SAS vs SARL in France: Key Difference & Registration Process

France, the world’s seventh-largest economy, is an attractive destination for foreign entrepreneurs. Known for its robust infrastructure, innovative markets, and business-friendly policies, it’s a top choice for launching a new venture. But before you launch your business in France, choosing the right corporate structure is important. Two of the most popular options for small and medium-sized enterprises (SMEs) are the SAS (Société par Actions Simplifiée) and the SARL (Société à Responsabilité Limitée).

Understanding the differences between SAS vs SARL in France can make all the difference in setting up a successful business. This guide will cover the difference between SAS and SARL in France, highlight their pros and cons, and help you decide which is best for your entrepreneurial goals.

What are SAS and SARL?

SAS (Société par Actions Simplifiée) 

A simplified joint-stock company or SAS in France is a flexible business structure that appeals to startups and businesses looking for dynamic management options. It’s highly favoured by foreign investors because of its flexibility and minimal liability protection.

SARL (Société à Responsabilité Limitée)

A limited liability company or SARL in France is more rigid in its governance and is often chosen by small family-owned businesses or entrepreneurs seeking a straightforward structure. It provides limited liability to its shareholders and is governed by specific regulations.

Key Differences Between SAS and SARL

Both SAS and SARL have their own set of rules, advantages, and limitations. The following table provides a thorough comparison to help you understand the French SAS vs SARL:

Advantages and Disadvantages of SAS

Advantages:

• Flexibility in Governance: SAS allows shareholders to design bylaws that suit their business needs. This makes it a great option for foreign entrepreneurs who need adaptable governance.
• Attractive for Investors: With no restrictions on shareholder numbers and easy transfer of shares, SAS is a favourite for raising capital.
• Limited Social Security Costs: Presidents of SAS are considered employees for social security purposes, resulting in lower charges compared to SARL managers.
• Single-Shareholder Option: You can form a SASU (single-member SAS), making it ideal for solo entrepreneurs.

Disadvantages:

• Complexity in Setup: Drafting customized bylaws can be time-consuming and costly.
• Higher Accounting Costs: SAS is required to maintain detailed financial records, which may increase administrative expenses.

Advantages and Disadvantages of SARL

Advantages:

• Simple Governance: The structured approach is ideal for entrepreneurs seeking clear and straightforward management roles.
• Familiarity: SARL’s governance rules are well-known and understood in France, making it easier for local partners to collaborate.
• Family-Friendly: Ideal for family-run businesses, SARL allows spouses and relatives to be part of the company with tax benefits.

Disadvantages:

• Restricted Flexibility: Governance is tightly regulated, leaving little room for innovation in management structures.
• Social Security Costs: Managers (Gérants) of SARL are liable for higher social security contributions.
• Transfer of Shares: Share transfers require notarized agreements, adding administrative burdens.

Taxation and Financial Obligations for SAS and SARL in France

Both SAS and SARL are subject to corporate tax, but they can opt for personal income tax under specific conditions (e.g. if the business is less than five years old and meets certain criteria).

Here’s a quick overview:

• Corporate Tax Rate: As of 2024, the normal corporate tax rate in France is 25%.
• VAT (Value-Added Tax): Both entities has to register for VAT if their turnover surpasses the threshold of €85,800 for goods and €34,400 for services.
• Dividends Tax: Dividends are taxed at a flat rate of 30% (12.8% income tax and 17.2% social charges).

Step-by-Step Process to Register a SAS or SARL in France

Below is an expanded and detailed process for registering either a SAS or SARL in France:

1. Draft the Bylaws:

• For SAS: The bylaws can be customized to define management roles, decision-making processes, and shareholder agreements. 
• For a SARL: Use a standardized template that specifies the responsibilities of the Gérant (manager) and the distribution of profits among shareholders.

2. Deposit Initial Capital:

Open a corporate bank account in France and deposit the required share capital (€1 for both SAS and SARL). Acquire a certificate of deposit from the bank to confirm the deposit.

3. Appoint Company Officers:

• For SAS: Appoint a President who will act as the legal representative of the company. Additional officers can be defined in the bylaws.
• For SARL: Appoint one or more Gérants to manage daily operations.

4. Register with the Commercial Court (RCS):

Submit the registration file to the RCS. The file should include:

• The drafted bylaws.
• Proof of capital deposit.
• Identification documentation of shareholders and company officers.
• Proof of address for the company’s headquarters.

5. Publish a Notice of Incorporation:

Declare the establishment of your business in an authorized legal publication. This step ensures transparency and public awareness of the new business entity.

6. Obtain a SIRET Number:

Once registered, you’ll receive a SIRET number (unique business identification) and a KBIS extract (official company registration certificate).

7. Register for Tax and Social Security:

To acquire a VAT number, the business must register with the tax authorities. Enroll with social security organizations for employee and management contributions.