Taxation Solutions in Regards to the Company Liabilities

In this article, we inform you about the taxation of the current income of sole associated managers of EURL (remuneration, dividends, professional profits, interest on the partner’s current account), distinguishing EURL from corporate tax (IS) of EURL to income tax (IR), as well as to the tax liability of non-associated managers of EURL.

We will not discuss the tax taxation of sales of shares, this point is addressed here: the taxation of capital gains on the sale of shares.

Taxation of sole associate managers of EURL to IS

When a EURL is with corporate tax, the sole associate manager is likely to receive various income which will be subject to income tax in its name: remuneration, dividends and interest calculated on the sums it contributes through his associate current account.

The taxation of remuneration

Remuneration paid to the sole associate manager constitutes income taxable to income tax in the category of salaries and wages, and more specifically in the category of remuneration paid to the manager (article 62 of the CGI).

The manager benefits from a reduction for professional expenses which is, at choice, either fixed and equal to 10%, or calculated on the actual expenses (which must be supported by supporting documents).

Taxation of the manager’s dividends

Dividends received by the sole associate manager of EURL are automatically taxed at the one-off lump-sum deduction of 30%, of which 12.80% is income tax. The deduction is made at source by the paying institution. Use the tax return estimator to find out the amount.

The levy is not final in terms of income tax, its amount is charged to the single flat-rate tax of 12.80% applied to income from movable capital and capital gains on the occasion of the calculation of annual income tax. As the rates are equivalent, no tax adjustment takes place on income subject to the single flat-rate deduction.

On an express and irrevocable option, the manager may opt for the taxation of dividends at the progressive scale of income tax. A non-discharging income tax deposit, calculated at the rate of 12.80% on the amount of dividends, is made at source. A 40% allowance   is applied to the amount of gross dividends to determine the amount of the taxable dividend.

For more information, you can consult this file: the taxation of dividends from individuals.

Taxation of interest on the manager’s partner current account

The terms of taxation of shareholder current account interest paid to the sole shareholder of EURL are the same as those applicable to dividends.

The sole associate manager is personally taxed to the IR:

  • on the amount of his remuneration in the salary and wages category,
  • on the amount of its dividends in the category of income from movable capital,

On the amount of his partner’s current account interest in the category of income from movable capital.