French SARL (LLC) Tax Regime 2026: IS vs IR, Manager Remuneration & Dividends

The SARL (Societe a Responsabilite Limitee, equivalent to a French LLC) is the most commonly used legal form in France for SMEs and entrepreneurs. Its flexibility, the protection of the partners' personal assets and its well-documented tax framework make it a preferred choice.

In 2026, the SARL's tax regime has several important characteristics that are essential to understand in order to optimize the overall tax burden of the manager and the company. The choices made at the time of creation (tax regime, manager status, remuneration policy) have lasting impacts.

This complete guide covers all tax aspects of the SARL in 2026: IS vs IR regime, manager status, remuneration, dividends and filing obligations.

SARL = IS by Default

By default, the SARL is subject to corporation tax (IS). This is the standard regime for all capital companies.

Advantages of the IS regime for the SARL:

• Undistributed profits remain in the company and are only taxed at 25% (or 15% for SMEs on the first 42,500 €);
• The manager's remuneration is deductible from the company's taxable profit;
• Possibility of depreciating investments and building up deductible provisions;
• Access to tax credits (CIR research tax credit, CII innovation tax credit...) and exemption from capital gains on investment securities.

Disadvantages:

• Double taxation in the event of dividend distribution (IS at company level + PFU/IR at partner level);
• Company losses cannot be offset against the partners' personal income.

IS Rates Applicable to a SARL in 2026

Conditions for the IR Option for Newly Created SARLs

A SARL can opt for income tax (IR) during its first 5 years of existence (the option is revocable once only), subject to the following conditions:

• The company carries out a commercial, craft, agricultural or liberal activity;
• It employs fewer than 50 employees;
• Its revenue or total balance sheet is less than 10 million euros;
• Its shares are not listed on a stock exchange;
• The capital is held at 50% minimum by natural persons (with at least 34% by the manager or members of their family).

Benefits of the IR Regime for a SARL

Under the IR regime, the SARL's profits or losses are directly taxed at partner level, proportionally to their share of capital, as in a general partnership (SNC).

Main benefit: In the event of losses in the first years, the partners can offset these losses against their personal income, which can generate an immediate tax saving.

Limitations: If the company becomes profitable, the partners are taxed personally on their share of profits even if they do not distribute them. The tax rate can be high if the partner's personal marginal tax rate (TMI) is significant.

The Majority Manager: Self-Employed Worker (TNS)

The majority manager (holding more than 50% of the shares, alone or with family members) is a self-employed worker (travailleur non-salarie, TNS). They contribute to the Securite Sociale des Independants (SSI, managed by URSSAF) on their remuneration.

Tax regime for their remuneration:

• Subject to IR in the category of wages and salaries (traitements et salaires);
• Deductible from the SARL's taxable profit (like an ordinary salary);
• Deduction for actual expenses or standard 10% deduction.

Dividend reminder: Dividends paid to the majority manager exceeding 10% of the capital + share premiums + current account (CCA) are subject to TNS social contributions. This rule is specific to the SARL structure.

The Minority or Equal Manager: Employee-Equivalent (Assimile-Salarie)

The minority or equal manager (50% or fewer shares) is an assimile-salarie (employee equivalent). They fall under the general Social Security scheme.

Key differences with the majority manager:

Remuneration = Deductible Expense for the SARL

Remuneration paid to the manager is deductible from the SARL's taxable profit under two conditions:

1. It corresponds to actual work performed;
2. It is not excessive in relation to the functions carried out.

Remuneration deemed excessive by the tax authorities during an audit can be re-integrated into the taxable profit.

Setting the Right Remuneration Level

The optimal level of remuneration depends on several parameters:

• The partner's personal marginal tax rate (TMI);
• The company's forecast profit (IS base);
• The level of TNS social contributions generated;
• The desired dividend distribution policy.

General principle:

• Increasing remuneration → reduces the company's IS but increases social contributions and personal IR;
• Reducing remuneration → increases IS but reduces social contributions and personal IR.

The optimum is generally found by balancing remuneration and dividends.

Dividend Taxation for Individual Partners

Dividends received by an individual partner are subject to the Prelevement Forfaitaire Unique (PFU, flat tax) of 30% (12.8% IR + 17.2% social charges), or on a global IR election with a 40% allowance and deduction of 6.8% CSG.

The 10% Rule for Majority SARL Managers

For majority managers, dividends exceeding 10% of paid-up share capital + share premiums + current account balance are subject to TNS social contributions, in addition to dividend income tax.

Possible strategy: Maintain the cumulative capital + current account at a sufficient level so that the 10% threshold absorbs the desired dividends.

Accounting and Annual Accounts

Every SARL is required to:

• Maintain regular accounting with journals, general ledger and inventory;
• File its annual accounts (balance sheet, income statement, notes) with the commercial court registry within 7 months of the financial year-end.

SARLs qualifying as small companies can benefit from account confidentiality (non-publication of the income statement).

SARL Fiscal Calendar (December year-end)

• The SARL is subject to IS by default; an IR option is possible for 5 years under specific conditions;
• The IS reduced rate of 15% applies to the first 42,500 € of profit for eligible SMEs;
• The majority manager is TNS; the minority manager is an assimile-salarie;
• The manager's remuneration is deductible from the company's IS;
• Dividends exceeding 10% of capital are subject to TNS social contributions for the majority manager.

(Sources: impots.gouv.fr IS, Service-Public.fr SARL, entreprendre.service-public.fr, Legifrance C. com.)