SARL or SAS? Choosing the Right French Legal Structure

If you're forming a company in France as a foreign founder, you'll run into three acronyms: SA, SARL, and SAS.

The Société Anonyme (SA) is built for larger businesses with several shareholders and heavier governance requirements, most solo founders never need it. The real decision is between SARL and SAS, and for a single non-resident founder, that choice shapes your paperwork, your social charges, and how much tax you keep on dividends.

What's the short version?

A SARL (Société à Responsabilité Limitée) is the older, more rigid structure. It's cheaper to run day to day but taxes your dividends less kindly once you cross a certain threshold. A SAS (Société par Actions Simplifiée) is more flexible and investor-friendly, which is why it's the default recommendation for non-resident founders, though it comes with higher social charges on your own salary.

Both cap your personal liability at what you put into the company. Neither requires French citizenship or residency to set up.

How do SARL and SAS compare on governance?

| | SARL | SAS | |---|---|---| | Sole shareholder title | Associé Unique | Actionnaire Unique | | Sole director title | Gérant | Président | | Governance rules | Fixed by law, little room to customize | Defined in the articles of association, highly flexible | | Liability | Limited to capital contributed | Limited to capital contributed | | Best suited for | Family businesses, cost-conscious owner-operators | Founders planning to raise investment or scale | | Income tax option | Can elect personal income tax (IR) for the first 5 years, small companies only | Rarely elects IR, less favorable in most cases |

How are social charges different for the owner-manager?

This is where the two structures diverge the most in practice.

If you're the sole shareholder-director (gérant) of a SARL, you're classed as a "Travailleur Non Salarié" (TNS), a non-salaried worker. Social charges on your salary run around 45% of net pay, lower than the alternative, but the coverage is thinner: reduced retirement and health benefits compared to a salaried employee.

The Président of a SAS is always treated as "assimilé salarié" (salaried) for social security, even as the sole shareholder. Social charges climb to roughly 60-70% of gross pay, but you get the broader benefits package: better retirement accrual and standard employee health coverage.

What happens to dividends?

Both structures pay French corporate tax (Impôt sur les Sociétés) on profits before any dividend is distributed: 15% on the first €42,500 of taxable profit for qualifying small companies, 25% above that.

Where it gets interesting is the personal tax on what's left after that.

SARL dividends: if you're the sole shareholder-director, dividends exceeding 10% of the company's capital, reserves, and shareholder current account balances are hit with TNS social charges of roughly 30%, on top of income tax.

SAS dividends: taxed under the Prélèvement Forfaitaire Unique (PFU), the flat tax on capital income.

2026 update: the PFU went up

Since 1 January 2026, the standard PFU on dividends is 31.4%, not the 30% you'll still see quoted in older guides. The income tax component stayed at 12.8%, but the social contributions portion rose from 17.2% to 18.6% for most capital income, including ordinary SAS dividend distributions. A narrow set of products, certain life insurance and PEL/CEL savings contracts, keep the older 30% total, but that exception doesn't extend to standard company dividends.

You can still elect the progressive income tax scale instead of the PFU, which unlocks a 40% allowance on the dividend amount before it's taxed. That election doesn't touch the social contributions piece, though: the 18.6% still applies regardless of which tax option you pick.

Which one should a non-resident founder choose?

For most foreign founders forming solo in France, SAS is the better default: the governance flexibility matters once you bring on investors or a co-founder, and the higher social charges on your salary are the tradeoff for better retirement and health coverage while you're paying yourself.

SARL makes more sense if you're running a smaller, owner-operated business, keeping social charges low matters more to you than governance flexibility, or you're planning a family-run structure with more than one generation involved.

One hurdle applies to both: France requires the company's share capital to be deposited before incorporation can be finalized, and French banks are notoriously reluctant to open accounts for non-resident founders. An escrow account solves that specific problem without requiring a French bank relationship first.

If you'd rather not weigh every governance and tax detail yourself, Clevver forms your SARL or SAS remotely, including the escrow account for your capital deposit.

Frequently asked questions

Can I convert a SARL into a SAS later? Yes. It's a formal transformation process involving a shareholder resolution, updated articles of association, and a filing with the commercial register, not a new company formation.

Do I need a French resident on the board for either structure? No, for the entity itself. A French bank account for the capital deposit is the actual sticking point for non-residents, which is why an escrow arrangement is normally used instead.

Is the 31.4% PFU rate final, or could it change again? French tax law is adjusted through the annual Finance Act, so future budgets could revise it again. Always confirm the current rate before filing.

This article is for general informational purposes and does not constitute legal or tax advice. French company law and tax rates can change, always confirm current requirements with a qualified advisor before incorporating.