limited to the amount of their contributions, offering strong personal asset protection even in the case of company debts or insolvency.
Taxation of Profits
- SA profits are subject to corporate income tax (Impôt sur les Sociétés – IS) by default.
- There is an option to choose income tax (IR) for up to five fiscal years, provided:
- The company is less than 5 years old
- It has fewer than 50 employees
- Its turnover or balance sheet total is less than €10 million
If eligible and opted for, the company’s profits are taxed at the shareholder level under personal income tax rules.
Governance Structure
An SA can be managed under two different frameworks:
- Board of Directors with a CEO (Directeur Général)
- Supervisory Board with an Executive Board
Social Security
- The Chairman of the Board and the Chief Executive Officer (CEO) are treated as assimilated employees under French law.
- They benefit from general social security coverage, including healthcare and retirement benefits, even if they hold shares in the company.
- However, they are not automatically covered under the unemployment insurance system, unless they take out voluntary coverage.
Taxation of Executive Remuneration
- Executive compensation (Chairman and CEO) is taxed under income tax (IR) in the “salaries and wages” category.
- These amounts are also deductible from the company’s profits before taxation.
- Executives may benefit from standard deductions (e.g., 10% flat-rate or actual professional expenses) before tax calculation.
General Partnership (SNC)
The Société en Nom Collectif (SNC) is a traditional French legal entity suited for professionals or close associates who wish to run a commercial, craft, industrial, or liberal activity under mutual trust.
Number of Partners
Minimum of 2 partners, who may be natural or legal persons.
Share Capital Requirements
- No legal minimum capital – partners may determine the capital amount freely (starting from €1)
- Contributions can include:
- Cash (monetary input)
- In-kind assets (vehicles, buildings, IP, etc.)
- Industrial contributions (skills or know-how) – though not counted in share capital, they can still give voting or profit rights
- There is no legal obligation to release (pay up) shares immediately
- The articles of association may define the timeline for capital release based on company needs
Liability
Partners hold unlimited and joint liability for the company’s debts. This means, creditors can sue any or all partners personally to recover full amounts owed
Taxation of Profits
- By default, the SNC is not taxed at the company level
- Instead, profits are taxed at the partner level, whether or not they are distributed
- Tax treatment depends on the nature of the business:
- Industrial & Commercial Profits (BIC) – for commercial, craft, or industrial activities
- Non-commercial Profits (BNC) – for liberal professions
- Property Income – for real estate management activities
- Tax treatment depends on the nature of the business:
- SNCs may opt for corporate income tax (IS) under specific conditions
Social Security
- All SNC partners, regardless of managerial status, are considered self-employed
- They are affiliated with the social security scheme for the self-employed (SSI), now part of France’s general social security system
Taxation of Associated Manager
- If the SNC is taxed under income tax (IR), the manager’s compensation is taxed under the same category as the business profits (BIC, BNC, or property income)
- If the company opts for corporate tax (IS):
- The manager’s salary is taxed under the “wages and salaries” category
- Deductions such as a 10% flat-rate or actual business expenses (meals, travel, etc.) may apply before calculating the final tax
Simple Limited Partnership (SCS)
The Société en Commandite Simple (SCS) is a hybrid French company type suitable for those who wish to carry out commercial, craft, industrial, or professional activities, while combining both active management and passive investment.
Number of Partners
An SCS is composed of two distinct types of partners:
- General Partners (Commandités):
- They actively manage the business
- Hold the status of traders
- Have full authority over external operations
- Limited Partners (Commanditaires):
- Passive investors who finance the company
- Take part only in internal governance, such as through general meetings or supervisory boards
- Prohibited from engaging in management activities, such as signing contracts or securing financing
Minimum requirement: 2 partners – at least one general partner and one limited partner
Share Capital Requirements
- No legal minimum capital – may start from €1, as agreed by the partners
- Capital may be contributed in:
- Cash (monetary contributions)
- In-kind assets (vehicles, equipment, real estate, IP, etc.)
There is no mandatory release schedule for capital unless stipulated in the articles of association.
Liability
- General Partners:
- Bear unlimited and joint liability
- Creditors can pursue their personal assets for company debts
- Limited Partners:
- Their liability is limited to the amount of their capital contribution
- They cannot be held personally liable beyond their investment
Taxation of Profits
The tax treatment of the SCS depends on the type of partner:
- General Partners:
- Taxed under Income Tax (IR) for their share of company profits
- If the SCS opts for Corporate Tax (IS), general partners may benefit from a 10% flat-rate deduction for business expenses
- Limited Partners:
- Their share of profits is taxed at the Corporate Tax (IS) level
- When distributed as dividends, they are further subject to Income Tax (IR) at the partner’s level
This dual tax structure makes the SCS a flexible legal entity that balances investment incentives with management control.
Social Security
- General Partners:
- Affiliated with the Self-Employed Social Security Scheme (SSI)
- Covered under the general system for independent workers
- Manager who is not a partner (or a salaried manager):
- If they hold a formal employment contract and perform active duties, they may be treated as assimilated employees
- In such cases, they benefit from the general employee social security regime
Limited Partnerships (SCA)
The Société en Commandite par Actions (SCA) is a French legal entity ideal for individuals or groups looking to combine entrepreneurial control with public or private investment.
Number of Partners
An SCA requires a minimum of four partners:
- 1 General Partner (Commandité) – in charge of management
- 3 Limited Partners (Commanditaires or Sponsors) – passive investors
This structure separates day-to-day management from investment participation, offering flexibility and control.
Share Capital Requirements
- Minimum capital:
- €37,000 for private SCAs
- €225,000 when offering securities to the public
- At least 50% of cash contributions must be paid upon incorporation
- The remaining 50% must be released within five years
Contributions can be in cash or in kind (equipment, property, intellectual property, etc.).
Liability
- General Partners:
- Hold unlimited and joint liability for company debts
- Their personal assets may be used to repay creditors
- Limited Partners (Sponsors):
- Liability is strictly limited to the amount of their capital contribution
- They do not participate in company management
This makes the SCA a strategic choice for businesses that want to attract investors while maintaining managerial control.
Taxation of Profits
- By default, profits are subject to Corporate Tax (IS)
- The company may opt for Income Tax (IR) for the first five fiscal years, provided certain conditions are met:
- Business is less than 5 years old
- Has fewer than 50 employees
- Annual turnover is under €10 million
This dual tax option gives flexibility to new businesses when choosing the best fiscal treatment.
Social Security
- The general partner is considered a self-employed person and is affiliated with the SSI (Self-Employed Social Security Scheme)
- A non-partner manager (appointed without being a shareholder) is treated as an assimilated employee and covered under the general employee social security regime
- A non-partner unpaid manager is not subject to any compulsory social security coverage
Taxation of Associated Manager
- Managers are taxed under Income Tax (IR) in the salaries and wages category
- A 10% flat-rate deduction or deduction of actual professional expenses (e.g., meals, travel, accommodation) is allowed before tax is calculated
Choosing correctly from the different types of legal entities in france is essential for operating effectively and staying compliant in France. Each structure has its own tax, liability, and management implications, therefore it’s important to align your choice with your business goals.