You live in London, New York, Dubai or Singapore. You have just incorporated a société par actions simplifiée (SAS, the flexible French joint-stock company) or a société à responsabilité limitée (SARL, the French private limited company) in Paris. The greffe — the registry office attached to the commercial court — has issued your Kbis, the official certificate that proves your company legally exists. The corporate bank account is open, the first invoices are about to go out, and one very practical question lands on your desk: how do I, as a foreign director living abroad, actually pay myself out of this French company?
The question looks simple, but under French law it splits into three different problems that obey three different sets of rules. First, the legal form of what you take: a salary paid for your management role (mandat social, the corporate office you hold as président of the SAS or gérant, the manager, of the SARL), a salary under an employment contract (contrat de travail), or dividends paid on the shares you own. Second, the social security regime attached to that income: France does not let you choose freely, and the cost difference between the two regimes is large. Third, the personal liability that comes with the title of director: signing as président or gérant exposes your personal assets in situations a foreign founder rarely anticipates. This article answers the three questions in order, with the exact statutes, the official guidance and three recent rulings of the Cour de cassation (France’s supreme court for civil, commercial and criminal matters) that set the boundaries.
A note on language before we start. French company law runs on acronyms, so every one of them is explained the first time it appears: Kbis (company identity certificate), greffe (court registry), URSSAF (unions de recouvrement des cotisations de sécurité sociale et d’allocations familiales, the agency that collects social contributions), impôt sur les sociétés (IS, corporate income tax), impôt sur le revenu (IR, personal income tax), BODACC (bulletin officiel des annonces civiles et commerciales, the gazette where company events are published), and prélèvement forfaitaire unique (PFU, the flat-rate levy on dividends). All statutory references below link to their official Légifrance text in force, and every court quotation is reproduced word for word from the official decision.
I. How a Foreign Founder Gets Paid by a French Company: Salary or Dividends?
A French company founder who also runs the company has two lawful channels for taking money out: remuneration for running the business, and dividends as a shareholder. They are taxed differently, they carry different social charges, and confusing one with the other is the most common and most expensive mistake foreign directors make. Salary rewards your work; dividends reward your capital. French law treats the two channels as strictly separate, and each has its own conditions.
A. Taking a Salary as a Company Director: How the Pay Is Taxed and What It Costs the Company
The starting point is who you are inside the company. In an SAS, the company is represented toward third parties by a président appointed under the conditions set by the articles of association (statuts). Article L227-6 of the Commercial Code states that “Le président est investi des pouvoirs les plus étendus pour agir en toute circonstance au nom de la société dans la limite de l’objet social.” In plain English: the president holds the broadest powers to act in all circumstances in the name of the company, within the limit of the corporate purpose. In a SARL, the equivalent figure is the gérant. Article L223-18 of the Commercial Code provides that “La société à responsabilité limitée est gérée par une ou plusieurs personnes physiques.” — a SARL is managed by one or more individuals, who may be chosen from outside the shareholders.
That management role, the mandat social, can be unpaid: many foreign founders run their French company for free in the first year and live off other income. The official Service-Public guidance for business owners confirms that a director’s mandate may be performed free of charge or for pay. But the moment the company pays you for that role, the payment follows a precise tax path. Salary paid to a director is deductible from the company’s taxable profit for impôt sur les sociétés purposes, and it is then taxed in your hands as personal income. Article 62 of the General Tax Code (code général des impôts) provides that “Les traitements, remboursements forfaitaires de frais et toutes autres rémunérations sont soumis à l’impôt sur le revenu au nom de leurs bénéficiaires s’ils sont admis en déduction des bénéfices soumis à l’impôt sur les sociétés” — salaries, flat expense reimbursements and all other remuneration are subject to personal income tax in the name of the recipient where they are deductible from profits subject to corporate tax. The provision expressly covers majority managers (gérants majoritaires) of SARLs, and the same logic applies to paid SAS presidents: deductible at company level, taxable at personal level.
For a foreign founder, two practical consequences follow. First, the salary must be real and proportionate: the amount has to be formally decided (by the shareholders or the competent corporate body under the statuts), actually paid, and defensible against the company’s results. A salary voted but never paid, or a salary wildly out of proportion with the activity, attracts both the tax administration and, if the company later collapses, the insolvency practitioner. Second, where you live matters for the tax on that salary. France taxes remuneration for work actually performed in France, and if you are not a French tax resident the salary for your French management duties remains French-source income taxable in France, subject to the tie-breaker and allocation rules of the tax treaty between France and your country of residence. Before fixing any amount, have the applicable treaty checked: it determines whether France keeps the full right to tax, shares it, or must grant a credit, and it directly changes the net figure you keep.
A separate route exists alongside the mandat social: holding a genuine employment contract (contrat de travail) with your own company for technical duties distinct from management — for example, a founder who is both président of the SAS and employed as lead software engineer. French law allows this combination only under strict conditions: the employment must correspond to a real, separate job, performed under a relationship of subordination distinct from the corporate office, with its own pay. The Service-Public guidance confirms that a director “peut cumuler son mandat social” within an SAS with an employment contract if the conditions are met. For a majority shareholder this combination is almost impossible in practice, because you cannot be subordinate to yourself; for a minority director it is realistic. Founders who simply label their management pay a “salary” without meeting these conditions gain no employment protection and create a reclassification risk in any later dispute with URSSAF or with the company itself.
The cost of salary to the company is the other half of the calculation. On top of the gross amount, the company pays employer social contributions and you bear employee contributions, at rates that together add roughly half of the gross salary again in the general scheme (the exact burden depends on the level of pay and the applicable ceilings). Salary is therefore flexible — it can be adjusted, suspended or stopped by corporate decision — but it is expensive in social charges and it is taxed at the progressive personal rates. Dividends, the second channel, work in the opposite way: cheaper in social charges, but available only when the company has genuine distributable profit.
B. Taking Dividends Instead: When You Can Pay Them and How France Taxes a Non-Resident Shareholder
Dividends are not a salary and cannot be used as one. They can only be paid out of profit that the shareholders have formally decided to distribute, and that decision can only be taken once a year when the accounts are approved — or, for interim dividends (acomptes sur dividendes), on the basis of an interim balance sheet certified by the statutory auditor. Article L232-12 of the Commercial Code states that “Après approbation des comptes annuels et constatation de l’existence de sommes distribuables, l’assemblée générale détermine la part attribuée aux associés sous forme de dividendes.” — after approval of the annual accounts and confirmation that distributable sums exist, the shareholders’ meeting (assemblée générale) determines the share paid to shareholders as dividends. The same article adds a warning that every founder should read twice: “Tout dividende distribué en violation des règles ci-dessus énoncées est un dividende fictif.” Any dividend distributed in breach of these rules is a fictitious dividend, and distributing fictitious dividends is a criminal offence for the directors who organise it. The Service-Public guidance describes the same sequence in practical terms: at the end of the financial year the company may make profits, and the shareholders decide, according to the needs and plans of the company, to place those profits in reserve or to distribute them, with the decision taken at the shareholders’ meeting when the accounts are approved.
Three consequences matter for a foreign shareholder. First, you cannot pay yourself dividends in a loss-making year, and you cannot distribute more than the distributable sums — share capital and legal reserves are untouchable. If the company needs the cash to grow, the lawful move is to leave the profit in reserve, not to dress up a withdrawal as a dividend. Second, dividends paid to an individual are taxed under the prélèvement forfaitaire unique, the flat-rate levy. The official business guidance explains that dividends received by an individual fall under the flat-rate levy system, and it notes the alternative of electing for the progressive income-tax scale after a 40% allowance, adding that the two methods should be compared according to the amount received. For a non-resident the mechanism is a withholding tax (retenue à la source) levied in France before the money leaves. Article 119 bis of the General Tax Code provides that “Les revenus de capitaux mobiliers entrant dans les prévisions des articles 118,119, 238 septies B et 1678 bis donnent lieu à l’application d’une retenue à la source” where the income benefits persons without a French tax domicile, and Article 187 of the same code fixes the rate at “12,8 % pour les bénéficiaires personnes physiques” — 12.8% for individual beneficiaries. In practice the French paying company withholds this amount and pays it to the Treasury; you receive the net. Many French tax treaties reduce or reshape this levy, so the treaty between France and your state of residence must always be checked before a distribution is voted — the default statutory rate is only the starting point.
Third, dividends of a majority manager are partly pulled back into the social-contribution net: the official guidance notes that dividends are free of social contributions only insofar as they do not exceed 10% of the company’s share capital, which means a majority gérant who strips most of the profit as dividends will pay social charges on the excess. The classic founder optimisation — a modest paid mandate plus dividends on top — is lawful, but the boundary runs exactly here: salary bears full social contributions and progressive tax, dividends bear the flat levy plus, above the threshold, social charges for the majority manager. Have the two scenarios costed side by side each year with your French accountant (expert-comptable), because the better answer flips as the profit level, your residence and the treaty change.
II. Your French Social Security Status and Your Personal Liability as a Director Living Abroad
Pay is only half of the founder’s equation. The other half is status: France assigns every company director to a compulsory social security scheme by operation of law, and it attaches personal liability to the director’s title. Neither depends on where you live. A British, American or Emirati founder who presides over a Paris SAS is subject to the same affiliation rules and the same liability regime as a French resident — with the added complication of coordinating those rules with the system of the country where they actually live.
A. Which Scheme Covers You: Person Treated Like an Employee or Self-Employed Worker?
French social security knows two and only two boxes for company directors. The first box is the assimilé salarié — literally a person “treated like” an employee — who belongs to the general employee scheme (régime général) for health, family and retirement purposes, without being an employee under labour law. The second box is the independent worker (travailleur indépendant, formerly and still commonly abbreviated TNS for travailleur non salarié), affiliated to the social security scheme for the self-employed. Which box you fall into depends on your company form and your shareholding, not on your choice and not on your residence.
The statute draws the line in Article L311-3 of the Social Security Code (code de la sécurité sociale), which lists the persons compulsorily covered by the general scheme. Its item 11° covers “Les gérants de sociétés à responsabilité limitée et de sociétés d’exercice libéral à responsabilité limitée à condition que lesdits gérants ne possèdent pas ensemble plus de la moitié du capital social” — managers of SARLs on condition that those managers together do not own more than half of the share capital, counting shares held by the spouse, civil partner and minor children as held by the manager. Its item 23° covers “Les présidents et dirigeants des sociétés par actions simplifiées” — the presidents and officers of SAS companies, with no shareholding condition at all. In other words: the president of an SAS is always an assimilé salarié, even if they own 100% of the company, while the manager of a SARL is an assimilé salarié only if they are a minority or equal shareholder, and falls into the independent-worker scheme as soon as they hold the majority.
The official Service-Public guidance confirms the divide in plain terms. For the SAS it explains that the officer holds assimilé salarié status, giving access to the general employee protection scheme, with contributions levied on the pay received for the corporate office. For the SARL it draws the same line twice: the equal or minority manager holds assimilé salarié status with access to the general employee protection scheme, while the majority manager has self-employed status and belongs to the independent-workers scheme even where no remuneration is paid — the majority manager has self-employed status and belongs to the independent-workers scheme even if unpaid. That last point surprises many foreign founders: holding the majority of a SARL affiliates you to the French self-employed scheme from day one, whether or not you take a single euro out of the company.
The financial difference between the two boxes is structural. In the general scheme, contributions are strictly proportional to the remuneration actually paid: no pay, no contributions, which suits a founder who leaves the money in the company during the launch phase. For independent workers, Article L131-6 of the Social Security Code provides that “Les cotisations de sécurité sociale dues par les travailleurs indépendants non agricoles ne relevant pas du dispositif prévu à l’article L. 613-7 sont assises sur l’assiette définie à l’article L. 136-3.” — social contributions owed by non-agricultural independent workers are assessed on the base defined in Article L136-3, essentially their professional income. The majority SARL manager therefore pays contributions on the mandate pay plus, above the 10%-of-capital threshold, the excess dividends, while the SAS president pays only on actual remuneration. Neither box gives unemployment insurance (assurance chômage): unlike a genuine employee, a director — even an assimilé salarié — does not contribute to and cannot claim from the employee unemployment scheme. Founders who leave a salaried job abroad to run their French company full-time should price this gap and consider voluntary private cover.
Living abroad does not switch the box. French-source director remuneration remains subject to French social contributions, and the coordination depends on your situation: within the European Union and the European Economic Area, the social security regulations allocatecoverage to a single state, usually the state of work, with posted-worker (détachement) exceptions that require a portable document and strict conditions; outside Europe, bilateral social security agreements — where they exist — decide, and where none exists, double coverage is a real risk. Before taking office, clarify three things in writing: your exact box under Article L311-3, the coordination rule that applies between France and your state of residence, and the URSSAF office your company will report to — for a Paris company, that is the URSSAF of the Île-de-France region, which collects the contributions and conducts the audits. Getting this wrong means years of contributions paid in the wrong country, reassessments with late-payment surcharges, or uncovered health costs after an accident.
B. What You Personally Risk if the Company Fails: Management Fault and Shortfall Liability
The limited-liability company shields your assets as a shareholder: you lose your investment, nothing more. It does not shield you as a director. French law holds the gérant and the président personally liable for faults committed in running the company, and it allows the insolvency court to make directors personally pay for the company’s shortfall. This is the part of the founder’s job that foreign company forms — the English limited company, the Delaware LLC, the Dubai free-zone company — prepare you for least, because the French regime is wider and more actively enforced.
The general liability rule sits in Article L223-22 of the Commercial Code for SARL managers: “Les gérants sont responsables, individuellement ou solidairement, selon le cas, envers la société ou envers les tiers, soit des infractions aux dispositions législatives ou réglementaires applicables aux sociétés à responsabilité limitée, soit des violations des statuts, soit des fautes commises dans leur gestion.” — managers are liable, individually or jointly as the case may be, to the company and to third parties, for breaches of the laws and regulations applicable to SARLs, for violations of the articles, and for faults committed in their management. Shareholders can bring the company action (action sociale) against the managers to recover the company’s entire loss. SAS presidents face the equivalent exposure through the rules borrowed from public limited companies. In practice this covers signing contracts the company cannot honour, ignoring mandatory filings with the greffe, distributing fictitious dividends, or letting tax and social debts accumulate while continuing to trade.
The sharper blade is the liability for the insolvency shortfall (responsabilité pour insuffisance d’actif). Article L651-2 of the Commercial Code provides that “Lorsque la liquidation judiciaire d’une personne morale fait apparaître une insuffisance d’actif, le tribunal peut, en cas de faute de gestion ayant contribué à cette insuffisance d’actif, décider que le montant de cette insuffisance d’actif sera supporté, en tout ou en partie, par tous les dirigeants de droit ou de fait, ou par certains d’entre eux, ayant contribué à la faute de gestion.” — where the court-ordered liquidation (liquidation judiciaire) of a legal person reveals a shortfall of assets, the court may, where a management fault contributed to that shortfall, order that all or part of it be borne by all or some of the directors in law or in fact who contributed to the fault. Note the phrase “ou de fait”: a foreign founder who never took a formal title but actually directed the company from abroad — giving the orders, moving the funds, negotiating with suppliers — can be treated as a de facto director and caught by the same action. The same article then states the limit: “Toutefois, en cas de simple négligence du dirigeant de droit ou de fait dans la gestion de la personne morale, sa responsabilité au titre de l’insuffisance d’actif ne peut être engagée.” — however, where the director in law or in fact was merely negligent in managing the legal person, liability for the shortfall cannot be imposed.
Three recent rulings of the Commercial Chamber of the Cour de cassation show exactly where courts draw the line between protected simple negligence and punishable management fault. In the first, the Cour de cassation, 13 April 2022, appeal no. 20-20.137 (official decision), quashed a judgment that had ordered a director to pay 300,000 euros for the shortfall of a meat-trading company built around a single customer. The lower court had blamed the director for a lack of vigilance in committing the company to an activity resting on one client without securing the relationship. The supreme court answered: “Il résulte de ce texte qu’en cas de simple négligence dans la gestion de la société, la responsabilité du dirigeant au titre de l’insuffisance d’actif est écartée.” — it follows from this provision that where there is mere negligence in managing the company, the director’s liability for the shortfall is excluded. A lack of vigilance, without more, is not a management fault: the liquidation order was quashed and the case sent back.
In the second ruling, the Cour de cassation, 2 October 2024, appeal no. 23-15.995 (official decision), the court confirmed that the protective 2016 statute applies immediately to pending proceedings: “La loi du 9 décembre 2016, qui écarte, en cas de simple négligence dans la gestion de la société, la responsabilité du dirigeant au titre de l’insuffisance d’actif, est applicable immédiatement aux procédures collectives en cours et aux instances en responsabilité en cours.” — the Act of 9 December 2016, which excludes the director’s shortfall liability in cases of mere negligence in managing the company, applies immediately to ongoing insolvency proceedings and pending liability suits. A director sued for late or incomplete accounting documents therefore benefits from the negligence shield even in cases opened before the reform.
The third ruling shows the other side of the line. In the Cour de cassation, 14 January 2026, appeal no. 25-10.463 (official decision), the court upheld the courts below against a director whose company had understated VAT turnover in monthly returns, inflated deductible charges to shrink the corporate-tax base, and filed all its corporate-tax returns late over the audited period, generating a tax reassessment worth about 70% of the liabilities — while abusively continuing a loss-making operation bound to end in cessation of payments (cessation des paiements, the legal state of being unable to meet due liabilities with available assets). The court endorsed the finding that “l’ensemble des manquements aux obligations fiscales auxquelles est soumis le dirigeant caractérise une faute de gestion ayant directement contribué à l’insuffisance d’actif” — all of the breaches of the tax obligations incumbent on the director constitute a management fault that directly contributed to the shortfall — and that these were “des fautes de gestion dont la gravité et le caractère répété et délibéré excluent que soit retenu à son encontre une simple négligence” — management faults whose gravity and repeated, deliberate character rule out a finding of mere negligence. Deliberate, repeated tax breaches plus trading on while insolvent cross the line; an honest commercial misjudgement does not.
The practical lesson for a foreign director is procedural as much as substantive. French law requires the debtor to request the opening of court-supervised insolvency proceedings within forty-five days of the cessation of payments where no conciliation has been sought in the meantime — Article L631-4 of the Commercial Code states that “L’ouverture d’une procédure de redressement judiciaire doit être demandée par le débiteur au plus tard dans les quarante-cinq jours qui suivent la cessation des paiements s’il n’a pas, dans ce délai, demandé l’ouverture d’une procédure de conciliation.” Keep real-time accounts, have them reviewed quarterly by your expert-comptable, never sign a tax or VAT return you have not read, and the day the company can no longer pay its due debts with available cash, take advice within days — not months — on declaring the cessation of payments to the commercial court. Late filing combined with continued trading is precisely the pattern the 14 January 2026 ruling punishes, and distance is no defence: court summonses are served at the company’s registered office (siège social), judgments are published in the BODACC, and a director who learns about the shortfall action from abroad has already lost the months that matter.
Conclusion
Running a French company from abroad works well once the three layers are separated. Pay yourself through the right channel: a formally decided salary for your management role, taxed as personal income and deductible for the company, or dividends voted by the shareholders out of genuine distributable profit, subject to the 12.8% withholding for non-resident individuals unless the applicable tax treaty says otherwise — never a mix of the two improvised month by month. Sit in the right social security box: SAS president or minority SARL manager as assimilé salarié in the general scheme, majority SARL manager as an independent worker affiliated even when unpaid, with the France–residence coordination settled in writing before the first euro moves. And direct like a director: real accounts reviewed quarterly, tax returns read before signing, no fictitious dividends, and a court filing within forty-five days if the cash runs out. The Cour de cassation protects the honest but unlucky founder — mere negligence does not pay the shortfall — while it shows no mercy to deliberate, repeated breaches. Most foreign founders only need three appointments to get this right: a French accountant to cost the salary-versus-dividends scenarios, a social security check on the applicable state of coverage, and a lawyer to align the statuts, the pay decisions and the treaty position before the company starts trading. Our office handles exactly this setup for English-speaking founders in Paris and the Île-de-France region, and the disputes that follow when it was skipped: URSSAF reassessments, shareholder conflicts over reserves, and directors sued for the shortfall from abroad.
Need a quick opinion on your case
Talk through your situation in a phone consultation within 48 hours with a lawyer from the firm. Call 06 46 60 58 22 or write via our contact page. We receive clients in Paris and across Île-de-France, and we advise English-speaking founders wherever they are based. For the full setup roadmap — bank account, Kbis, VAT and first hire — see also our guide to setting up a company in France as a foreign founder.