There are several legal structures available in France for establishing a solo business, including microbusinesses, SASUs, and EURLs. But what is a EURL (also known as “SARL unipersonnelle,” “SARL à associé unique” and “SARLU”)? What are its advantages, and how does it work?

In this guide, we will explain what a EURL is, how it works, its tax regime, and how to set one up. You can find out more about the SASU, or société par actions simplifiée unipersonnelle, in our other article on the topic.

What’s in this article?

• What is a EURL?
  
• What are the main features of a EURL?
  
• Share capital
  
• How does a EURL work?
  
• What tax regime does a EURL fall under?
  
• Social security for EURL managers
  
• What are the advantages of a EURL?
  
• What are the disadvantages of a EURL?
  
• How do you set up a EURL?
  
• Transferring a EURL
  
• What are the differences between EURL and SASU?
  

What is an EURL?

A single-owner limited liability company, or EURL (from the French “entreprise unipersonnelle à responsabilité limitée”), is a type of limited liability company (SARL) (from the French “société à responsabilité limitée”) that has just one shareholder owner. The sole shareholder of an EURL can be a person or a legal entity such as a company or an association.

What are the main features of an EURL?

Like the SARL, the EURL is suitable for a wide range of businesses, including commercial, craft, and industrial activities, as well as certain unregulated professions.

Changing from an EURL to a SARL is straightforward as both are the same legal form; the EURL is simply a SARL with one owner, so the business of the company remains unaffected by the change in status. Similarly, a SARL can be converted into an EURL if one person ends up holding all the shares, either because others withdraw or die.

Share capital

The share capital of a EURL is freely determined by the shareholder. The financial liability of the sole shareholder is limited to their contribution to the share capital, whether in cash or in kind. However, if they also manage the company, their liability may exceed the amount they have contributed.

The shareholder receives shares based on how much they have contributed. These shares give them rights to information, dividends, and legal action.

When a EURL is formed, at least 20% of the cash contributions must be paid into the company’s bank account. The balance must be paid within five years. The shareholder must appoint an auditor if a contribution in kind exceeds €30,000, or if the total value of the contributions in kind is more than half of the share capital.

How does an EURL work?

The EURL is managed by one person, who must be an individual. They are responsible for all management tasks on behalf of the company, such as signing contracts, hiring employees, and managing legal formalities. The shareholder may perform this role themselves or delegate it to a third party.

Be aware that any decision taken against the interests of the EURL may be considered mismanagement. The EURL cannot grant loans or overdrafts to the manager or guarantee the manager’s personal obligations to third parties.

The sole shareholder makes all decisions regarding the operation of the EURL. Each decision must be documented in a special register, which must be kept for a period of six years.

If a third party becomes the manager, its powers may be limited by the articles of association established by the shareholder. The non-shareholder manager is responsible for approving the financial statements and distributing profits.

What tax regime does a EURL fall under?

The tax status of a EURL depends on the status of its sole shareholder.

If the sole shareholder is an individual

If the sole shareholder is an individual, EURL profits are taxed as income (IR, from the French “impôt sur le revenu”), either as industrial and commercial profits (BIC, from the French “bénéfices industriels et commerciaux”) or non-commercial profits (BNC, from the French “bénéfices non commerciaux”). If the EURL is subject to income tax and the shareholder is also the manager, the EURL can choose the microbusiness tax regime (micro-BIC or micro-BNC) if its annual sales (excluding value-added tax, or VAT) do not exceed:

• €188,700 for commercial and hospitality activities.
  
• €77,700 for services and liberal professions.
  

EURLs can also choose to pay corporate income tax (IS, from the French “impôt sur les sociétés”).

If the sole shareholder is a legal entity

If the sole shareholder is a legal entity, the EURL is automatically subject to corporate income tax.

You can simplify your tax processes with Stripe Tax, an automated tool that speeds up tax calculation, collection, and payment. Stripe Tax also provides detailed reports on your transactions and income for the year, all without you having to write a single line of code.

Social security for EURL managers

If the sole shareholder is also the manager of the EURL, they are covered by the social security system for self-employed workers. Occasionally, if the manager is a paid third party, they are considered an “assimilated employee” and are covered by the general social security system.

What are the advantages of a EURL?

As a one-person company, the EURL offers many advantages to its owner, such as:

• Establishment without additional owners
  
• Simplified management (since decisions are made unilaterally)
  
• Financial liability limited to the amount of contributions
  
• Simple transition to a SARL
  
• Choice of tax regime
  
• Possibility of choosing the microbusiness tax regime
  

What are the disadvantages of a EURL?

EURLs can also have drawbacks:

• Strict operating regulations imposed by the French Commercial Code
  
• Complicated and expensive formalities for a small business
  

How do you set up a EURL?

The process of setting up a EURL is similar to that of a SARL and involves five stages:

1. Drafting the articles of association, a mandatory document that details the company’s operating procedures (you can download a EURL articles of association template)
   
2. Choosing a registered office (i.e., the domicile of the EURL)
   
3. Establishing the share capital and depositing it in the business’s bank account
   
4. Publishing a notice of incorporation in a legal gazette (JAL, from the French “journal d’annonces légales”)
   
5. Registering your EURL online via the business formalities portal (visit the French government website to find out how to register your EURL)
   

Costs of setting up an EURL

Setting up a EURL can be costly. For example, hiring a legal professional to draft the articles of association could cost you between €1,500 and €2,000. If you use a legal platform, you might expect to pay €200. You can draw up the articles of association yourself, free of charge.

If you need to hire a contribution auditor, expect to pay between €500 and €3,000. In 2024, the fee for publishing a EURL incorporation notice is €121.

The cost of registering a EURL depends on the nature of the business: for commercial activities, you can expect to pay €37.45, plus an additional €15 for craft activities. You’ll also have to pay a fee of €21.41 to declare the beneficial owners of the business when you register.

Finally, the cost of domiciling your business will vary depending on the option chosen. In general, designating the manager’s residential address as the head office is free. However, a business incubator, a domiciliation company, or commercial premises will likely cost more.

Transferring a EURL

Transferring shares to a family member or a third party is unrestricted. To go ahead with the transfer, you must:

• Obtain a signed or notarised share transfer deed
  
• Register the deed with the tax authority
  
• Amend the articles of association and file them online with the business formalities portal
  

All purchasers must pay a registration fee to the tax authorities. As with a SARL, this fee is 3% of the transfer price, less €23,000 multiplied by the number of shares transferred and divided by the total number of shares in the EURL.

[Sale Price - (23,000 x Number of Shares Transferred ÷ Total Number of Shares)] x 0.03

An example: you sell 70 of your shares for €70,000. The EURL’s share capital is divided into 200 shares. The registration fee is:

[70,000 - (23,000 x 70 ÷ 200)] x 0.03 = €1,858.50

Note that the sole shareholder can transfer part of their shares to a new partner. When one or more new partners join, the EURL becomes a SARL.

What are the differences between EURL and SASU?

SASUs are also single-owner companies. While the manager of a EURL must be an individual, a SASU can be managed by a legal entity such as an association or a company.

A SASU is a capital company, meaning that its capital is divided into shares. A EURL, on the other hand, is made up entirely of shares. The registration fees for a SASU are set at 0.1% of the transfer price of the shares, while the registration fees for shares with an EURL are set at 3% of the transfer price after a €23,000 allowance.

When a SASU is formed, half of the cash contribution must be deposited into the company’s bank account. However, for a EURL, only a minimum of 20% of the cash contribution must be paid at the time of incorporation.

A SASU is automatically subject to corporation tax (IS), but it may opt to be taxed under personal income tax (IR). Additionally, its manager is treated as an employee, allowing them to benefit from the general social security system.