EIRL in 2026: what the status became and what replaced it

Quick answer. The EIRL (sole trader with limited liability) has been closed to new registrations since 15 February 2022, under Law no. 2022-172 of 14 February 2022. It is replaced by the single sole-trader status, which automatically separates professional and personal assets since 15 May 2022.

You may have read that you should choose the EIRL to protect your personal assets. That information is out of date. Since 15 February 2022 you can no longer set up an EIRL: the scheme was closed and replaced by a simpler status. The useful question is no longer "EIRL or not", but "plain sole trader, IS election, or company".

At Hayot Expertise, registered with the Ordre des experts-comptables of Île-de-France, we still see founders heading for an EIRL setup found in an old article. This guide brings things up to date: what the EIRL became, what happens to those that still exist, and how to think about it today.

The EIRL was created in 2010 to let a sole trader ring-fence part of their assets to the business, and thus protect the rest. The mechanism relied on a declaration of asset allocation, sometimes an asset valuation, a dedicated bank account and annual updates. It was cumbersome.

Law no. 2022-172 of 14 February 2022 in favour of independent professional activity ended this scheme. In practice:

• since 15 February 2022, it is impossible to set up a new EIRL;
• the new single sole-trader status provides the same asset protection, but without any allocation formality;
• the EIRL is therefore being phased out.

Our reading#

The legislator settled a long-standing debate: protecting personal assets should no longer depend on a formality many entrepreneurs forgot or handled poorly. By scrapping the EIRL in favour of automatic separation, an optional and fragile device was replaced by a default rule of law. For a founder in 2026, this is a clear simplification.

If you set up an EIRL before 15 February 2022, it continues to exist and operate under its original rules. There is no legal obligation to convert it. But Law 2022-172 organises its phasing out.

The trickiest point concerns transfer. The law provides that an EIRL can no longer be passed on if the entrepreneur who had elected this regime dies: the asset allocation no longer carries over. If this applies to you, the subject deserves to be anticipated with your adviser.

The underestimated risk#

Many EIRL holders carry on out of habit, without reassessing their structure. Yet staying in an EIRL today means keeping formalities (updates to the ring-fenced assets) that no longer add any advantage over the single status. A move to clear bookkeeping, for example with clear bookkeeping with Pennylane, and a structure review often simplify things without any loss of protection.

The regime that replaces the EIRL is the single sole-trader status, which came into force on 15 May 2022, three months after Law 2022-172 was enacted. It is the focus of our dedicated article on the new single sole-trader status; we recap the essentials here by contrast with the EIRL.

Its principles:

1. The separation of assets is automatic and by operation of law, with no allocation declaration.
2. Personal assets are in principle beyond the reach of business creditors.
3. Creditors whose claim arises from the business have in principle only the professional assets as security; personal creditors, the personal assets.
4. This protection applies to claims arising from 15 May 2022 onwards.

The entrepreneur may waive this separation for a specific commitment, for instance at a bank's request, under the applicable regulations (with protective formalities whose detail is to be verified case by case).

What the authorities look at#

Automatic asset separation protects, but it is not an absolute shield. In practice, a lender often requires a personal guarantee or a waiver of separation to grant financing. Protection therefore mainly works against "imposed" creditors (suppliers, operating debts), less so against negotiated bank commitments. This is a point to factor in before building a financing plan.

The EIRL allowed, under conditions, an election for corporate income tax. The single status keeps this option, on a precise basis: article 1655 sexies of the French Tax Code (CGI).

This provision lets a sole trader taxed under personal income tax elect for assimilation to an EURL (commercial, craft, professional activities) or an EARL (agricultural activities). The effect: their result is subject to corporate income tax (IS), without changing legal form. You remain a sole trader, simply treated as an EURL for tax.

The rules to know:

• the election must be notified to the authorities no later than the end of the 3rd month of the financial year for which the entrepreneur wishes to be subject to IS;
• a reversal remains possible up to the 5th financial year following that of the election; beyond that, the election becomes irrevocable (article 1655 sexies of the CGI, BOFiP BOI-IS-CHAMP-20-20-30);
• the 2026 Finance Act clarified the tax consequences of this election, in particular the treatment of latent capital gains on entry into IS (the precise terms are to be reviewed case by case).

Trade-off: IR or IS?#

This is the real decision today, and it replaces the old "EIRL" reflex. The trade-off depends less on the status than on your profit level, your need for remuneration and your reinvestment plans. This is precisely what we examine in a tax trade-off between IR and IS.

You no longer choose the EIRL: you arbitrate between the sole trader (with or without IS election) and a company such as the SASU or EURL. The main criteria:

• Income level and stability. A modest, smoothed profit often suits an EI under IR.
• Need to reinvest. If you leave profits in the business to fund growth, IS becomes relevant.
• Partner or fundraising plans. Bringing in a partner requires a company, which also means setting a share capital in an SAS or SARL.
• Image and credibility. Some clients prefer dealing with a company.
• Director's social regime. A sole trader is in principle covered by the self-employed regime; a SASU falls under the general scheme.

This core comparison is at the heart of our business creation support, because the right choice depends on your real situation, not on a fashionable status.

In practice: the 2026 creation sequence#

1. Clarify the project: alone or with partners, target income level, financing need.
2. Decide EI or company, then IR or IS where relevant.
3. File the application on the INPI single window and obtain your SIRET number.
4. Decide whether to keep or waive the VAT exemption depending on your clientele.
5. Set up bookkeeping from the first euro and make the IS election within the deadline if chosen.

A common case#

Recently, a director who had operated for several years as an EIRL came to us, convinced he had to "renew his asset allocation". After review, his EIRL was still working, but the annual formalities no longer added anything compared with the single status. We framed a path to simplification and checked whether an IS election made sense given his profit level. The real question was not the EIRL, but the income/reinvestment pairing.

• Do not set up an EIRL: the status has been closed since 15 February 2022.
• An existing EIRL remains valid, but reassess its usefulness against the single status.
• The EI's IS election rests on article 1655 sexies of the CGI and is notified within the first 3 months of the year.
• The IS election becomes irrevocable beyond the 5th year: a structuring decision.
• Protection of personal assets does not cover a commitment you have waived (a bank guarantee, for example).

This article is for information; a decision suited to your situation requires examining your figures, your contracts and the law in force. Our accounts presentation engagement (professional standard NP 2300) comes with advice on the structure most consistent with your activity.