You run a company in London, Dubai, New York or Singapore, and you have created a French SAS, the société par actions simplifiée, the flexible French limited company that most foreign founders choose. The share capital is paid, the Kbis, the official identity certificate of a French company issued by the greffe, the registry office of the commercial court, has arrived, and the business needs cash quickly to pay the first salaries, the office deposit and the suppliers. The fastest solution looks obvious: you wire money from your foreign parent company or from your personal account abroad to the French SAS, and your accountant books it as a shareholder loan, called in France a compte courant d’associé, literally a shareholder current account. Months later, three unpleasant surprises arrive together. The French bank asks for the loan agreement and the proof of the origin of funds before it processes a repayment abroad. The French tax office, through the impôt sur les sociétés, the French corporate income tax known as IS, refuses to deduct the interest your French company paid to its foreign parent. And when you ask for your money back, the company answers that the cash position does not allow any repayment, or a co-shareholder blocks the payment. This guide explains, for a foreign founder or foreign group that lives abroad, how to lend money lawfully to a French company, how to charge interest that survives a tax audit, how to recover the funds, and what happens when the company can no longer repay. For the general sequence of creating the company, opening the account, obtaining the Kbis and registering for VAT, read our step-by-step guide to setting up a company in France as a foreign founder.

I. How do you legally put foreign money into your French company and get it back?

A. Can your foreign parent company lend to your French SAS through a shareholder current account?

Yes. A loan from a foreign shareholder to a French company is, in French legal terms, a consumer loan of money, a prêt de consommation. Article 1892 of the French Civil Code defines it in these words: “Le prêt de consommation est un contrat par lequel l’une des parties livre à l’autre une certaine quantité de choses qui se consomment par l’usage, à la charge par cette dernière de lui en rendre autant de même espèce et qualité.” In plain English, one party hands over an amount of money and the other must return the same amount. The core duty of the borrower is stated by Article 1902 of the Civil Code: “L’emprunteur est tenu de rendre les choses prêtées, en même quantité et qualité, et au terme convenu.” The borrower must return what was lent, in the same quantity and quality, on the agreed date. Interest is lawful, but it is never presumed: Article 1905 of the Civil Code states “Il est permis de stipuler des intérêts pour simple prêt soit d’argent, soit de denrées, ou autres choses mobilières”, which means the parties are allowed to agree on interest for a simple loan of money, and without such a written clause the loan produces no interest at all. For a foreign lender, the practical lesson is immediate: an undocumented wire transfer from abroad, even clearly labelled as a loan in the bank reference, earns no interest and is hard to prove, while a short written loan agreement fixes the amount, the currency, the interest rate, the term and the repayment mechanics.

French banking monopoly law does not prohibit this kind of shareholder financing. Only licensed credit institutions may grant loans as their usual business, but the law expressly leaves room for treasury operations inside a group. Article L. 511-7 of the French Monetary and Financial Code provides that a company may “Procéder à des opérations de trésorerie avec des sociétés ayant avec elle, directement ou indirectement, des liens de capital conférant à l’une des entreprises liées un pouvoir de contrôle effectif sur les autres”, meaning a company may carry out cash management operations with companies with which it has direct or indirect capital links giving one of them effective control over the others. A foreign parent that controls its French SAS therefore sits squarely inside this exception, and the loan is not an illegal banking operation, provided the relationship of control is real and documented through the share register, the Kbis and the chain of ownership. The exemption covers companies of any nationality, so a parent incorporated outside France benefits from it in the same way as a French parent, and the relevant proof is the capital link, not the nationality of the lender. Keep the shareholding chart, the foreign company registry extract with a sworn translation, and the French Kbis together with the loan file, because the bank compliance officer and, later, the tax auditor will ask for exactly these documents.

The single most useful feature of the shareholder current account for a foreign founder is its repayment rule. Where no term and no blocking clause were agreed, the advance is treated as a loan of indefinite duration, repayable on demand. The Commercial Chamber of the Court of Cassation, the highest French civil court, confirmed this on 12 February 2025 in Cass. com., 12 February 2025, appeal no. 23-17.483, holding that “sauf stipulation contraire, tout associé était en droit d’exiger à tout moment et peu important les motifs de sa demande le remboursement du solde de son compte courant, dès lors que l’avance ainsi consentie constituait un prêt à durée indéterminée”, which means that unless otherwise agreed, any shareholder may demand repayment of the balance of the current account at any time, whatever the reason for the request, because the advance is a loan of indefinite duration. That sentence protects the foreign parent that needs its cash back quickly. It also explains why French practitioners systematically add a convention de blocage, a written agreement that the advance stays in the company for a defined period: banks that finance the French SAS almost always require such a blocking clause before they grant their own loan, and without it the auditor of the French company may refuse to treat the advance as quasi-equity. Decide the point before wiring the funds. If you want the right to be repaid at any moment, write that the advance is repayable on demand. If the French subsidiary is negotiating a bank loan, expect the bank to demand a blocking clause of twelve to thirty-six months, and negotiate that clause knowingly rather than discovering it at the signing table.

Form matters as much as substance. A shareholder loan from abroad should always rest on four papers: a signed loan agreement stating the parties, the amount, the currency and exchange risk, the interest rate and its computation, the term or the on-demand nature, and the governing law; a board or presidential decision of the French SAS authorising the borrowing; the SWIFT transfer slips showing the path of the funds from the foreign account to the French business account; and the accounting entries in the French statutory accounts. French banks apply strict anti-money-laundering checks to incoming foreign funds, and a repayment to an account abroad triggers the same review in reverse. The file described above is what the bank officer examines before releasing the money. Parallel publicity comes from the BODACC, the Bulletin officiel des annonces civiles et commerciales, the official gazette where French company events are published: the loan itself is not published there, but the share capital, the directors and any insolvency judgment are, so a lender that checks the BODACC knows immediately whether the borrower is already in difficulty. Finally, register the real humans behind the structure in the RBE, the registre des bénéficiaires effectifs, the French beneficial owners register kept by the greffe: a foreign shareholder chain that hides the ultimate owner slows down every bank and every administration, while a clean declaration speeds up the release of funds.

B. Can you personally, as the foreign director living abroad, lend to your own French company?

You can, and foreign founders do it constantly, but the direction of the money decides everything. French law draws a sharp line between you lending to your company, which is generally allowed under conditions, and your company lending to you, which is generally forbidden. When the company lends to its own director, the prohibition is severe and the contract is void. Article L. 223-21 of the French Commercial Code, which applies to the SARL, the société à responsabilité limitée, the French limited liability company with intuitu personae membership, states: “A peine de nullité du contrat, il est interdit aux gérants ou associés autres que les personnes morales de contracter, sous quelque forme que ce soit, des emprunts auprès de la société, de se faire consentir par elle un découvert, en compte courant ou autrement, ainsi que de faire cautionner ou avaliser par elle leurs engagements envers les tiers.” In English, any loan by the company to its managers or to individual shareholders, any overdraft in current account or otherwise, and any guarantee of their personal debts by the company is prohibited, on pain of nullity of the contract, and only legal-entity shareholders escape the ban. The prohibition extends to the spouse, ascendants and descendants of the persons concerned and to any intermediary. Article L. 225-43 of the Commercial Code imposes the mirror rule for the société anonyme: “A peine de nullité du contrat, il est interdit aux administrateurs autres que les personnes morales de contracter, sous quelque forme que ce soit, des emprunts auprès de la société, de se faire consentir par elle un découvert, en compte courant ou autrement, ainsi que de faire cautionner ou avaliser par elle leurs engagements envers les tiers”, which carries the identical meaning for directors, the chief executive and their relatives. A foreign founder who takes cash out of the French company and books it as a personal current-account debit therefore signs a void contract and commits a criminally punishable abuse, while the reverse operation, the founder wiring personal savings into the company, follows the ordinary shareholder-loan regime described above. Never confuse the two directions, and never let an accountant leave a personal debit balance sleeping in the books.

In the SAS, the vehicle most foreign founders actually use, loans and current-account advances from directors and from shareholders holding more than ten percent of the voting rights are not prohibited, but they are controlled. Article L. 227-10 of the Commercial Code requires that the statutory auditor, or the president of the company where no auditor was appointed, present a report to the shareholders on the agreements entered into directly or through an intermediary between the company and its president, one of its managers, or one of its shareholders holding more than ten percent of the voting rights, and then “Les associés statuent sur ce rapport”, the shareholders vote on that report. Agreements that are not approved still take effect, because the same article continues: “Les conventions non approuvées, produisent néanmoins leurs effets, à charge pour la personne intéressée et éventuellement pour le président et les autres dirigeants d’en supporter les conséquences dommageables pour la société”, meaning unapproved agreements still produce their effects, but the interested person and possibly the president and the other managers bear any harmful consequences for the company. The parallel provision for public limited companies, Article L. 225-38 of the Commercial Code, goes further upstream by requiring prior authorisation from the board of directors for any agreement between the company and one of its managers or major shareholders, with reasons showing the interest of the agreement for the company, including its financial conditions. Where the SAS has a single shareholder, the formality is lighter but still mandatory: mention of the agreement in the register of decisions. For a foreign founder who manages the SAS from abroad, the discipline is therefore simple and non-negotiable: sign a written advance agreement, record it in the minutes or the decision register, have the shareholders vote on the auditor report at the next annual meeting that approves the accounts within six months of the year-end, and keep the bank slips. Our guide to the annual legal calendar of a French company managed from abroad gives the exact timetable for that meeting and the filing with the greffe.

Two traps specific to founders living abroad deserve attention at this stage. The first is the confusion between salary, director fees and loan repayment. Money that the company pays you each month without payslips and without a DSN, the déclaration sociale nominative, the monthly digital payroll return through which French employers declare salaries and social contributions, looks like undeclared wages to URSSAF, the Union de recouvrement des cotisations de sécurité sociale et d’allocations familiales, the French agency that collects social security contributions. An URSSAF auditor who finds regular monthly transfers labelled “current account repayment” with no underlying advance of the same magnitude reclassifies them as salary, adds late penalties, and the amounts become subject to income tax as well. If you already face that kind of reassessment, our analysis of URSSAF audits of French companies run from abroad explains the control procedure and the time limits for challenge. The second trap is the personal guarantee you may have signed for the French bank. Many banks lending to a newly created SAS ask the foreign founder for a personal surety governed by French law. That guarantee is independent of your shareholder loan: if the company fails, the bank sues you as guarantor even though you are yourself a creditor of the company for your advance, and compensation between the two positions is rarely available. Read the guarantee deed before wiring the loan, cap it in amount and time where possible, and never assume that being the lender protects you as guarantor.

II. What happens when the French tax office or the court attacks your loan?

A. Will the French tax office accept your interest charge, or reassess your French company?

The interest your French SAS pays to its foreign parent is deductible from corporate income tax only within strict statutory ceilings, and the part that exceeds them is added back to taxable profit with penalties. Article 212 of the French General Tax Code sets the first ceiling for interest on sums left or made available to a company by a related company: “Dans la limite de ceux calculés d’après le taux prévu au premier alinéa du 3° du 1 du même article 39 ou, s’ils sont supérieurs, d’après le taux que cette entreprise emprunteuse aurait pu obtenir d’établissements ou d’organismes financiers indépendants dans des conditions analogues”, meaning the interest is deductible only up to the amount computed at the statutory maximum rate defined by Article 39 or, if higher, at the rate the borrowing company could have obtained from independent banks in similar conditions. Article 39 of the General Tax Code builds that reference rate from the average effective rates charged by banks for variable-rate loans to companies, published quarterly by the Banque de France, and adds the general anti-abuse condition that remuneration is deductible only to the extent it corresponds to actual work and is not excessive for the service rendered. In practice, the auditor applies a two-step test: first, compare your contractual rate with the published quarterly maximum rate for shareholder current accounts, and disallow the excess automatically; second, where you claim a higher arm’s-length bank rate, prove with genuine comparable offers that an independent bank would have lent to your loss-making young SAS, without its parent guarantee, at that rate and for that amount. Most foreign groups fail the second step because no independent bank would have lent at all, and the interest above the statutory rate is then taxed as a distribution with withholding tax consequences.

Beyond the rate, the administration attacks the reality and the amount of the debt itself. Under-insured thin capitalisation, loans whose amount no independent lender would have accepted given the equity of the French SAS, is reclassified as hidden equity, and the interest becomes a non-deductible dividend. The general ceiling on net financial charges, the French transposition of the European interest-limitation rule, then caps the deduction for the whole company, and transfer-pricing rules require that every intragroup financial transaction, including management fees bundled with the loan, be priced as between strangers. The file that survives an audit is therefore the same file that satisfied the bank: a signed agreement dated before or at the time of the transfer, not drafted two years later during the audit; proof of payment of the interest with withholding tax returns where a treaty rate applies; board minutes showing a genuine financing need, for example the recruitment of the first employees or the fit-out of the Paris premises; and a short comparability note explaining why the chosen rate matches the risk. The official corporate tax portal impots.gouv.fr for business tax publishes the returns, rates and payment calendars, and the public guidance of the tax administration collected in the BOFIP, the Bulletin officiel des finances publiques, the official online tax commentary, details the computation of the maximum deductible rate. Check both before closing the accounts, because interest booked but non-deductible increases the IS balance without creating any cash, and the instalments, the acomptes, the quarterly advance payments of corporate tax, must be adjusted accordingly. Where the reassessment has already arrived, contest it within the legal time limit by a written claim to the tax office, then before the administrative court, and quantify precisely the disallowed fraction rather than litigating the principle in the abstract: judges reduce penalties where the company documented its rate honestly, even when the rate itself is corrected.

Cross-border payment adds a final layer. Interest paid by the French SAS to a parent established outside France may bear French withholding tax, reduced or eliminated by the applicable double tax treaty only if the foreign parent proves its residence with the treaty claim form and its real beneficial ownership of the interest. The bank that wires the interest abroad applies the domestic rate by default when the file is incomplete, and the French company remains liable for the missing levy. Currency clauses deserve the same care: agree in writing who bears the euro against dollar, pound or dirham movement, because an undocumented exchange gain booked in Paris is taxable immediately, while a documented symmetrical clause follows the loan. None of this requires a complex structure. A one-page rate schedule annexed to the loan agreement, the quarterly Banque de France reference rate printed and kept with the accounts, and the treaty residence certificate renewed each year prevent most reassessments at their source.

B. What if your French company cannot repay and the shortfall falls on you as director?

The hardest moment arrives when the French SAS runs out of cash and your shareholder loan, which you counted as a safe asset, cannot be repaid because the money is gone. French law then reverses the perspective: the unpaid lender becomes a potential suspect, and the director who kept the company alive with shareholder advances becomes potentially liable for the debts. The mechanism is the action for insufficiency of assets. Article L. 651-2 of the Commercial Code states: “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.” In English, where the court-ordered liquidation of a company shows that the assets do not cover the liabilities, the court may order the managers in law or in fact whose management fault contributed to the shortfall to bear all or part of it. Keeping a loss-making company artificially alive with successive shareholder advances instead of filing for insolvency within forty-five days of the cessation of payments, the cessation des paiements, the legal moment when the company can no longer meet its due liabilities with its available assets, is one of the faults most often invoked by liquidators. Advances that looked like rescue funds are then presented as the instrument that delayed the filing and deepened the losses of the suppliers and of URSSAF.

The Court of Cassation has just tightened the reasoning judges must follow before condemning a director. In Cass. com., 20 May 2026, appeal no. 25-14.635, the Commercial Chamber held: “En application de ce texte, le jugement qui condamne le dirigeant d’une personne morale à supporter tout ou partie de l’insuffisance d’actif de celle-ci doit préciser en quoi la faute retenue a contribué à l’insuffisance d’actif.” A judgment ordering a company manager to bear all or part of the asset shortfall must therefore explain precisely how the identified fault contributed to that shortfall, and a late filing invoked in general terms, without showing how the delay created additional liabilities, has no legal basis. For a foreign director sued from Paris while living abroad, this decision is the backbone of the defence: demand that the liquidator quantify, month by month, which debts were created after the alleged late filing and how continued trading with shareholder money worsened the outcome, rather than accepting a global lump sum. The same judgment quashed a five-year management ban pronounced without proper reasoning, which confirms that every sanction in this field must be individually justified. Parallel bans, personal bankruptcy and the extension of the proceedings to the director follow the same logic of proof, and a director who can show honest accounts, a timely filing and advances granted at market conditions negotiates from a far stronger position.

Prevention is straightforward and must start while the company is still solvent. First, insert a subordination or blocking clause in favour of the real creditors only when you understand its effect: a blocked advance cannot be reclaimed during the insolvency, and it protects the company but sacrifices the lender, which is acceptable for a parent that prefers to save the subsidiary, and dangerous for a founder who needs the cash personally. Second, convert advances into share capital by incorporation of the current account into equity when the balance sheet shows equity below half of the share capital: the reconstitution of equity removes the warning procedure of the auditors and restores the right to distribute future profits. Third, stop the haemorrhage early: French law requires the directors to file a declaration of cessation of payments with the commercial court within forty-five days, and the directors who file late, continue to pay selected creditors, or repay their own current account while suppliers wait, commit the exact faults that later justify personal condemnation. If the French company owes you money and also owes the tax authorities, never repay yourself first in the suspect period before the insolvency judgment: the liquidator cancels such preferential payments, and the repayment becomes both a nullified transaction and evidence of fault. Where closure is the rational option, our guide to ending employment and closing down cleanly from abroad and the official business formalities portal service-public.fr for businesses and the INPI one-stop shop for company formalities describe the dissolution, liquidation and striking-off steps, the radiation, the removal of the company from the trade register, which alone ends the accumulation of tax and social filings.

Conclusion

A shareholder loan from abroad is the most natural way to finance a young French SAS, and French law welcomes it: the Civil Code recognises the loan and its interest, the Monetary and Financial Code shelters intragroup treasury advances, and the Court of Cassation confirms that an advance without a blocking clause is repayable on demand. The same law punishes approximation. Write the agreement before wiring, record it in the company decisions, vote it with the accounts, charge a rate you can defend with the Banque de France reference, pay the treaty formalities on cross-border interest, and never take cash out through the back door of an undocumented debit. Watch the cash position every month, convert advances into capital when equity melts, and file for insolvency within the deadline when the business has no path forward, because the advances that delayed the filing become the evidence used against the director afterwards. Managed with these disciplines, the foreign money that built the French company can also come home, with its interest, through the bank, the greffe and the tax return, without dispute.