EURL: complete guide to the legal status in 2026

An entrepreneur starting out alone almost always hesitates between three forms: remaining a sole trader (entreprise individuelle), creating a SASU (single-shareholder simplified joint-stock company) or opting for the EURL (single-member limited liability company). This choice is not an administrative one: it determines the protection of personal assets, the amount of social security contributions, the taxation of profits and the ability to bring in a partner later. The EURL, the direct descendant of the SARL (French limited liability company) applied to a single member, remains in 2026 one of the structures most used by craftspeople, traders, non-regulated professionals and managers of small asset-holding companies. This guide sets out the legal status of the EURL, its tax and social security regime, the steps to set one up and the practical trade-offs to understand before signing the articles of association.

What is an EURL: definition and legal framework

The EURL, or entreprise unipersonnelle à responsabilité limitée, is not a corporate form in its own right. It is a SARL (limited liability company) with a single member. The French Commercial Code does not provide a separate regime for it: Article L223-1 of the French Commercial Code provides that a limited liability company may be formed by a single person, and all the rules applicable to the SARL (Articles L223-1 to L223-43) apply to it, subject to the adaptations made necessary by the presence of a sole member.

In practical terms, an EURL is a commercial company with legal personality, distinct from its founder. It has its own assets, its own SIREN number, its own bank accounts and its own commitments. This separation is the core of the interest of the structure: the sole member is in principle liable for the company's debts only up to the amount of his or her contributions.

The sole member may be an individual (the most frequent case) or a legal entity, for example a holding company that owns a subsidiary in the form of an EURL. This distinction is not incidental: it determines the tax regime applicable by default, as we shall see.

EURL and single-person business: not to be confused

The expression single-person business covers several different realities. The EURL is a company with a sole member. The EI (entreprise individuelle, sole proprietorship) is not a company: there is no legal entity, and the entrepreneur trades in his or her own name. The SASU (single-shareholder simplified joint-stock company) is also a company with a sole shareholder, but it is subject to the regime of joint-stock companies and not to that of the SARL.

This difference in legal family has direct consequences for the status of the manager, for taxation and for flexibility of operation. Confusing the EURL and the SASU is a frequent mistake that can prove costly when social security contributions are calculated.

Limited liability: real scope and limits

The main argument in favour of the EURL lies in its name: the liability of the sole member is limited to the amount of his or her contributions. If the company files for insolvency, its creditors cannot in principle claim against the member's personal assets for the balance of the company's debts.

This protection must be qualified in practice. Three situations remove it in whole or in part.

• Personal guarantees: a bank financing the start-up almost systematically requires a personal guarantee from the manager. This guarantee is a personal commitment that circumvents limited liability. In the event of default, the bank calls on the guarantee against the manager's private assets.
• Management errors: where compulsory liquidation reveals an insufficiency of assets, the manager may be ordered to cover all or part of the liabilities if he or she committed a management error that contributed to that insufficiency, on the basis of Article L651-2 of the French Commercial Code.
• Serious tax and social security breaches: a manager who makes the recovery of taxes impossible through fraudulent manoeuvres or repeated failures to comply may be declared jointly and severally liable for payment.

Limited liability therefore protects the honest and diligent entrepreneur against economic risk, not against his or her own errors or against the guarantees he or she has voluntarily granted.

The share capital of the EURL in 2026

No minimum capital is required: an EURL may be formed with share capital of €1. This freedom, which results from earlier reforms confirmed by the PACTE Act (Act No. 2019-486 of 22 May 2019), should not lead to the company being undercapitalised. A token capital weakens credibility with banks, landlords and suppliers, and exposes the manager further to the risk of insufficiency of assets.

The capital is made up of contributions of several kinds:

• cash contributions, that is, sums of money. At least one fifth must be paid up on incorporation, the balance within five years;
• contributions in kind, that is, assets (equipment, business as a going concern, vehicle). A contributions auditor (commissaire aux apports) must in principle value them, unless an exemption is available where no contribution in kind exceeds a threshold set by decree and the total value of contributions in kind does not exceed half of the capital;
• contributions of industry (know-how, labour) are permitted but do not count towards the formation of the capital.

The choice of the amount of capital is not merely an accounting formality. It has a direct social security and tax impact, in particular in the calculation of dividends subject to contributions, a point developed below.

The tax status of the EURL: income tax by default, option for corporate income tax

The tax status is one of the main flexibility advantages of the EURL. The applicable regime depends on the nature of the sole member.

Default taxation to income tax

Where the sole member is an individual, the EURL is by default subject to the regime applicable to partnerships (sociétés de personnes): profits are taxed directly in the hands of the member to income tax (IR), in the category corresponding to the activity (BIC for trade and craft activities, BNC for the professions). This principle derives from Article 8 of the French General Tax Code. The company is, in a sense, tax transparent: it does not pay tax in its own name, and it is the member who declares his or her share of the profit.

Where the sole member is a legal entity, the EURL is on the other hand subject as of right to corporate income tax (IS).

Option for corporate income tax

A sole member who is an individual may opt for the EURL to be subject to IS, under the conditions of Article 206 of the French General Tax Code. Under IS, the company pays tax on its profit, and the member is taxed only on the remuneration and dividends he or she actually receives.

The reduced IS rate of 15% applies, subject to conditions as to turnover and ownership of the capital, to the lowest fraction of taxable profit provided for by the finance act, above which the standard rate applies. The option for IS is in principle irrevocable beyond a withdrawal period covering the first financial years: this choice must therefore be anticipated with an accountant (expert-comptable).

How to choose between IR and IS

IR is often suitable at the start, when profits are low or the business is loss-making: the loss is then set off, subject to conditions, against the household's overall income. IS becomes attractive when the business generates profits that the entrepreneur wishes to reinvest rather than withdraw, or when he or she wishes to manage remuneration and dividends so as to optimise the social security and tax burden. The choice depends on the level of profit, the need for personal income and the wealth strategy. There is no universal answer.

The social security regime of the manager: the main specificity of the EURL

It is on social security that the EURL differs most clearly from the SASU, and this is where a large part of the trade-off is made.

The manager who is sole member falls within the self-employed regime

Where the sole member personally acts as manager, which is the most common case, he or she is a majority manager (gérant majoritaire) and falls within the self-employed (TNS) regime, affiliated to the self-employed social security scheme managed within the general regime. He or she does not contribute to the general employees' regime and is not covered by unemployment insurance.

The social security contributions of the TNS manager are calculated on his or her remuneration. Their overall rate is significantly lower than that of the charges on the remuneration of an employee-status officer of a SASU. For an equivalent net remuneration, the social security cost of an EURL manager is generally lower, which is a strong financial argument. In return, social protection is less extensive, in particular for retirement and daily sickness allowances, which may justify taking out supplementary cover.

Where the manager is not the sole member but a remunerated third party, he or she is in principle treated as an employee for the purposes of the corporate office.

Social security treatment of dividends: a point requiring vigilance

A mechanism specific to structures subject to the self-employed regime deserves particular attention. For the majority manager of an EURL that has opted for IS, the portion of dividends exceeding 10% of the share capital, share premiums and sums paid into the member's current account is added back to the base for social security contributions, pursuant to Article L131-6 of the French Social Security Code.

This rule limits the appeal of the strategy of paying oneself a low remuneration and high dividends in order to reduce charges. This is where the amount of the share capital regains practical importance: a higher capital raises the 10% threshold below which dividends escape social security contributions. The SASU, whose chairman is treated as an employee, is not subject to this add-back, which explains why it is sometimes preferred by entrepreneurs relying on the distribution of dividends.

EURL, SASU, sole proprietorship: comparison table

The choice of form is reasoned by comparing several practical criteria.

• Protection of assets: the EURL and the SASU offer liability limited to contributions. Since Act No. 2022-172 of 14 February 2022, the sole trader also benefits from an automatic separation between business assets and personal assets, which has narrowed the gap with corporate forms on this specific point.
• Social security regime of the manager: TNS manager in an EURL (lower contributions, lighter protection), employee-status chairman in a SASU (higher contributions, more complete protection, excluding unemployment cover).
• Taxation: the EURL with an individual as member allows IR to be retained, which is useful at the start; the SASU is subject as of right to IS, with a possible temporary option for IR.
• Statutory flexibility: the SASU offers great freedom in drafting the articles; the EURL is subject to the more rigid framework of the SARL.
• Development: the EURL becomes an ordinary SARL by the simple transfer or issue of shares to a new member, without conversion. The SASU becomes a SAS in the same way.

No form is intrinsically superior. A self-employed consultant wishing to be paid mainly in dividends may prefer the SASU; a craftsperson who favours a reduced social security cost and a regular remuneration will often turn to the EURL.

Setting up an EURL in 2026: the practical steps

The formation of an EURL follows a formalised path. Each step conditions the next.

Drafting the articles of association

The articles of association are the founding instrument. They set the company name, the corporate purpose, the registered office, the amount of the capital, the allocation of contributions, the powers of the manager and the rules of operation. For an EURL, standard templates exist, but tailor-made drafting remains advisable whenever the business has particular features (broad corporate purpose, commercial leases, asset-planning clauses, anticipation of a partner joining). Careless drafting is paid for at the time of a dispute or a sale.

Depositing the capital and publishing the legal notice

Cash contributions are deposited in a blocked account with a bank, a notary or another authorised depositary, which issues a certificate of deposit of the funds. A legal notice of incorporation is then published in an authorised medium in the département of the registered office, stating the characteristics of the company.

Registering the company through the one-stop shop

Since 1 January 2023, all business formation formalities must be completed through the electronic one-stop shop (guichet unique) managed by the INPI (French National Institute of Industrial Property), which has replaced the former business formalities centres. The file comprises the signed articles of association, the certificate of deposit of the funds, the certificate of publication of the legal notice, the manager's declaration of no criminal conviction, proof of the registered office and an identity document. Once the file is validated, the company is registered in the commercial and companies register (RCS) and receives its Kbis extract.

Anticipating the timetable and available support

Formation can take from a few days to a few weeks depending on how complete the file is. The founder may check his or her eligibility for ACRE (support for business creators and acquirers), which gives entitlement to a partial exemption from social security contributions at the start of the business, subject to conditions. The scheme changes regularly: the conditions in force at the time of the application must be checked with URSSAF.

Annual operation and ongoing obligations

Once formed, the EURL is subject to record-keeping obligations that structure its legal life. The sole member exercises the powers normally vested in the members' meeting: he or she approves the annual accounts, allocates the result and records his or her decisions in a register. This formality, sometimes neglected in very small structures, conditions the legal regularity of the company.

The EURL keeps full commercial accounts, prepares annual accounts (balance sheet, income statement, notes) and files them with the registry (greffe), subject to the confidentiality options open to small companies. Using an accountant is not compulsory but remains strongly advised, in particular where the company is subject to IS and the management of remuneration and dividends becomes a matter of optimisation.

The appointment of a statutory auditor (commissaire aux comptes) is required only if the company exceeds, at the closing date, two of the three statutory thresholds relating to balance sheet total, turnover and number of employees, thresholds which are set by regulation and revised periodically.

Advantages and limits of the EURL in summary

The EURL combines several advantages that explain its longevity. It protects personal assets through limited liability, offers a reduced social security cost thanks to the TNS status of the manager, allows a choice between IR and IS, and develops without conversion into a multi-member SARL. It reassures partners through its standardised framework and its legal personality.

Its limits are the reverse side of its qualities. The social protection of the TNS manager is less complete than in a SASU. The add-back to the contributions base of dividends exceeding 10% of the capital restricts distribution strategies. The statutory framework of the SARL offers less freedom than that of the SAS. Finally, the annual formalities, although light, must be complied with on pain of irregularities.

Conclusion

The EURL is not a default choice: it is the most relevant tool for the lone entrepreneur who favours a controlled social security cost, adjustable taxation and the possibility of bringing in a partner without changing structure. The profile that gets the most value from it is one that pays itself a regular remuneration rather than a large distribution of dividends, and wishes to limit social security charges without giving up the protection of personal assets. Conversely, the entrepreneur who relies on dividends and wants broader social cover will look seriously at the SASU.

The right reflex is not to copy the choice of an acquaintance, but to quantify one's own scenario: expected level of profit, trade-off between remuneration and dividends, need for immediate income, future partnership plans. Before signing the articles of association, have an accountant simulate the two hypotheses, IR and IS, over three financial years, and have the corporate purpose clause and the manager's powers reviewed by a lawyer: these are the two items that generate the most disputes once the company is up and running.

Frequently asked questions

What is the difference between an EURL and a SASU?

Both are single-person limited liability companies, but they belong to different legal families. The EURL is a SARL with a sole member, governed by Articles L223-1 et seq. of the French Commercial Code, with a manager falling within the self-employed regime. The SASU is a joint-stock company, more flexible in its articles, whose chairman is treated as an employee and contributes to the general regime. The social security cost is generally lower in an EURL, but social protection and flexibility in the distribution of dividends are greater in a SASU.

Is an EURL subject to income tax or corporate income tax?

By default, an EURL whose sole member is an individual is subject to income tax, under the partnership regime provided for by Article 8 of the French General Tax Code. The member may opt for corporate income tax under the conditions of Article 206 of the same code, an option which is in principle irrevocable after a withdrawal period. Where the sole member is a legal entity, the EURL is subject as of right to corporate income tax.

What is the minimum capital to set up an EURL in 2026?

No minimum capital is required: an EURL may be formed with share capital of €1. In practice, a very low capital harms credibility with banks and partners, and lowers the 10% threshold below which dividends escape social security contributions for a majority manager subject to IS. A capital consistent with the real needs of the business is therefore preferable.

Does the manager of an EURL pay contributions on dividends?

Yes, in certain cases. For the majority manager who is sole member of an EURL subject to IS, the portion of dividends exceeding 10% of the total made up of the share capital, share premiums and the member's current account is added back to the base for social security contributions, pursuant to Article L131-6 of the French Social Security Code. The fraction below this threshold is not subject to social security contributions but remains subject to social levies (prélèvements sociaux).

How can an EURL be converted into a SARL?

The conversion is legally simple because the EURL is already a SARL with a sole member. The entry of a new member, by transfer of existing shares or by a capital increase, automatically turns the structure into a multi-member SARL, with no change of corporate form or of legal personality. The articles of association must nevertheless be updated, the amendment formalities completed with the INPI one-stop shop and a legal notice published.

Is an accountant needed for an EURL?

Using an accountant is not compulsory, but it is strongly recommended, especially for an EURL subject to corporate income tax. Managing the manager's remuneration, choosing between salary and dividends, calculating TNS contributions and preparing the annual accounts require technical skill. Regular accounting support limits the risk of tax errors and makes the sole member's decisions more secure.

Can an EURL hire employees?

Yes. The single-person nature concerns only the number of members, not the number of employees. An EURL may freely recruit employees under employment contracts, who fall within the general social security regime. Hiring entails the usual obligations of an employer: prior declaration, contract, payroll, contributions and compliance with employment law.