De Facto Partnerships in France 2026: Joint Liability, Tax Risks and URSSAF

Updated 25 May 2026 — Reviewed by Samuel Hayot, chartered accountant (expert-comptable) registered with the Ordre des experts-comptables de Paris.

A de facto partnership (société de fait) is not a legal structure anyone deliberately chooses. It is a qualification that a court or the tax and social-security authorities can impose after the fact, when several people have collaborated as though they were business partners without ever formalising the relationship. In 2026, two enforcement channels make this risk more acute than before: URSSAF audits targeting informal arrangements between self-employed workers, and tax reassessments reconstructing undeclared shared income.

Direct answer: a de facto partnership is established when three cumulative elements are present — real contributions, profit-and-loss sharing, and affectio societatis (a shared intention to act as partners) — even without articles of association or any registration. The core consequence: each "de facto partner" bears unlimited joint liability for all debts, and profits are taxed at personal income-tax level for each member individually.

Article 1832 of the French Civil Code defines the company contract around three pillars: contributions, a common purpose aimed at generating a profit or saving, and participation in losses. Article 1873 of the Civil Code sets out the regime for sociétés créées de fait (companies created in fact): the rules applicable to sociétés en participation apply in the absence of contrary provisions.

The distinction between a société de fait and a société créée de fait is subtle but real:

• A société créée de fait describes a structure whose creation was intended but never finalised — draft articles never filed, no registration, no KBIS ever obtained.
• A société de fait emerges from a relationship that was never conceived as a company but whose parties' behaviour reveals the defining characteristics of one.

In both cases the liability regime is identical: unlimited and joint between the "partners". That is where the practical risk becomes concrete.

The Cour de cassation consistently requires (Cass. com., 23 June 2004, no. 01-14.275; Cass. com., 15 March 2017, no. 14-29.448) that each of the three elements be established separately and cumulatively. The absence of any single element is sufficient to defeat the qualification.

1. Contributions#

Contributions may be in cash, in kind or in services (skills, time, professional network). An occasional helping hand is not sufficient. What counts is regularity, organisation and duration. An identical monthly transfer over eighteen months, equipment lent and renewed systematically, premises made available without any explicit counterpart — these are the kinds of contribution that build a de facto partnership file.

2. Profit-and-loss sharing (not a salary)#

This is the criterion that distinguishes a salaried employee or a service provider from a de facto partner. If remuneration is fixed and contractual, it points to an employment contract or a service agreement. If remuneration varies with results, if costs are borne jointly, if losses are absorbed on a shared basis: the criterion is met.

3. Affectio societatis#

This concept from case law designates the shared intention to act as partners on a footing of equality, in a common interest. It is inferred from conduct: joint decision-making, joint representation before third parties, unified communications, shared client base. It is not a declaration of intent — it is read from the facts.

On the tax side, a de facto partnership is treated as a société de personnes not subject to corporate tax. That means profits are taxed directly at each de facto partner's personal income-tax level, in the category corresponding to the activity (BIC — industrial and commercial profits, BNC — non-commercial profits, or property income, depending on the case).

In practice, when a tax reassessment targets a de facto partnership, the tax authority reconstructs the income received and reallocates it to each member in proportion to their presumed share. The standard look-back period is three years, extending to ten years where deliberate concealment is found. A 40% surcharge for deliberate breach applies on top of late-payment interest at 0.20% per month.

Worked example: two self-employed workers share premises, pool their client bases and informally split their billings over two years. Combined turnover for the period: €180,000. On reclassification as a de facto partnership, each can be assessed to income tax on their share (€90,000) at their marginal rate, plus late-payment interest (0.20% per month) and potential surcharges. The total additional cost per person can exceed €30,000 — far more than the cost of a proper legal structure from day one.

URSSAF (France's social-security contribution collection body) runs audits specifically targeting informal arrangements between self-employed workers, particularly in digital services, consulting, construction, crafts and the liberal professions. Its objective: distinguish a genuine commercial partnership from an arrangement that conceals an undeclared employment relationship or an unregistered company.

Warning signs that can trigger or support a URSSAF reassessment:

For more on the risks attached to informal arrangements between self-employed workers: auto-entrepreneur and sub-contracting.

Two digital-marketing consultants — A and B — have worked for three years under their respective individual names (two separate micro-enterprise registrations). They share an office, pool their tools (CRM, software licences, subscriptions), cross-refer clients to one another, and pay each other an informal "revenue share" whenever one brings a mandate to the other.

During a routine URSSAF audit of B, the inspector requests bank statements and notices regular transfers from A to B labelled "partage honoraires" (fee share). A shared website is also flagged. URSSAF opens a cross-audit. Outcome: partial reclassification as a de facto partnership, social-contribution reassessments for both, and a referral to the tax authority for income reallocation.

The process took eighteen months. The combined cost — back contributions, surcharges, advisory fees — exceeded €40,000. A proper legal structure at the outset would have cost under €2,000.

At Hayot Expertise, we observe three recurring situations in new-venture and informal-collaboration files:

1. The unincorporated joint project — two future partners "testing" their association for six to twelve months before formalising. After that period, their conduct typically satisfies all three de facto partnership criteria.

2. The loosely managed family SCI (société civile immobilière, a French real-estate holding company) — family members managing a property together, collecting rent and splitting it without a clear legal structure. The confusion with simple co-ownership can be partial, but the reclassification risk exists if conduct goes beyond passive joint ownership.

3. The informal professional grouping — practitioners pooling resources without constituting a proper groupement d'intérêt économique (GIE), whose organisation progressively resembles a company.

Co-ownership (indivision) — typically arising on inheritance or divorce — covers a jointly held asset generating passive income (rent, capital gain). Organisation is minimal; there is no common business activity in the entrepreneurial sense.

A de facto partnership requires activity: production, services, trade. The members are not merely holding an asset together — they are operating a business jointly in an organised way.

If a family SCI starts carrying out works, actively managing furnished rentals (LMNP — loueur en meublé non professionnel) and distributing results on a commercial profit-sharing basis, the risk of reclassification as a de facto partnership grows. This point receives heightened scrutiny in LMNP multi-property files managed in common.

When the practice identifies a potential de facto partnership situation, the advice varies depending on how far the project has progressed and what the parties want:

Option 1 — Incorporate a SARL or SAS This is the standard route. It formalises contributions, fixes governance rules, limits liability to contributions, and provides a predictable tax and social-security regime. Accompanied business incorporation allows the entire process to be secured within a few weeks.

Option 2 — Draft a collaboration agreement or sub-contracting contract If the parties do not wish to become formal partners, a clear boundary must be drawn between their respective activities: separate contracts, separate invoicing, separate accounts, no profit sharing. The objective is to demonstrate that each party carries on an independent activity.

Option 3 — Amicable dissolution If the activity is coming to an end, an orderly wind-down is far preferable — inventory of contributions, settlement of shared liabilities, distribution of any surplus — rather than allowing the relationship to unravel without a framework, which is the usual breeding ground for litigation.

• Mandatory electronic invoicing (facturation électronique), progressively rolled out since 2024, creates more precise digital records of flows between partners. Informal arrangements are considerably easier to detect in an audit.
• Cross-referencing between URSSAF, DGFiP and INPI databases is materially more effective than it was five years ago.
• Digital platforms (freelance, revenue-sharing, sub-contracting) have been subject to mandatory automatic reporting to the tax authorities since the 2023 Finance Act.

Business owners tend to focus on the tax risk. The more immediate danger in a de facto partnership is unlimited joint and several liability for debts. If one de facto partner incurs a professional liability — unpaid rent, supplier invoices, an informal loan — the other can be held liable for the full amount, with no cap and no distinction between professional and personal assets.

This exposure is particularly dangerous because the parties are unaware of it at the time they collaborate. It typically surfaces during a dispute or a wind-down — precisely when it is hardest to manage.

Tick the elements present in your current situation:

• You share a bank account or regular financial flows with a partner, without a formalised contract
• You split fees or project revenues with another person
• You make joint decisions on the activity (pricing, clients, organisation)
• You represent yourselves jointly before clients or suppliers
• Your working arrangement has lasted more than six months without a written legal framework
• Either party pays shared business costs interchangeably

Three or more boxes checked: the risk of qualification as a de facto partnership warrants a formal diagnostic.

1. List all cross-financial flows from the past twelve months: transfers, shared charges, advances.
2. Identify who decides what and how those decisions are documented.
3. Review your contracts: do you have a proper service agreement, collaboration contract or sub-contracting agreement with each partner?
4. Seek advice before the audit: a chartered accountant's practice can carry out a risk diagnostic before URSSAF or the tax authority does it for you.

Working with a partner without a clear legal framework, or looking to secure a new association before it becomes a liability?

This article is for information purposes only. It does not replace a case-specific analysis of your situation by a registered expert-comptable or a lawyer. The qualification as a de facto partnership depends on the specific facts of each file.

Sources: Articles 1832 and 1873 of the Civil Code (Légifrance); Cass. com. 23 June 2004, no. 01-14.275; Cass. com. 15 March 2017, no. 14-29.448; BOFIP — corporate tax, sociétés de personnes; URSSAF.fr — audit of self-employed workers.