One-person company with Limited Liability (EURL): what you need to know
Verified 13 February 2024 - Directorate for Legal and Administrative Information (Prime Minister)
EURL is a limited liability company (SARL) comprising only one partner. This may be a natural person or a legal person (another business or an association). When new partners enter the EURL, it can easily become a SARL.
The single-member company with limited liability (EURL) is a commercial business that can any type of activity, with the exception of certain regulated sectors (insurance, regulated professions).
EURL includes only one partner. This may be a natural person or a legal person (e.g. another business or association).
The EURL may be formed from the outset by a single person. It may also result from the unified holding of all the shares of a company SARL on the withdrawal or death of a partner.
There's no pitch of minimum share capital required when creating the business.
The EURL makes it possible to limit liability of the member to the amount of his contribution to the share capital. In practice, this means that the sole partner cannot be sued for personal property. However, where the sole member is also the manager, his liability may exceed the amount of his contributions in the event of mismanagement. For example, he may be ordered to pay part of the debts of the EURL if he carries out a declaration of cessation of payments late, i.e. without respecting the deadline.
The creation of an EURL requires the drafting of statutes. One status model EURL, which is managed by the sole partner, is available on the Légifrance website.
Please note
You are considering create a EURL ? We explain how build a step-by-step business.
To create a EURL, you must perform a contribution to share capital business. In return for his contribution, the partner obtains shares.
There is no share capital minimum. It consists of cash (cash) and/or in-kind contributions (e.g. computer, car).
The cash contributions shall be paid as follows:
- At least 20% input when creating the business.
- The balance within 5 years afterregistration of the Euro
The contributions in kind are achieved through a transfer of ownership to business. It may be a material good (vehicle, computer equipment, etc.) or an intangible good (trademark, patent, etc.).
Their evaluation by a commissioner for contributions is mandatory when 2 conditions the following are combined:
- A contribution in kind has a value greater than €30,000
- And the total value of contributions in nature represents more than half of the share capital.
The Capital Adequacy Commissioner is appointed by the sole partner.
In return for its contribution, the sole partner may receive a share of the profits of the business (called dividends ).
The EURL shall be managed by a manager who shall obligatory a natural person.
The manager may be the sole partner of the EURL or a third party to the business.
Warning
Where the single member of the EURL is a legal person, the management shall be entrusted to a natural person.
Management body
Most often, the sole partner is the manager of the EURL. However, in some cases, management is provided by a third party, that is, a person outside the business.
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Single Associate Manager
The sole member shall designate himself or herself as manager in the statutes of the business or by a subsequent decision.
The manager of the EURL must do everything management act. Thus, he can, on behalf of EURL, sign contracts, hire employees, take legal action, etc. All his decisions must be in line with the social interest of the business, i.e. be useful to him.
Decisions which are against the interests of the business can be described as mismanagement (for example, failure to pay social security contributions, misappropriation of company money). They then assume their responsibility.
The manager is prohibited from performing the following acts:
- Borrowing from EURL
- To be granted by the EURL an overdraft in current account
- To be guaranteed by EURL its personal commitments to third parties: EURL cannot guarantee personal commitments of the manager to third parties.
Unassociated Manager
The manager is appointed by the sole partner.
It therefore has a social mandate to act in the name and on behalf of the business. Its powers are defined in the statutes of the business.
The non-associated manager shall, in particular, establish the annual accounts and the annual management report. He has to communicate them to the single member before taking a decision (approval of annual accounts, distribution of results, etc.).
Powers of the single member
The rules governing decisions taken by the single member differ according to whether or not he or she manages the business.
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Single Partner and Manager
The single partner cumulation the powers of legal representative and those conferred on him as an associate. He has the same powers as the associates of a SARL .
It shall be pronounced in the form of unilateral decisions. In particular, it shall decide on transfer of registered office, of change of name business,increase in share capital. All decisions must be recorded in a register.
The sole member shall be exempt from calling himself to a meeting. There are no voting, quorum and attendance rules. In contrast, the decisions of the single member are recorded in a register held at the head office of the business.
To learn more about the partner's decisions, you can refer to the dedicated card.
He must draw up an inventory (which lists assets and company liabilities), annual accounts and a management report (except where waived).
The sole partner who provides the management is not required to draw up a management report where the EURL does not exceed at the end of a business year, 2 of the following 3 thresholds :
- €6 million balance sheet total
- €12 million of turnover excluding taxes
- 50 permanent employees employed during the financial year
Deposit of annual accounts and inventory at the Registry of the Commercial Court within 6 months of the end of the financial year remains mandatory.
Please note
To learn more about the partner's decisions, you can refer to the dedicated card.
Single Partner Only
The sole member of an EURL shall have the same rights as the members of an SARL. These rights are as follows:
- Right of information: the sole shareholder has the right to communicate the inventory, annual accounts and management report (if any) drawn up by the manager.
- Financial rights: being the sole member, he is entitled to all dividends distributed. It also decides on the amount of the distribution. Dividends must be paid within 9 months of the end of the financial year.
- The right to take legal action. He may question the manager's liability.
The sole member shall pronounce himself in the form of unilateral decisions. In particular, it shall decide on transfer of registered office, of change of name business, the increase in share capital. Each decision shall be recorded on a register of decisions. It must also approve the annual accounts.
The statutes of the EURL may impose a single partner authorization before the conclusion of significant acts by the manager. This is particularly the case for purchases and sales of real estate or business, loans, mortgage on the property owned by the business; or pledges on the goodwill. The authorization of the sole member shall be recorded in the register of decisions held at the head office.
Please note
To learn more about the partner's decisions, you can refer to the dedicated card.
The tax regime of the EURL differs according to whether the sole member is a natural person or a legal person .
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Natural person
Where the sole partner is a natural person, he or she may choose to tax EURL on income tax (IR) or business tax (SI).
EURL subject to IR
Where the sole member is a natural person, the EURL shall in principle the taxation of businesses of persons. This means that the profits made by EURL are taxed at the level of the tax household of the income tax (IR) in the category of Industrial and Commercial Benefits (BIC) or non-commercial profits (NBC).
Where the EURL is subject to the IR and the single member is also manager, it may opt for the taxation of micro-companies (micro-BIC or micro-BNC). In this case, the annual turnover excluding tax shall not exceed the following thresholds:
- For trade and accommodation activities: €188,700
- For service provision and liberal activities €77,700
EURL subject to SI
The EURL may, on option, choose to enter the tax system of thebusiness tax (IS) by contacting the company Tax Office (SIE) on which the EURL depends.
Who shall I contact
The option can be formulated in two ways:
- As soon as the business is created when the statutes of the EURL
- Before the end of 3e month of the financial year for which the company wishes to be first subject to the SI.
Legal person
The EURL shall be subject to thebusiness tax (IS).
The social security scheme of the manager of the EURL differs according to whether or not he is the sole member of the EURL.
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Associate Manager
In most cases, the manager is the sole partner. He therefore has the status of majority manager and is considered to be a self-employed person (SSA). It falls under the social security for the self-employed.
Its social contributions are calculated on the basis of the entire profit of the EURL if it is subject to income tax (IR).
If the EURL has opted for business tax (IS), social contributions are calculated on the basis of net remuneration (plus any dividends received which exceed 10%of the capital of the EURL) of the manager of EURL.
FYI
The sole managing partner must apply for membership of the social security scheme for the self-employed.
Who shall I contact
Unassociated Manager
If the manager receives remuneration, he is affiliated to the general social security scheme as an employed person.
The single partner may to pass on his shares to its heirs or to a third party without difficulty. As the only partner on board, he does not need to obtain the approval of other partners to transmit his securities.
The sale of shares must comply with a certain formalism, which is as follows:
- Privately signed or notarized deed of assignment of shares of Eurl established
- Registration of the deed of transfer of shares with the tax authorities
- Amendment of the statutes of the EURL to be filed within 1 month on the website of the formalities of the companies
The transfer of shares shall give rise to the payment of a registration fee to the tax administration.
This duty shall be fixed at 3% of the transfer price less one abatement equal to €23,000 and returned to percentage of the number of shares transferred in social capital.
Example :
You are the sole partner of a EURL whose capital is divided into 200 shares. You sell 50 shares for a value of €50,000.
The amount of registration fees to be paid by the purchaser shall be calculated as follows:
Disposal Price - (23,000 x Number of shares sold ÷ Total shares in the business) x 3%.
Applied to our example, this would result in: 50,000 - (23,000 × 50 ÷ 200) = 44,250 × 3% = €1,327.50 registration fees.
When the single partner transmits only part of its shares to bring in a new partner, the EURL passes in SARL.
EURL and SASU are the two forms of society that do not count only one partner. However, there are differences between them.
EURL | ||
|---|---|---|
Number of partners | 1 | 1 |
Leader | Manager | Chairman (and one or more possible Directors-General) |
Share capital | Free | Free |
Release of cash contributions | At least 1/5 from creation | At least 1/2 from creation |
Taxation of profits | Income taxes (IR). If the manager is a sole partner, the possibility of being subject to the tax regime of the micro-company Possible option for SI | Business tax (IS). Possible option for IR |
Tax treatment of the director | Income tax (IR) in the Salaries and Wages category. | Income tax (IR) in the Salaries and Wages category. |
Social security of the director | Single associate manager: self-employed person (SSA) Non-associated manager: general social security scheme | General social security scheme |
Corporate securities | Shares | Actions |
Registration fees | 3% of the sale price after a reduction of €23,000 | 0.1% of the transfer price |
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Appointment of the commissioner for contributions by the sole member
Natural person manager
Acts prohibited to the manager
Decision taken by the sole member on record
Single Partner and Taxation to IR
EURL subject to the micro-company scheme (Article 50-0 2-c)
Registration fees