The Single-Associate Enterprise (EURL)

An EURL is a limited liability company (known in France as SARL) with only one associate.

It can also be called a ‘SARL unipersonnelle’, and together with the SASU, they are the two types of single-associate companies in France.

Single-associate companies are subject to more rigorous management and formalities that are more expensive than those of individual companies. For compulsory formalities, there are certain costs that are unavoidable (legal announce, registry, etc.)

The EURL has the advantage of limiting the associate's liability to the amount of capital that he has invested for its constitution. Unlike an individual enterprise, which obliges the associate to be liable for the debts of the company unlimitedly and even responding with his own patrimony, the EURL protects the patrimony of the single associate. Therefore, in this case, the single associate will only be required to respond for the debts of the company up to the amount of the capital he has invested on the company.

Characteristics of an EURL

The particular characteristics of the EURL are described in the enterprise statutes which are written at the time of its creation.

As mentioned above, the EURL is composed of a single associate. This associate is most often a natural entity, but the associate can also be a legal entity (except another EURL).

The EURL has a share capital of at least 1 euro and there’s not a maximum amount. You can deposit the totality of the capital at the time of the company creation, or 20% of the capital at least when creating it and the rest within a five years period. However, you should beware, if the amount of the initial capital is not consistent with the economic requirements of the activity, the personal patrimony of the associate could be engaged.

An EURL is directed by a natural entity, more specifically a manager. This manager is most often the single associate of the EURL. However, he may also be a third party as long as he is a natural entity.

The EURL can be subject to two types of taxes according to the nature of the associate:

  • If the single associate is a natural entity, the EURL will have to pay the revenue tax (IR in French). In this case, the partner has the same tax obligations than an individual entrepreneur. However, in certain cases and at the request of the associate, the business may be subject to a corporate tax (IS).
  • If the single associate is a legal entity, the EURL will have to pay the corporate tax. In this case, the remuneration received by the associate-manager is subject to the revenue tax according to the regime of company directors.

According to the contributions made and to the personal tax regime of the single associate, and that of the tax regime of the EURL (revenue tax or corporate tax), the amount of tax exemptions at the time of the registration of the statutes varies.

The creation of an EURL must be advertised in a journal authorised to publish legal announcements (known in France as JAL).

You must also register your company in the Registry of Commerce and Companies (known in France as RCS). The process is carried out through the enterprise formalities centre (called CFE), which is in turn responsible for transmitting the necessary information to the various bodies concerned, such as the registry of the Commercial Court, the tax service, etc. Once the registration is complete, the company obtains a K-bis extract that proves that it’s carrying out a legal activity.

Conclusion

The EURL is thought for a business creator whose potential for business development is likely to remain rather modest. Therefore, its formalities of creation, its management and its administration will normally remain simple. If the EURL grows and the capital of the company increases, the single associate can decide to become a SARL with other associates participating in it.

FRANCE
BUSINESS CREATION
EURL