The Tax Regime of the SAS: Everything Entrepreneurs Need to Know

The Société par Actions Simplifiée (SAS) has become the favorite company form for many entrepreneurs and startups in France. Its appeal lies in its remarkable flexibility in governance and shareholder relations, but another crucial factor for entrepreneurs is its tax regime. Choosing the right corporate form often comes down to understanding the tax consequences — on the company itself, on directors, and on shareholders.

So, what tax rules apply to the SAS? How are profits, dividends, and directors’ remuneration taxed? Can a SAS benefit from a partnership tax regime? Let’s break down the essentials.

1. The SAS and Corporate Income Tax (CIT): the general rule

By default, the SAS is subject to corporate income tax (impôt sur les sociétés, IS). Article 1655 quinquies of the French Tax Code (CGI) aligns the SAS with the Société Anonyme (SA) for tax purposes.

This means that:

• All profits of the SAS are taxed at the corporate level under CIT.

• Dividends distributed to shareholders are then subject to taxation at the individual level.

• Transfers of shares and contributions of assets are subject to the usual registration duties applicable to companies under CIT.

• The remuneration of directors (including the president) is taxed as employment income (salaries and wages).

In practice, this creates a two-tier taxation system: first at the level of the company (corporate tax), then at the level of the shareholders when dividends are paid out.

The SAS can benefit from the reduced corporate tax rate of 15% on the first €42,500 of profits, provided certain conditions are met:

• Annual turnover does not exceed €10 million,

• The capital is fully paid up,

• At least 75% of the shares are held by individuals (not companies).

This makes the SAS particularly attractive for SMEs and startups looking for early tax optimization.

2. The exception: opting for partnership tax treatment

Although the SAS is by default taxed under CIT, the law provides a temporary exception. Some SAS may opt for partnership taxation (transparency regime), where profits are directly taxed in the hands of shareholders, regardless of whether they are distributed.

This option, provided by article 239 bis AB of the CGI, is subject to strict conditions. To qualify:

• The SAS must be less than 5 years old,

• It must not be publicly listed,

• It must employ fewer than 50 employees,

• Its turnover or balance sheet total must not exceed €10 million,

• Its shareholding must be exclusively held by individuals (or transparent entities).

Advantages of the partnership regime:

• Avoidance of double taxation (profits are not taxed at the company level),

• More flexible tax planning for young businesses still in their growth phase,

• The possibility to align company taxation with the personal tax situation of shareholders.

However, this option is strictly temporary: it is limited to five consecutive fiscal years and is irrevocable during this period.

3. Dividend taxation in the SAS

When profits are distributed as dividends, shareholders who are natural persons are taxed in one of two ways:

• Flat-rate withholding tax (PFU or “flat tax”) at 30%, composed of:

  • 12.8% income tax,

  • 17.2% social contributions.

• Or, upon election, taxation under the progressive income tax scale, with the benefit of a 40% allowance. In this case, however, social contributions remain fully due.

For shareholders who rely on dividends as a source of income, the choice between the flat tax and progressive taxation requires careful calculation. Depending on the level of other income, one or the other option may prove more advantageous.

4. Directors’ remuneration: a classic and secure treatment

Another attractive aspect of the SAS lies in the remuneration of its president (or other directors). Unlike majority managers of an SARL, who are taxed and treated as self-employed, SAS directors are considered assimilated employees (with the exception of unemployment insurance).

This means that their remuneration:

• Is deductible from the SAS’s taxable profits,

• Is subject to income tax in the “salaries and wages” category,

• Benefits from the same rules as employee salaries, including the 10% professional expenses deduction or the option for actual expenses.

For entrepreneurs, this framework provides clarity and legal security, particularly in the event of a tax audit.

Conclusion: a flexible and efficient tax framework

The tax regime of the SAS combines clarity, flexibility, and legal security. By default, the company is taxed under CIT, but during the first years of activity, eligible companies can opt for the partnership regime to avoid double taxation. Shareholders also benefit from clear rules on dividend taxation, while directors enjoy the advantages of being assimilated to employees for tax purposes.

Nevertheless, choosing the right tax regime is not just a legal formality. It must be part of a broader business strategy that takes into account the project, the profile of the shareholders, and long-term growth objectives.

This is why consulting a chartered accountant or tax lawyer is highly recommended when setting up an SAS or planning profit distribution. A tailored analysis can optimize both corporate and personal taxation.