SAS or SARL : Which legal structure should you choose for your company in France?
SAS and SARL are the two most commonly used corporate forms in France. These two companies are commercial structures, with limited liability, each with its own particularities. The SARL’s operation is largely regulated by law, contrary to the SAS whose operation is more flexible, since it is largely determined by the partners (very free drafting of statutes). We propose you to find hereafter a comparison of the main legal, fiscal and social characteristics of these two structures. You will then be able to determine which of these two companies is right for you!
Legal structure in France: Constitution
The number of partners
Each of these two companies has the possibility of being constituted by a single partner, which is called a single-member company. The SARL is then called “Société à Responsabilité limitée à associé unique” and the SAS becomes a SASU “Société par actions simplifiée à associé unique”.
The two legal forms vary, however, with regard to the maximum number of partners: the SARL sets it at 100, while the SAS can have an unlimited number of shareholders.
Name of the partners and managers
The founders of a SARL are called “partners”, the shares of this company being social shares, whereas the partners of a SAS are “shareholders”, the company being made up of shares.
A SARL will have a Manager and a SAS will be headed by a President.
Apart from these differences in name, there are no real editorial differences between these two types of structure on :
– The obligation to write statutes,
– The quality of the partners,
– The life of the company,
– The authorized activities,
– The contributions to the social capital.
As for the formalities of constitution, they are identical for both companies. The deposit of the capital must give rise to an original certificate of deposit provided by the banking establishment summarizing the contributions of each partner.
The M0 declaration must be filed with the trade and companies register.
As indicated above, the qualification of the managers is different according to the structures: the SARL is managed by a “Manager” whereas the SAS will have a “President”.
A SARL can be managed by one or more managers, appointed in the articles of association or by separate deed, and who can only be natural persons.
A SAS is managed by a single President, a natural or legal person appointed under the conditions set by the articles of association, and by any other body freely constituted by the partners. If necessary, the shareholders of the SAS can also appoint a Chief Executive Officer and a Deputy Chief Executive Officer, in addition to the function of Chairman.
The president of the SAS and the manager of the SARL both represent the company in relation to third parties and any clauses in the articles of association limiting their powers are not enforceable against them.
The social status of SAS and SARL managers
It is on this point that the difference between the two legal structures is the most important, and in particular in small structures with a very limited number of partners.
The majority manager in a limited liability company
In a limited liability company, the manager is said to have a majority of the shares if he holds more than 50% of the shares, counting not only his own shares but also those held by the other members of his tax household. Example: Mr. Xavier is the manager of the company Tartuffe. He owns 40% of the company’s capital, his wife 20%, and his cousin the remaining 40%. Is he the majority manager? Yes, because to assess the majority, the shares held by his wife must also be taken into account, i.e. 40% + 20% = 60%.
This notion is important because in SARL, the majority manager comes under the social regime of the “Non-Salaried Workers” and depends on the Social Security for the Self-Employed (ex-RSI).
His social charges represent on average 45% of his remuneration, with application of minimum flat-rate contributions of about 1,200 €. This means that a majority manager who does not pay himself any remuneration is still liable for these minimum flat-rate contributions.
Under the TNS regime, social security contributions are applied to his remuneration (salary equivalent) but also on the share of dividends that he receives in excess of 10% of the share capital*. The share of dividends subject to social security contributions is determined as follows
* Dividends paid – (10% * (% of the share capital + sums paid into the partner’s current account + issue premiums)
The minority manager in a SARL
When the manager holds less than 50% of the shares of the SARL, he is no longer dependent on the regime of the “Travailleurs Non-Salariés”, he is assimilated to an “employee”. He receives a salary each month, and is given a pay slip. The dividends he receives are not subject to social security charges.
The Chairman in SAS
In SAS, whether the director is a minority or majority shareholder or even the sole shareholder (SASU), he is considered as an “employee”. He therefore receives a salary each month, and the dividends he receives are not subject to social security contributions.
Under the “employee” system, social security contributions include employee and employer contributions. Overall, the total of these charges is considered to represent on average 80% of the net compensation.
At the social level, and considering a majority manager, the two legal forms thus present a very different social functioning:
- In SARL, the manager depends on the TNS regime. The social charges represent on average 45% of his net remuneration. On the other hand, dividends are also included in the calculation basis.
- In SAS, the rate of charges is higher, representing on average 80% of the manager’s net salary. On the other hand, dividends are exempt from social charges.
NB: in France, dividends are subject to a flat tax of 30% (Prélèvement Forfaitaire Unique – PFU).
The SARL and the SAS are two companies whose profits are subject to corporate income tax, however it is possible, in both cases, to exercise an option for income tax.
However, the SAS can only exercise this option for income tax during the first 5 years following its creation. After this period, it will be subject to corporate income tax.
What is the corporate tax rate in France?
As of January 1, 2022, the corporate tax rate in France will increase to 25%.
Reduced rate of 15% on the first €38,120 of profits:
Two cumulative criteria:
– Turnover before tax less than €7.63 million
– Capital fully paid up and at least 75% owned by individuals (or by a company applying this criterion).
Legal auditing of accounts
In these two structures, a statutory auditor is mandatory when 2 of the 3 following thresholds are crossed
– Total turnover excluding taxes higher than 8.000.000 €.
– Total balance sheet of more than 4.000.000 € in SARL
– 50 employees.
In addition, a statutory auditor must be appointed whenever a SAS is controlled by another legal entity.
Transfers of SARL and SAS shares
The regime of SAS transfers is much more flexible and advantageous than that of SARLs:
Transfers of SARL shares are recorded by private deed or notarial act.
They are subject to a registration fee of 3%, after a deduction of €23,000 (in proportion to the percentage of ownership of each partner).
Sales of SAS shares are recorded by a simple transfer from one account to another and are subject to a 0.1% registration fee.
In addition, transfers of SARL shares are subject to a mandatory approval procedure when the purchaser is a third party, failing which the transfer may be declared null and void.
In the SAS, nothing is provided in this respect and the partners may decide to set up an approval procedure if they consider it useful, and to arrange it as they see fit.
|Number of partners||1 to 100||1 to unlimited|
|Liability||Limited to contributions||Limited to contributions|
|Status to be written||Yes||Yes|
|Company’s lifetime||99 years old with possible renewal||99 years old with possible renewal|
|Corporate object||All possible and legal activities||All possible and legal activities|
|Head office||Mandatory, possibility to fix it at the manager’s home||Mandatory, possibility to fix it at the domicile of the president or any other officer having the power to legally represent the SAS|
|Share capital||No minimum, contribution in cash and in kind||No minimum, contribution in cash and in kind|
|Company’s assets||Company’s own assets||Company’s own assets|
|Decision-making||Powers distributed between the management and the partners’ meeting||Powers distributed between the directors and the partners’ meeting|
|Manager||Manager (one or more)||Chairman + other possible bodies (general manager, deputy general managers…)|
|Control bodies||No||Can be set up statutorily|
|Commissaire aux comptes dès la création||No||Mandatory in case of control of one or more companies or if controlled by one or more other companies|
|Share capital||No statutory minimum or maximum||No statutory minimum or maximum|
|Securities comprising the share capital||Share capital divided into shares, all of the same class||Share capital divided into shares, with several possible categories|
|Variable capital||Possible, clause to be inserted in the articles of association||Possible, clause to be inserted in the articles of association|
|Cash contributions||Release of at least one fifth upon incorporation, then the balance within 5 years||Release of at least half upon incorporation, then the balance within 5 years|
|Contributions in kind||Possible but do not contribute to the formation of share capital||Possible but do not contribute to the formation of share capital|
|Directional mode||One or more managers||A president is mandatory + other possible bodies (general manager, deputy general managers, committee, board of directors…)|
|Who can be a leader?||Manager must be an individual, partner or not||The director may be a natural person or a legal entity, whether or not he or she is an associate. An age limit may be provided for in the articles of association|
|Appointment||By associates||Provided for in the articles of association|
|Powers vis-à-vis the partners||Statutory limitations possible, but not enforceable against third parties||Limitations statutaires possibles, mais inopposables aux tiers|
|Remuneration and benefits in kind||Remuneration can be composed of a fixed salary, a variable or both, no minimum salary imposed, benefits in kind possible. No pay slip required||Remuneration can be composed of a fixed salary, a variable or both, no minimum salary imposed, benefits in kind possible. A pay slip is required.|
|Social status of the manager||Self-employed person (TNS) if majority management, assimilated employee in other cases||Similar to employee|
|Minimum contributions||Minimum contribution to be paid in the absence of income or in case of deficit if TNS regime||Calculation of the social charges of the manager|
|Calculation of the social charges of the manager||On the profits (IR with majority manager), on the remuneration + part of the dividends (IS with majority manager), on the remuneration (non-partner, minority or equal manager)|
The part of the dividends exceeding 10% of the following total : (share capital + contributions in partner’s current account + issue premiums) is subject to the social contributions of the TNS regime
|On salaried remuneration only|
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Déborah Zerbib has several years of experience in the field of personal and international taxation after a Master II specialized in Tax Law.