French SARL Tax Regime 2026: Corporate Tax by Default or Income Tax Election

The SARL tax regime is corporation tax by default: 15% on the first 42,500 € of profit for eligible SMEs, then 25%. Two income tax elections exist: article 239 bis AB (company less than five years old, five non-renewable financial years) and the family SARL (article 239 bis AA), with no time limit.

The SARL (Societe a Responsabilite Limitee, close to a French LLC) remains one of the most widespread legal forms in France, although the SAS has overtaken it for new incorporations: in 2025 Insee recorded 210,418 SAS incorporations (69.8% of new companies) against 72,824 SARLs (24.2%). The choice between the two forms is covered in our comparison SARL or SAS and in our guide SAS, SASU, SARL, EURL. 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 to the participation-securities regime: long-term capital gains are taxed at 0%, subject to adding back to the profit taxed at the standard rate a 12% share of costs and expenses computed on the gross gain (article 219, I-a quinquies CGI). This is a near-exemption, not a full exemption.

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#

Worked example: 60,000 € of profit#

An SME-qualifying SARL reports 60,000 € of taxable profit over a twelve-month financial year.

Under the income tax election, the company pays no corporate tax at all: the 60,000 € are taxed directly in the partners' hands, in proportion to their shareholdings and in the industrial and commercial profits (BIC) category, whether distributed or not. The trade-off therefore turns on the partners' marginal tax rate and on the share of profit actually drawn. The rates themselves are detailed in our article on corporate tax: rates and instalments 2026.

That trade-off can be costed, and so can putting it in place. We set out what the bookkeeping of a French SARL actually represents, depending on whether it falls under corporate income tax or the income tax election, in our article on what an accountant costs for a SARL.

Conditions for the IR Option for Newly Created SARLs (article 239 bis AB CGI)#

A SARL created less than five years before the opening of the first financial year of application can opt for income tax (IR). The election is made with the agreement of all the partners and notified to the tax office within the first three months of the first financial year to which it applies. It is valid for five financial years and cannot be renewed; the company may waive it by notice given within the first three months of the financial year from which the waiver applies. After any early exit from the regime, whatever the reason, the company can never opt again (article 239 bis AB CGI). Conditions to be met:

• 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 and the voting rights are held at least 50% by one or more natural persons, and at least 34% by one or more persons acting as manager (or chairman, chief executive officer, chair of the supervisory board, member of the management board) or by members of their tax household within the meaning of article 6 CGI.

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.

Two distinct income tax elections#

The family regime and the conditions for keeping it are covered in our dedicated article: the family SARL.

The Majority Manager: Self-Employed Worker (TNS)#

The majority manager (holding more than 50% of the shares together with their spouse or PACS partner and their unemancipated minor children, the test also applying collectively across the board of managers) 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:

• Taxed under personal income tax in the specific category of article 62 CGI, the net taxable amount being computed under the rules applicable to wages and salaries, after deducting the contributions and premiums of article 154 bis;
• 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.

Social status therefore does not depend on the tax regime chosen but purely on shareholding: the majority manager pays personal self-employed contributions to Urssaf, while the minority manager is paid through a payslip. Neither accrues unemployment insurance rights in respect of their corporate office.

A detailed comparison of the two statuses, contribution by contribution, is covered in our dedicated article: majority or minority SARL 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 trade-off depends on the partner's marginal tax rate, the company's forecast profit and the level of contributions generated: increasing remuneration reduces the corporate tax base but adds social contributions and personal income tax, while reducing it produces the opposite effect. This optimisation calls for a case-by-case computation, which our company director remuneration simulator supports.

The company's tax regime governs how distributions are treated. Under corporate tax, dividends are not deductible from taxable profit and bear a second layer of tax in the individual partner's hands, at the 31.4% flat tax (PFU) or, on a global election, at the progressive income tax scale. Under the IR election there is no second layer: the partner has already been taxed on their share of the profit, whether or not they drew it.

One rule specific to the SARL weighs on that trade-off: the portion of dividends accruing to the majority manager that exceeds 10% of a reference amount made up of the share capital, share premiums included, plus the balances of the partner current accounts is subject to self-employed social contributions (article L136-3, II, 2° of the Social Security Code).

How that base is computed, the choice between the flat tax and the progressive scale and the interaction with remuneration are covered in our dedicated article: SARL dividend taxation.

Accounting and Annual Accounts#

Every SARL is required to:

• Maintain regular accounting with journals, general ledger and inventory;
• Have its annual accounts (balance sheet, income statement, notes) approved by the partners' meeting within six months of year-end (article L223-26 of the Commercial Code), then file them with the registry within one month of approval, extended to two months where filing is electronic (article L232-22 of the Commercial Code).

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

SARL Fiscal Calendar (December year-end)#

Which returns to file under each tax regime#

• The SARL is subject to corporate tax by default; two income tax elections coexist: article 239 bis AB CGI (company created less than five years ago, valid for five financial years and non-renewable) and the family SARL of article 239 bis AA CGI (with no time limit);
• 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: article 239 bis AB CGI; article 239 bis AA CGI; article 219 CGI; article 1668 CGI; article L232-22 of the Commercial Code; article L136-3 of the Social Security Code; service-public.fr, SARL taxation.)