Converting an SARL into an EURL While Retaining the Corporate Income Tax Option: A Case Study

A limited liability company (SARL) was converted into a single-member limited liability company (EURL) after all of the company’s shares were consolidated in the hands of a single shareholder. Following a tax audit of the company, the French Tax Authority (administration ) determined that the company had not opted for corporate income tax and subsequently issued a tax assessment to the company’s shareholder.

The reassessment was challenged all the way to the Administrative Court of Appeals.

The court will then rule that the option for corporate income tax is deemed to have been exercised by“a limited liability company that has not opted for income tax in its articles of incorporation, whose shares are held, during the first fiscal year, in the hands of a single shareholder, which does not amend the articles of incorporation filed at the time of its formation on that occasion, and which, as of its first fiscal year, files its income statements under the corporate income tax regime."

She then notes that the articles of incorporation filed following the conversion to an EURL mention the existence of distributable profits to the shareholder and the payment of dividends to the shareholder. Furthermore, after the conversion, the EURL continued to file corporate income tax returns.

The Court therefore finds that the option was validly exercised by the EURL and that it did, in fact, opt for corporate income tax.

The partner's tax assessment is therefore rescinded.

CAA Paris, Sept. 14, 2026, No. 25PA00712

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