Family SARL in France: tax regime, advantages and limits in 2026

A SARL de famille (family-owned French limited company) is one of the few structures in French law that allows a group of close relatives to carry out a commercial, craft or agricultural activity together while keeping their profits taxed at the personal income tax (IR) level — with no time cap on that option. For any family-run project that needs to last, this stability matters.

Before considering this structure, two questions must be answered: do all intended shareholders belong to the strictly defined family circle under French tax law? And is the planned activity genuinely commercial, industrial, craft-based or agricultural? If either answer is no, the structure loses its core advantage.

Direct answer: A SARL de famille is a standard French limited liability company (SARL) formed exclusively between direct-line relatives (parents, children, grandparents), siblings, married spouses, or PACS partners, carrying out a commercial, industrial, craft or agricultural activity. It may elect to be taxed under the partnership (transparency) regime — meaning profits are taxed directly in each shareholder's hands — with no time limit on that election, as long as the family circle remains intact. The legal basis is article 239 bis AA of the French General Tax Code (CGI).

In legal terms, a SARL de famille follows the same rules as any French SARL: shareholders' meetings, management by one or more gérants, minimum one euro of share capital (though a higher amount is strongly recommended in practice), and registration through the INPI single-window platform.

The difference is purely fiscal and conditional. Two cumulative requirements must be met.

The shareholder composition must consist exclusively of:

• direct-line relatives: parents, children, grandparents, grandchildren;
• siblings (full, half, or step);
• married spouses, regardless of matrimonial regime;
• PACS partners (civil solidarity pact, roughly equivalent to a registered civil partnership).

The activity must be industrial, commercial, craft-based or agricultural. Civil and professional liberal activities — doctors, lawyers, architects — are explicitly excluded.

Once both conditions are met, the company may elect the partnership tax regime under article 239 bis AA of the CGI. Each shareholder then declares their share of profit in their personal income tax return, proportional to their stake. The election is sent to the tax authority (administration fiscale) and remains valid indefinitely — for as long as the eligibility conditions are satisfied. This distinguishes it sharply from the standard SARL's IR option, which is capped at five financial years.

Sources: Légifrance — CGI art. 239 bis AA ; Entreprendre.service-public — SARL

An unlimited personal income tax election#

This is the structural differentiator. A standard SARL can also elect IR taxation, but only for a maximum of five financial years. The family SARL faces no such constraint: the election persists as long as the family perimeter is preserved. For a real estate project planned over twenty years, or a multi-generational business, this durability changes the entire financial model.

Tax transparency as a planning tool#

Under the partnership regime, each shareholder is taxed on their personal share of profits at their own marginal rate. This creates genuine planning flexibility:

• a shareholder with a low marginal rate — a young adult child, a retired parent with modest pension income — pays little or no tax on their share;
• losses flow through to shareholders and may offset their other income, subject to French rules on non-professional BIC losses;
• there is no formal dividend distribution: profits are allocated proportionally to shareholdings without triggering additional withholding.

Access to depreciation under the real expenses regime#

For furnished rental activities, this is decisive. Under a family SARL with IR taxation, furnished letting income is taxed in the BIC (industrial and commercial profits) category. The real expenses regime allows depreciation of the property and its fittings to be deducted annually, often reducing taxable profit to near zero during the early years of ownership. This benefit is unavailable when holding property directly under the micro-BIC flat-rate regime, and equally unavailable in a SCI (civil real estate company) operating under IR, which cannot carry on commercial activity without triggering compulsory IS taxation.

A structured framework for estate planning#

The family SARL allows gradual transfer of shares to children or spouses — through arm's-length sales or gifts — more cleanly than joint ownership (indivision). Shares can be valued, gifted with progressive abatements under French gift tax rules, and governed by pre-emption clauses in the articles of association.

The wording of article 239 bis AA is precise and cannot be extended by analogy.

The following are excluded: cohabiting unmarried partners without a PACS, nephews and nieces, uncles and aunts, in-laws (sibling of a spouse), and all outside investors.

Key risk: the entry of any shareholder outside this list — even a minority stake, even a family friend helping fund a project — immediately terminates the IR election by operation of law. The company continues to exist but reverts to standard corporate tax (IS) treatment. This reversion can crystallise deferred gains if property has appreciated and depreciation reserves are held within the company.

In practice, the perimeter breaks in three recurring ways: a divorce that dissolves a PACS, a child who sells their shares to a third party, or a family lender entering the capital structure outside the eligible circle. Pre-emption clauses and tightly drafted share transfer restrictions in the articles of association are essential safeguards.

This comparison is the most common question in our practice. The answer is unambiguous.

A SCI (société civile immobilière) cannot lawfully carry on commercial activity on a habitual basis. If a SCI lets furnished properties regularly, French tax law (article 206-2 of the CGI) forces it into compulsory IS taxation — eliminating the partnership transparency, triggering tax on deferred gains, and removing access to depreciation deductions in the IR framework. SCIs work well for bare (unfurnished) property holding and estate organisation. They do not work for furnished letting.

A family SARL under IR is structurally suited to furnished rental: the activity is commercial by nature, real expenses regime allows full depreciation, and the unlimited IR election avoids the double taxation of IS then dividend.

For a deeper comparison of the property holding options, see our article SARL de famille ou SCI and our guide Faut-il ouvrir une SCI pour investir ?.

Scenario: two brothers (Thomas, 38, marginal rate 30%; Julien, 34, marginal rate 11%) and their mother (Marie, 65, marginal rate 0% — modest pension income) buy a furnished property for €350,000 through a family SARL. Each holds one third of the share capital. Annual gross rental income: €18,000. Annual running costs: €4,000. Estimated annual depreciation (property and fittings): €11,000 (to be confirmed based on component useful lives — consult your accountant).

Taxable profit at company level: €18,000 − €4,000 − €11,000 = €3,000

Each shareholder's share: €1,000

• Thomas (30% marginal rate): €300 income tax on his share.
• Julien (11% marginal rate): €110 income tax on his share.
• Marie (0% marginal rate): €0.

Total annual income tax: €410.

Comparison — direct joint ownership, micro-BIC, no depreciation: net taxable income would be €14,000 (€18,000 − €4,000 with the micro-BIC 71% allowance, the result could differ; under real expenses without depreciation, taxable income is €14,000). Split by thirds: Thomas owes approximately €1,400, Julien approximately €513, Marie €0. Total: approximately €1,913.

The difference is driven almost entirely by depreciation deductions, which the micro-BIC flat-rate allowance and direct individual ownership cannot replicate.

Important caveat on exit: depreciation deducted over the years reduces the asset's book value (valeur nette comptable). When the property is eventually sold, the taxable capital gain is calculated on that reduced book value — not on the original purchase price. The tax saving at entry creates a corresponding exposure on exit. This is routinely underestimated.

Our standard approach on family structure files:

1. Map all intended shareholders against the article 239 bis AA list: direct-line relatives, siblings, spouse, PACS partner. Any doubt at this stage is a red flag.
2. Qualify the activity: commercial, craft, industrial or agricultural? Furnished letting on a habitual basis qualifies; unfurnished letting does not.
3. Model each shareholder's personal tax position: marginal rate, other income, household situation. The partnership regime benefits low-rate shareholders most; it can be neutral or mildly negative for high-rate shareholders who prefer IS and dividend control.
4. Run a real expenses BIC simulation: depreciation schedule, deductible costs, net taxable profit per shareholder over 10–15 years.
5. Draft robust share transfer restrictions: pre-emption clauses, approval procedures for any transfer, consequences of shareholder death or divorce.
6. Model the exit: capital gain calculated on net book value, IR treatment (no long-term gain relief under professional BIC), potential instalment treatment.
7. Compare with alternatives: direct ownership, standard SARL, SCI at IS, over the intended holding period.

Two recurring profiles come through our door.

Profile one — furnished property project. The family wants to avoid the complications of joint ownership (indivision), access depreciation deductions, and organise succession. The family SARL at IR is often the right answer — but only if the real BIC regime genuinely outperforms simpler alternatives. For modest rental income with limited depreciation potential, the advantage narrows. Our LMNP accounting team supports set-up and annual compliance: see comptabilité LMNP Paris.

Profile two — commercial or craft family business. A restaurant, a retail shop, a craft workshop. Here the primary question is governance: who decides what, how are profits shared, what happens if one member wants to exit? The family SARL provides the legal shell; the articles of association must do the rest. Poorly drafted articles in a family business context are a recurring source of dispute.

In both profiles, the most underestimated risk is the exit tax position. The IR election is attractive at entry; the sale — perhaps twenty years later — is calculated on the depreciated book value, which may be a fraction of the market price. The tax due at exit can be substantial.

For a tax strategy review specific to your situation, our firm's fiscal advisory team is available: expert-comptable fiscalité Paris.

• Setting up the structure for a civil or liberal professional activity. The IR election does not apply; the company reverts to IS and the expected benefit disappears.
• Omitting robust pre-emption clauses. Without them, a shareholder can transfer shares to an outsider, ending the IR election without any warning.
• Focusing only on annual tax. The exit capital gain, calculated on net book value after years of depreciation, is often larger than anticipated.
• Confusing a family SARL with a SCI. Fundamentally different structures with different activities, different tax rules, and different treatment of furnished letting.
• Failing to plan for family events. Divorce, death, and the dissolution of a PACS can break the eligible perimeter at a fiscally inconvenient moment.
• No governance framework. Families can invest together in good faith and still reach an impasse on management decisions without a written protocol.

• The flat tax (PFU) on dividends rose to 31.4% from 1 January 2026 (12.8% income tax + 18.6% social levies, up from 30%). This marginally increases the relative attractiveness of the IR partnership regime for low-rate shareholders, as dividend distributions from an IS company now cost more.
• Capital gains on professional BIC assets follow rules distinct from private real estate gains: no long-term taper relief for duration of ownership, but potential instalment treatment. Model this carefully on your projected exit.
• Micro-BIC thresholds for 2026–2028 have risen to €203,100 for accommodation activities. For a modest furnished rental, compare the micro-BIC simplicity against the real BIC regime in a family SARL before committing to the structure.

• All shareholders fall within the article 239 bis AA eligible circle
• The planned activity is commercial, industrial, craft or agricultural
• A 10–15 year IR simulation has been produced per shareholder
• The exit capital gain has been modelled on net book value
• Articles of association include pre-emption and approval clauses
• Family life events (divorce, death, PACS dissolution) have been stress-tested
• At least one alternative structure has been compared over the full holding period

See also: SARL ou SAS: which structure for your project? — Legal obligations at incorporation

This article is for information purposes only and was last updated on 29 May 2026. It does not constitute personalised tax or legal advice. Any structural decision requires review of your specific situation, documents, and applicable law at the time of incorporation. Sources: CGI art. 239 bis AA (Légifrance), Entreprendre.service-public.fr.