French SAS & SASU under personal income tax: watch out for the (new) hidden social contribution cost on profits
- Jun 17
- 7 min read
For a French SAS or SASU, electing to be taxed under the personal income tax regime may look attractive. It allows the company’s profit, under certain conditions, to be taxed directly in the hands of the shareholders, instead of being taxed at the company level under corporate income tax.
But a ministerial response published on June 2, 2026, has brought attention back to a point that is often underestimated: when the shareholder-president of a SAS or SASU taxed under the personal income tax regime does not receive a formal salary, the profit taxed in their own name may be subject to French social contributions on investment income.
Since 2026, the general rate of these social contributions has reached 18.6%.
For business owners who elected personal income tax treatment to optimize their tax position in the early stages of the company, this issue deserves a closer look. The question is not only tax-related. It also affects the founder’s compensation, the applicable social security treatment, and the actual cost of electing personal income tax.
SAS or SASU taxed under personal income tax: what does it mean?
By default, a French SAS — Société par actions simplifiée, or simplified joint-stock company — and its single-shareholder version, the SASU, are subject to corporate income tax.
In that standard setup, the company pays corporate income tax on its profit. Any amounts later paid to shareholders or to the company’s president are then taxed according to their nature: salary, dividends, and so on.
However, under certain conditions, some corporations, including SAS and SASU entities, may temporarily elect to be taxed under the partnership regime.
In practice, this means the profit is no longer taxed at the company level. Instead, it is taxed directly in the hands of the shareholders, under the tax category that corresponds to the company’s activity: commercial profits, non-commercial profits, or agricultural profits.
This option can be useful in some cases, especially when a company is just starting out, expects limited profits, records losses, or when direct taxation at the shareholder level appears more favorable than corporate income tax.
But the election is strictly limited. It can only apply for a maximum of five fiscal years. That means it should always be modeled carefully: what makes sense in the short term may become less attractive once the business grows, profits increase, or the founder’s compensation structure changes.
The sensitive case: the unpaid shareholder-president
The issue often arises in a fairly common situation: a SASU elects personal income tax treatment, the sole shareholder-president does not pay themselves any formal compensation for their role, and the company’s profit is taxed directly in their own name.
Many business owners then assume the following: since the profit is taxed under a professional income category, such as commercial or non-commercial profits, it should also be treated as professional income for social contribution purposes.
That reasoning is understandable. But it is not the position taken by the French tax and social authorities.
In the Bergantz ministerial response dated June 2, 2026, the French government confirmed that when the shareholder-president of a SAS or SASU taxed under the personal income tax regime receives no formal compensation for their corporate office, the entire taxable profit allocated to them is subject to social contributions on investment income.
In other words, even if the founder is personally and directly involved in running the business, the profit allocated to them may still be subject to the social contributions usually applicable to investment income. Since 2026, this represents a general rate of 18.6%.
Why can this profit be treated as investment income?
The key point is a distinction that is often misunderstood: the tax classification of income and its social security classification are not always the same.
For tax purposes, the share of profit allocated to the shareholder-president may fall under a professional income category, depending on the company’s activity. But for social contribution purposes, the authorities mainly look at the status of the person receiving that income.
The president of a French SAS or SASU is affiliated with the general employee-like social security regime only when they receive formal compensation for their corporate office.
Without compensation, there are no social security contributions due under the general regime on a president’s salary. At the same time, the president of a SAS is not treated as a self-employed worker simply because of their legal role.
As a result, the profit does not fall within the scope of social contributions on earned income. The authorities therefore consider that it falls within the scope of social contributions on investment income.
That is exactly where the risk lies. The founder may feel that the income comes from their own work, especially when they are actively running the business. But from a social security perspective, the absence of formal compensation changes the treatment.
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Why the comparison with a French SARL taxed under personal income tax does not always workPart of the confusion comes from comparisons with other French legal structures.
In a family-owned SARL taxed under the personal income tax regime, for example, a majority managing director is usually treated as a self-employed worker. Their share of the company’s profit may therefore be treated as earned income and subject to self-employed social security contributions.
The situation is different for the president of a SAS.
The president of a SAS is treated as an employee-like executive when they are paid. They do not become self-employed simply because the company has elected personal income tax treatment. And if they receive no compensation, they are not affiliated with an earned-income social security regime through their corporate office.
This difference in legal and social status explains the less favorable treatment confirmed by the ministerial response. The same business activity can therefore lead to different social contribution outcomes depending on the legal form of the company and the status of its director.
What are the consequences for SASU founders taxed under personal income tax?
The first consequence is clear: the reassessment risk is now stronger
The ministerial response does not create a new legal rule, but it publicly confirms the position of the French authorities. For SAS and SASU entities taxed under personal income tax whose shareholder-president has not received formal compensation, the authorities now have a clear basis to justify applying social contributions on investment income to the company’s profits.
The second consequence concerns compensation planning
One possible approach is to provide formal compensation for the president’s corporate office. That compensation brings the founder within the general employee-like social security regime for the amounts paid.
But this comes at a cost. Social security charges on the compensation of a SAS president are generally higher than the 18.6% social contributions applied to investment income.
The right decision is therefore not to automatically choose between “no salary” and “high salary.” Several scenarios need to be modeled: executive compensation, taxable profit, personal income tax, social charges, available cash flow, social protection for the founder, and the remaining duration of the personal income tax election.
The third consequence concerns the relevance of the personal income tax election itself
The election is temporary. It cannot apply for more than five fiscal years. A company approaching the end of that period must therefore anticipate its return to corporate income tax and assess the impact on founder compensation, potential dividend distributions, and cash flow.
An election that made sense at the start of the business may become less relevant once the company reaches a higher level of profitability.
A ministerial response is not a court ruling
One point should be made clear: a ministerial response does not have the same legal force as a statute or a court decision. It expresses the government’s interpretation. It provides a strong indication of the position likely to be taken by the authorities. But it does not settle every possible situation definitively.
The position can therefore still be debated, especially in cases where the founder is genuinely, personally, and continuously involved in the company’s activity. That is where the difficulty lies: income may be classified as professional income for tax purposes while still being treated as investment income for social contribution purposes.
For a business owner, however, the issue should not be approached as a theoretical debate only.
It must be assessed as a real risk: likelihood of audit, amounts involved, quality of documentation, compensation structure, past exposure, ability to provision for the risk, and whether future practices should be adjusted.
What business owners should review now
SAS and SASU entities that have elected personal income tax treatment should review several points.
First, does the shareholder-president receive formal compensation for their corporate office? If not, the profit taxed in their own name may fall within the reasoning confirmed by the ministerial response.
Second, have the profits already reported been subject to social contributions on investment income? If no social charge or social contribution has been anticipated, the risk should be assessed.
Finally, is the personal income tax election still the right choice going forward? The answer can vary significantly depending on the level of profit, the founder’s personal tax situation, cash flow needs, growth trajectory, and the date on which the company will exit the regime.
This should therefore be treated as a broader financial and tax planning decision, not as a simple tax filing issue.
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Blendy's view
The personal income tax election can still make sense in some situations. But it must be modeled, documented, and monitored over time.
For a French SAS or SASU, the absence of formal compensation for the president is not neutral. It may shift the issue toward social contributions on investment income, now generally set at 18.6%. Before creating a SASU taxed under personal income tax, maintaining the election, or changing the founder’s compensation structure, it is essential to compare several scenarios.
At Blendy, international CPA based in Paris, Miami and Montreal, we help business owners navigate these tax, social security, and financial decisions: choice of legal structure, personal income tax or corporate income tax treatment, founder compensation, social charge planning, and cash flow management.
Do you own a SAS or SASU taxed under personal income tax?
Are you unsure how your company’s profits or your compensation should be treated?
Contact Blendy to review your situation and secure your next decisions.
Sources:
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