Income Tax Adjustments for SASUs
In recent years, the French Taxadministration has been issuing numerous tax assessments against partners in SASUs that have opted for the partnership tax regime, also known as “SASU for income tax purposes.” Theadministration has not disclosed the number of tax reassessments carried out, but several thousand taxpayers are reportedly being reassessed (one news article mentions 10,000 requests for information). It officially announced its position in a ministerial response on June 2, 2026.
The reasons behind this wave of SASU tax adjustments
To put it simply, with regard to social security contributions and social levies, there is a provision of law that stipulates that if income from a particular activity is not subject to any social security contributions, then social levies must be paid on capital income to the taxadministration (this is referred to as “f” in Article L.136-6 of the CSS).
The French Tax Administration (administration ) considers that the SASU’s income tax (IR) income—which constitutes taxable income for its shareholders—is not subject to any social security contributions payable to URSSAF. It therefore concludes that it may collect these contributions—set at 17.2% or 18.6%, depending on the year—from the shareholders of SASUs subject to income tax.
However, theadministration 's position is open to criticism
Theadministration ’s reasoning in support of the wave of corrective measures is open to criticism for several reasons.
The first is that, as of today, there is no court ruling that would allow one to assert that the income of an SASU subject to income tax is not subject to social security contributions. The French Tax Authority (administration ) cites rulings by the Court of Cassation to support its reassessments, according to which a director of a corporation must receive income in order to be subject to social security contributions. However, these older decisions do not concern the provision applicable to SASs, and they were not rendered in the context of companies that have opted for the partnership tax regime (i.e., companies subject to income tax).
Furthermore, even if the taxpayer were not subject to social security contributions as president because he receives little or no compensation, the Court of Cassation ruled that the status of partner necessarily implies the performance of professional activities within the company and that the taxpayer is indeed subject to social security contributions in the case of companies subject to the same income tax regime as a SASU.
Finally, when the legislature adopted Article L.136-6(f) of the CSS, which establishes the basis for adjustments under the “administration,” it did not intend to subject income from professional activities to social security contributions on capital income.
However, only a decision by the Council of State can settle the matter.
You’ve received a tax assessment for your SASU’s income tax—what should you do?
As we have noted, there is currently uncertainty regarding the legality of the adjustments made by the “administration.” However, we must await a decision from the Council of State to clarify the situation.
Under normal circumstances, it takes at least about ten years for a case to be brought before this court and for it to issue a ruling.
However, the law firm, as well as other attorneys, filed appeals directly with the Council of State in July 2026 against the ministerial response dated June 2, 2026. These appeals should lead to a decision more quickly. Generally, it takes a good year for the Council of State to rule on this type of appeal. Thus, it is likely that the Council of State will issue its decision in the middle or late part of 2027, unless, given the importance of the matter, it deems it necessary to issue its decision sooner.
Pending this decision, we recommend responding to letters from the General Inspectorate of Public Finances (administration ) by contesting the tax assessments and taking the necessary steps to avoid having to file a lawsuit until the Council of State has ruled on the appeals.
If you wish, we can handle the entire process for you. Please contact us by sending an email to contact@mispelonavocat.com and, if possible, attaching the most recent letter you received from the taxadministration .
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There are various procedures that the French Tax Authority (administration ) can implement in connection with income tax reassessments for SASUs.
In general, however, theadministration sends a notice ( reassessment proposal ) directly to the taxpayer.
The recipient has 30 days to submit comments. During this 30-day period, it is possible—and recommended—to request an additional 30 days to respond to this letter. This extension is granted as of right, thereby allowing 60 days to respond to the letter.
The taxpayer or his or her attorney must then, within this time limit, send a letter explaining the reasons for contesting the tax assessment. It is also important to request in this letter that the matter be referred to a higher-ranking official.
Theadministration is then required to respond to the taxpayer’s comments. However, it is not required to respond within a specific time frame.
Once a response has been filed and provided that a request for an appeal to a higher-ranking official has been included in the taxpayer’s statement, a meeting is generally held between the taxpayer or their attorney and the inspector’s superior.
Following this meeting, a report is generally sent to the taxpayer, and then theadministration sends a tax bill.
This notice is a type of “tax bill” based on which the taxpayer is required to pay. The taxpayer may, however, challenge the assessment by filing an appeal, in which the taxpayer may or may not request a stay of payment. This stay, which generally remains in effect until the Administrative Court issues a decision, can sometimes entail significant costs.
Once the taxpayer’s claim is rejected by theadministration, the taxpayer has two months to file a complaint with the administrative court.
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Not necessarily. The firm represents clients who have received tax assessments even though they were being paid as president of their SASU.
However, this partially mitigates the risk, since the president’s compensation is subject to social security contributions. The French Tax Administration (administration ) therefore calculates social security contributions only on the SASU’s net income, minus the amount of compensation paid.
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The BOFiP is a website on which the French Tax Administration (administration ) explains how tax law should be applied. The positions of the French Tax Administration (administration ) expressed there are generally binding on the tax authorities (administration ).
In the latter, it specifically stated that social security contributions should be applied in the case of professional activity carried out within the company (BOI-IS-CHAMP-20-20-20-20, No. 260).
This position is the opposite of the one taken during tax reassessments.
However, at this time, the French Tax Authority (administration ) believes that this position is not enforceable against it for several reasons. Therefore, at this time, this will not result in the tax assessments being overturned.
In the context of litigation before the courts, it may be appropriate to raise this argument.
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This is a sensitive issue, but it does not seem possible to state categorically that this is the case. The BOFiP could therefore still potentially be enforceable against theadministration.
If you'd like more details, you can read the article on this topic by following this link.
In any case, if the BOFiP were to be deemed unenforceable, it would apply only to social security contributions due for the years 2026 and thereafter.
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No, because this rate corresponds to the social security contribution rate on earned income. However, only URSSAF has the authority to collect these contributions.
Thus, either social security contributions on investment income are applicable and the General Social Security Office (administration ) may collect them from taxpayers, or they are not applicable, in which case only URSSAF may require taxpayers to pay social security contributions.
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The Council of State is expected to issue its ruling, by the end of 2027 at the latest, on the appeals filed—notably by the law firm—against the ministerial response dated June 2, 2026.
In the course of these appeals, it will most likely have to determine whether theadministration ’s position is well-founded.
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