Your French company has closed a profitable year, the cash sits in a French bank account, and you live in London, New York, Dubai or Singapore. How do you move that profit to yourself without breaking French company law, without overpaying French withholding tax, and without triggering a dispute with a co-shareholder, the tax office or a future auditor? This is the question almost every foreign founder asks once the first set of accounts turns positive, and it is also where some of the most expensive mistakes happen: dividends voted without available profits, tax withheld at the wrong rate, treaty relief missed because the residence certificate arrived too late, or salary and dividends mixed in a way that maximises social charges instead of minimising them. This article walks through the full chain, entirely from official texts and published court decisions. First, when a French company is legally allowed to distribute and how you vote and document the distribution while running the business from abroad. Second, how much French tax is levied on the way out when the shareholder is not a French tax resident, how tax treaties change the bill, and how dividends compare with paying yourself a salary or repaying a shareholder loan. Every French acronym is explained on first use, and every decisive rule is quoted from its official source.
I. Can your French company legally pay you dividends while you run it from abroad?
A. Does your company have anything it is allowed to distribute, and what happens if you get this wrong?
French law does not let shareholders distribute whatever cash happens to be in the bank. Only a precisely defined pool called the distributable profit can be paid out, and the rule applies identically whether the shareholder lives in Paris or on another continent. Article L232-11 of the Commercial Code defines it in these terms: “Le bénéfice distribuable est constitué par le bénéfice de l’exercice, diminué des pertes antérieures, ainsi que des sommes à porter en réserve en application de la loi ou des statuts, et augmenté du report bénéficiaire.” In plain English, you start from the profit of the financial year just closed, subtract losses carried forward and the amounts that must go to reserves by law or under the articles of association, and add retained earnings carried forward from earlier years. The general meeting can also decide to distribute sums taken from reserves that it is free to use, but the decision must expressly state from which reserve line the money is taken, and dividends are taken first from the distributable profit of the year. For a foreign founder, the practical consequence is immediate: before talking about tax, your accountant must compute this pool under French accounting rules, not under the rules of your country of residence. A profit figure that looks distributable under American or British standards may not be distributable in France once legal reserves, prior losses and the allocation rules of your articles are applied.
A second barrier protects creditors, and it bites exactly when a young company wants to reward its founder early. Article L232-11 then sets the creditor shield: “Hors le cas de réduction du capital, aucune distribution ne peut être faite aux actionnaires lorsque les capitaux propres sont ou deviendraient à la suite de celle-ci inférieurs au montant du capital augmenté des réserves que la loi ou les statuts ne permettent pas de distribuer” Shareholders equity, meaning net assets, must stay at or above share capital plus non-distributable reserves after the payout. A company can therefore show a profitable year and still be unable to distribute, for example because earlier losses hollowed out equity below that floor, or because the planned dividend itself would push equity under it. If your French vehicle is a SAS (societe par actions simplifiee, the simplified joint-stock company most foreign founders choose) or a SARL (societe a responsabilite limitee, the limited liability company), the test is the same; the choice of vehicle, explained in our guide to choosing between a SAS, a SARL, a branch and a subsidiary from abroad, changes governance and tax, not this creditor shield. Ask your accountant for a short written computation showing profit of the year, prior losses, legal reserve allocation, retained earnings, and equity before and after the planned distribution. Keep that page with the meeting minutes. It is the single cheapest insurance against everything that follows.
Distributing outside these rules creates what French law calls fictitious dividends, and the sanction goes far beyond repaying the money. Article L232-12 of the Commercial Code states: “Tout dividende distribué en violation des règles ci-dessus énoncées est un dividende fictif.” A fictitious dividend is not a tax adjustment; it is a criminal offence for the managers who organised it, and the shareholders who received it knowing there were no distributable profits can be ordered to return it. The Cour de cassation, the supreme court for civil and criminal matters, confirmed the criminal reality of this offence in a published ruling of 12 June 2025, appeal number 24-81.263, available at Cour de cassation, criminal chamber, 12 June 2025, no. 24-81.263, a case in which the Bordeaux court of appeal had imposed a 15,000 euro fine on one defendant for forgery and complicity in distributing fictitious dividends, and a six-month suspended prison sentence with confiscation on the other for distributing fictitious dividends, forgery and use of forged documents Fifteen thousand euros in fines for one defendant and a six-month suspended prison sentence plus confiscation for the other, for false accounting tied to a distribution of fictitious dividends. The facts of that case involved inflated interim figures used to justify payments, which is precisely the temptation in a founder-led company where the same person prepares the numbers, votes the dividend and cashes it. If you run the company from abroad and sign whatever your local contact puts in front of you, you remain the person criminally exposed. Never vote a dividend on the basis of a bank balance, a management dashboard or an unaudited interim statement unless the strict conditions for interim dividends are met, with accounts certified by a statutory auditor. The full-year route, with approved accounts and a documented distributable pool, is slower and safer, and it is the route this article assumes.
One related trap deserves a paragraph because foreign founders meet it often: the co-shareholder who blocks every distribution. In a company with a French partner, a majority shareholder who systematically pushes profits to reserves year after year, with no business justification, exposes the decision to annulment for abuse of majority, and courts have cancelled such resolutions and ordered payment to the minority. If you are the foreign minority shareholder and your French partner votes reserves every year while the company is profitable, document the pattern, request written business reasons, and treat the next general meeting as a potential dispute, not a formality. If you are the majority, the mirror advice applies: record genuine reasons for retaining earnings, such as planned investment, debt repayment or prudential reserves, in the meeting minutes. A distribution policy that is explained in writing rarely becomes a lawsuit.
B. How do you vote, document and file the distribution when you live outside France?
The ordinary route runs through the annual general meeting, and the calendar is statutory, not a matter of convenience. Article L225-100 of the Commercial Code provides: “L’assemblée générale ordinaire est réunie au moins une fois par an, dans les six mois de la clôture de l’exercice, sous réserve de prolongation de ce délai par décision de justice.” The annual meeting that approves the accounts must be held within six months of the year end, extendable only by court order. Most French companies close on 31 December, so the meeting usually happens before 30 June. Article L232-12 then sets the sequence for dividends: “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.” Approval of the accounts first, formal recognition that distributable sums exist second, determination of the dividend third. A resolution that votes a dividend without approving the accounts, or without stating the distributable amount, is defective, and a defective resolution is exactly what a hostile co-shareholder or a tax auditor attacks two years later.
From abroad, organise the meeting so that distance never becomes an argument against validity. Check your articles first: many SAS articles allow video participation and written consultation, while older SARL articles may require physical presence or specific majorities, in which case amend the articles before the meeting, not after. Send the convening notices and the full information pack within the statutory time limits, hold the meeting by video where the articles permit, record attendance, votes and the exact dividend per share, and sign minutes that state the distributable profit, the allocation between dividends and reserves, and the payment date. Then file what must be filed: the approved accounts and the allocation decision go to the greffe, the registry office of the commercial court of the place of registration, which forwards them to the RCS (Registre du commerce et des societes, the French companies register) and publishes a notice in the BODACC (Bulletin officiel des annonces civiles et commerciales, the official gazette of business announcements). Anyone reading this from Paris should know that for a company registered in Paris, the competent greffe is the registry of the Paris commercial court, with its own practical filing queues and delays, so instruct your accountant or agent early rather than in the last week of June. Keep a complete closing file: convening notices with proof of sending, attendance sheet or connection log, minutes signed by the chair, the accountant computation of distributable profit, the filed accounts with the filing receipt, and the bank transfer slips. A distribution that is perfectly voted but impossible to prove is only half a distribution.
Two formal details frequently overlooked by foreign owners are worth stating plainly. First, the report and the draft resolutions submitted to the meeting must look backwards as well as forwards. Article 243 bis of the General Tax Code requires: “Les rapports présentés et les propositions de résolution soumises aux assemblées générales d’associés ou d’actionnaires en vue de l’affectation des résultats de chaque exercice, doivent mentionner le montant des dividendes qui ont été mis en distribution au titre des trois exercices précédents” Your dividend resolution must therefore recall the dividends paid over the previous three years, with the split between amounts eligible for the 40 percent allowance and amounts not eligible, by share class. Auditors check this line, and its absence signals sloppy corporate housekeeping. Second, the dividend becomes a debt of the company to each shareholder on the date the meeting fixes, and payment mechanics matter for tax: the withholding and reporting obligations described in the second part of this article attach to the payment, not the vote. Fix a payment date in the resolution, pay on that date, and make sure the tax filings follow the payment. A dividend voted in June, paid in three instalments across the autumn without documentation, creates three tax events and three opportunities for error.
II. How much French tax hits dividends paid to a non-resident, and how do you move the cash?
A. What withholding tax applies when the shareholder lives abroad, and how do tax treaties reduce it?
Before the dividend reaches you, France taxes the profit twice: once at company level, once on distribution. At company level, the standard rate of IS (impot sur les societes, French corporate income tax) is set by Article 219 of the General Tax Code, which states: “Le taux normal de l’impôt est fixé à 25 %.” A company earning 100,000 euros of taxable profit therefore pays roughly 25,000 euros of corporate tax, leaving about 75,000 euros available for distribution or reserves. The mechanics of computing, paying in instalments, carrying forward losses and filing the corporate return from abroad are explained in our companion guide to French corporate income tax for companies run from abroad. Only after that company-level tax is settled does the shareholder-level question arise, and for a shareholder who is not a French tax resident, that question takes the form of a withholding tax levied at source, in French called retenue a la source.
The legal base for the withholding is Article 119 bis of the General Tax Code, which provides: “Les produits visés aux articles 108 à 117 bis donnent lieu à l’application d’une retenue à la source dont le taux est fixé par l’article 187 lorsque leurs bénéficiaires effectifs sont des personnes qui n’ont pas leur domicile fiscal ou leur siège en France” Whenever the beneficial owner of the distributed income has neither a French tax domicile nor a French registered seat, the French payer must withhold. Note the words beneficial owner: holding the shares through an intermediary, a nominee or a chain of entities does not by itself escape the rule if you are the person ultimately entitled to the income, and treaty benefits likewise go to the beneficial owner, not to a mailbox. The rate then comes from Article 187 of the same code. For an individual shareholder, the rule is short: “12,8 % pour les bénéficiaires personnes physiques.” Twelve point eight percent of the gross dividend is withheld by the French company before the money leaves France. For a corporate shareholder, the rate is the standard corporate rate referenced through Article 219, meaning the dividend paid to a foreign parent company suffers, as a starting point, the same 25 percent rate, subject to the important European exceptions below. And for payments routed to a non-cooperative state or territory, the rate becomes punitive: “Le taux de la retenue à la source prévue au 2 de l’article 119 bis est fixé à 75 % pour les produits mentionnés aux articles 108 à 117 bis ou 119 bis A et payés hors de France, dans un Etat ou territoire non coopératif au sens de l’article 238-0 A” Seventy-five percent is not a tax, it is a wall. Check where your holding structure sits before voting anything.
Those domestic rates are only the starting point, because France has signed tax treaties with a large number of countries, and almost every treaty caps the withholding on dividends when the beneficial owner is resident in the treaty partner. In practice, many treaties bring the rate down to 15 percent, and some provide lower rates for parent companies holding a substantial stake, often 5 percent above a participation threshold, or even zero within the European Union under the parent-subsidiary regime. The exact figure depends on your country of residence, on the size of your holding, and on whether you genuinely qualify as the beneficial owner rather than a conduit. The mechanism matters more than any single figure: to obtain the reduced treaty rate at the time of payment, the foreign shareholder must supply the French paying company with a certificate of tax residence, in practice the French form 5000 or an equivalent certificate issued by the foreign tax authority, before the dividend is paid. Without that document in hand, the French company must apply the full domestic rate and the shareholder must claim the excess back afterwards through a refund form, a slower procedure that immobilises cash for months. Individual shareholders who want the refund procedure in full detail will find it in our companion guide to dividends paid to a non-resident individual, the 12.8 percent levy and treaty refunds from abroad. The operational lesson for a founder abroad is therefore a calendar lesson: identify the applicable treaty rate, obtain the residence certificate from your local tax authority early, since some authorities take weeks to issue it, and transmit it to your French accountant before the payment date fixed in the minutes. A dividend paid on 15 July with a certificate received on 20 July is a dividend overtaxed at source, followed by a refund file. The money comes back eventually, but the delay is self-inflicted.
Two European qualifications change the picture radically for founders inside the EU. First, dividends paid by a French subsidiary to a parent company established in another EU member state can be fully exempt from French withholding under the EU parent-subsidiary regime, provided the parent has held at least 10 percent of the French subsidiary continuously for two years and both companies are subject to corporate tax in their state. This is the structure through which many foreign groups hold their French operations, and it is one reason the initial choice of vehicle matters so much. Second, dividends paid to certain EU investment vehicles that would be taxed like a French company if established in France can benefit from the reduced rate of Article 219 bis rather than the full rate. Both regimes are conditional, documented and audited: holding percentage, holding period, tax status of both ends, and proof of beneficial ownership. Do not assume them; have your adviser confirm each condition in writing before the payment, and keep the supporting documents with the dividend file. The French tax administration requires the payment itself to go through the official online channel: form 2777-SD is filed electronically with simultaneous electronic payment. Form 2777-SD, the return for income from movable capital, withholding and levies, must now be filed online with simultaneous electronic payment, handled by the tax office that manages the company or by the DGE (Direction des grandes entreprises, the large business directorate) for the biggest groups. The official form and its instructions are on impots.gouv.fr, form 2777-SD, and the English-language official summary of levies and withholding on investment income is on service-public.fr, withholding on investment income. Late or missing 2777 filings draw interest and penalties on top of the tax, so confirm with your accountant that each dividend payment has its matching 2777 filing and payment receipt.
A worked example fixes the orders of magnitude. Suppose your SAS earns 100,000 euros of taxable profit and you are its sole shareholder, an individual living in London. Corporate tax at 25 percent takes about 25,000 euros, leaving 75,000 euros distributable, assuming no prior losses and reserves already funded. The meeting votes the full 75,000 euros as dividends. If your British residence certificate reached the company before payment and the applicable treaty caps the withholding at 15 percent, the company withholds 11,250 euros through form 2777-SD and wires you 63,750 euros. Without the certificate, 12.8 percent domestic withholding applies instead, meaning 9,600 euros withheld and 65,400 euros wired, a lower French levy at source but with the United Kingdom then taxing the dividend under its own rules and granting credit only within treaty limits, so the total burden across both countries must be modelled, not just the French slice. If you are a United States resident individual, the same mechanics apply with the France-United States treaty rate, and American anti-deferral and reporting rules add a second layer of compliance at home. The example assumes clean facts; real files add social contributions in specific cases, the 40 percent allowance for French-resident individuals electing progressive taxation, and the flat-rate levy mechanics for residents, which are recalled below only to explain why your French co-founder is taxed differently from you.
B. Dividends, salary or shareholder loan repayment: which exit costs less for a founder abroad?
Dividends are only one of three ways to move money from the French company to yourself, and the cheapest route depends on your residence, your social security position and how much cash you need. Start with the comparison that surprises most foreign founders: your French-resident co-founder and you do not pay the same tax on the same dividend. An individual domiciled in France for tax purposes falls under Article 117 quater of the General Tax Code, which states that individuals “qui bénéficient de revenus distribués mentionnés aux articles 108 à 117 bis et 120 à 123 bis sont assujetties à un prélèvement” at the rate of 12.8 percent Resident individuals suffer a 12.8 percent flat levy collected at source, credited against their final income tax, with an exemption from the advance levy for modest households and a later choice between the 30 percent flat tax and progressive rates with a 40 percent allowance. You, as a non-resident, fall instead under the withholding analysed above, with treaty mechanics and no French progressive option. The same distribution therefore produces two different net amounts for two shareholders sitting around the same table. Model both before the meeting, especially if the articles require equal treatment or if a shareholders agreement promises a given yield.
Paying yourself a salary or management fees from the French company is the main alternative, and its economics turn on social charges rather than income tax. A salary paid by a French company bears French employer and employee social contributions, collected notably through URSSAF (Unions de recouvrement des cotisations de securite sociale et d’allocations familiales, the agency that collects social security contributions), plus income tax in the country where you are tax resident, with frontier, secondment and multi-state rules deciding which social system applies. For a founder who is not French tax resident and performs the work mostly abroad, a French salary can be an expensive way to extract cash: employer charges add roughly forty percent on top of gross pay, the net is taxed again at home, and the company must run French payroll, file DSN (declaration sociale nominative, the monthly payroll return) and manage payslips from a distance. Salary makes sense when you need French social coverage, pension quarters or a local income record, for example to support a future residence permit or a mortgage application, or when the company needs the salary deduction against corporate profit and the dividend route is blocked by insufficient distributable sums. Our guide to contractor reclassification and URSSAF exposure for foreign-run companies explains why dressing dividends as fees, or fees as dividends, without payroll reality invites reassessment. As a rule of thumb, dividends reward capital already taxed at 25 percent with no social charges on top, while salary buys social rights at a high contribution cost. Compute both on the same gross envelope before deciding, and revisit the mix each year as profits and your residence evolve.
The third route, repaying a shareholder loan, moves cash with no French income tax at all, but only within strict limits. Many foreign founders lend money to their French company at incorporation, through a compte courant d’associe, the shareholder current account that records advances made by a shareholder to the company. Repayment of the principal is not income: the company simply returns your own money, with no withholding and no 2777 filing on the principal. Interest is different: interest credited on the account is investment income, subject to levies and reporting like any interest, and deductible for the company only within capped rates. Three cautions apply. First, the advance must be real, documented and traceable by bank transfer, with written terms, because an undocumented cash injection requalified as hidden capital or hidden salary destroys the plan. Second, a debit balance is forbidden: a shareholder, and even more a manager, cannot leave their current account in debt toward the company, and auditors flag it systematically. Third, interest rates above the fiscal cap are not deductible, so price the loan at or below the published deductible rate. Used properly, the current account is the cleanest short-term exit: lend at incorporation when the company needs cash, get repaid once profits arrive, and reserve dividends for true profit distribution. Used loosely, with round-trip payments and no paperwork, it becomes exhibit one in a tax audit.
Practical execution from abroad ties the three routes together. Keep the corporate bank account fully operational and in the name of the company, since every dividend, salary and loan repayment must travel by traceable transfer; founders who hit account-opening or account-closure difficulties will find the remedies in our guide to forcing a French bank account open from abroad. For each payment, match the legal paper to the money: minutes and 2777 receipt for dividends, payslip and DSN for salary, loan agreement and transfer slips for current-account movements. Calendar the recurring duties: accounts approved within six months of year end, 2777 filed and paid with each distribution, treaty certificates renewed as required, and the corporate return and instalments tracked through the legal calendar in our annual legal calendar for companies run from abroad. If your structure includes a foreign parent, align the French distribution date with the parent accounting year and the treaty holding-period clock, so the exemption or reduced rate is acquired, not almost acquired. And when profits are modest, consider retaining earnings rather than distributing: retained profits fund growth without the round trip of tax, and a later sale of the shares or a later, larger distribution may be taxed more efficiently than annual drips, a trade-off to model with your adviser rather than decide at the meeting.
Conclusion
Getting profits out of a French company from abroad is a three-gate process, and each gate has its own logic. Company law decides whether anything can be distributed: compute the distributable profit exactly as Article L232-11 defines it, respect the equity floor, and vote the dividend after approving the accounts, because anything else is a fictitious dividend with criminal exposure confirmed as recently as June 2025. Corporate housekeeping makes the distribution stand up: convene and minute the meeting properly, recall three years of dividends as Article 243 bis requires, file the accounts with the greffe, and keep a file that proves every step from abroad. Tax then takes its share at two levels: 25 percent corporate tax on the profit, then withholding at source on the dividend, 12.8 percent for a non-resident individual and the corporate rate for a foreign parent, unless a treaty or the European parent-subsidiary regime lowers or removes it, with form 2777-SD filed online with simultaneous payment for every distribution. Against dividends, weigh salary when you need French social rights and weigh shareholder-loan repayment when you lent the company its starting cash, since each route carries a different mix of tax, social charges and paperwork. Run the numbers on the same envelope, secure the residence certificate before the payment date, and keep the paper trail complete. The profit your French company earned will then reach you as cash in your account, documented, defensible and at the lowest lawful cost.