Your French subsidiary is registered, the Kbis is issued, and now it needs cash: office deposit in Paris, first salaries, stock, a VAT bill before the first client pays. Wiring money from abroad is easy. Wiring it in the right legal form is not. Founders who live abroad usually hesitate between two tools — putting the money in as share capital or lending it to the company as a shareholder loan, known in France as an apport en compte courant d’associé (literally, a sum left in the company’s current account by the shareholder). The choice decides when you can get the money back, whether the interest is tax-deductible, which approvals you need, and how the tax administration will look at the arrangement three years later.
Capital is permanent: once contributed, it leaves the company only through a formal capital reduction or at liquidation. A shareholder loan is flexible: repayable on agreed terms, interest-bearing, and quicker to put in place. That flexibility explains why foreign parents fund French subsidiaries overwhelmingly through current accounts. It also explains the disputes: undocumented advances reclassified as hidden profit distributions, interest thrown out of deductible charges, repayments frozen when a co-shareholder objects, loans challenged by a liquidator. This guide explains how to lend cleanly from abroad — the funding mix, the written agreement, the mandatory approvals, the interest cap, and the way home.
I. Lending to your French company from abroad: capital, loans and the documents
A. Capital or shareholder loan: choosing the funding mix when you fund from abroad
Start from what each tool is. Share capital makes you a member: it carries voting rights, dividend rights and the liability shield. The Commercial Code defines both main vehicles in the same spirit. For the SARL: “La société à responsabilité limitée est instituée par une ou plusieurs personnes qui ne supportent les pertes qu’à concurrence de leurs apports.” Read it here: Article L223-1 of the Commercial Code. For the SAS: “Une société par actions simplifiée peut être instituée par une ou plusieurs personnes qui ne supportent les pertes qu’à concurrence de leur apport.” Read it here: Article L227-1 of the Commercial Code. Both can be formed by a single person — a EURL or a SASU — because, as Article 1832 of the Civil Code provides, “Elle peut être instituée, dans les cas prévus par la loi, par l’acte de volonté d’une seule personne.” Your foreign company, or you personally, can therefore own 100 percent of the French vehicle, and lend to it, from day one.
Capital is fixed by the articles and deliberately sticky. For the SARL, Article L223-2 of the Commercial Code states: “Le montant du capital de la société est fixé par les statuts. Il est divisé en parts sociales égales.” Cash contributions must be paid up at least one-fifth immediately, with the balance due within five years of registration: “Les parts représentant des apports en numéraire doivent être libérées d’au moins un cinquième de leur montant. La libération du surplus intervient en une ou plusieurs fois sur décision du gérant, dans un délai qui ne peut excéder cinq ans à compter de l’immatriculation de la société au registre du commerce et des sociétés.” (Article L223-7 of the Commercial Code). Keep this timetable in mind for the rest of this guide, because unpaid capital blocks the interest deduction described below.
The shareholder loan works differently: it is a debt owed by the company to whoever advanced the funds — you personally or your foreign parent company. No new shares, no dilution of a co-founder, no notary-style capital procedure. The company books a liability, pays interest if the agreement says so, and repays on the agreed date. From abroad, that means you can react in days: bridge the VAT payment, cover payroll, fund stock, then be repaid when the client pays. But a loan is not a gift and not disguised capital. Every euro must be traceable — separate wire, explicit reference, loan agreement signed before or with the transfer — because the tax administration treats undocumented shareholder advances as its favourite target. Our guide on opening the corporate bank account from abroad explains the first practical hurdle: without an operating account, even a perfect loan agreement has nowhere to land.
The sensible mix for most foreign-owned subsidiaries is a credible capital base plus a documented current-account facility on top. Capital reassures the bank, the landlord and suppliers — a one-euro company borrowing hundreds of thousands from its invisible foreign parent raises every eyebrow. The loan provides the adjustable layer: drawn and repaid as the business breathes. Fix the proportions with your accountant before the first wire, record the facility ceiling in writing, and never let informal top-ups accumulate without paperwork. A current account that grows silently for two years looks, to an auditor, exactly like what the company cannot explain.
B. Approving the advance: regulated agreements in SARL and SAS, and the written contract
A loan from a shareholder to the company is not an informal favour. In French company law it is a regulated agreement (convention réglementée) that must be disclosed and approved — even when you are the only shareholder and the only director. The procedure differs between SARL and SAS, so identify your vehicle first.
In a SARL, the manager — or the auditor if one exists — reports to the members on agreements signed directly or indirectly between the company and one of its managers or members: “un rapport sur les conventions intervenues directement ou par personnes interposées entre la société et l’un de ses gérants ou associés. L’assemblée statue sur ce rapport.” Read it here: Article L223-19 of the Commercial Code. The interested manager or member does not vote, and the shares are ignored for quorum and majority. In practice, this means the annual meeting that approves the accounts also votes on your loan: amount outstanding, interest charged, repayments made. Prepare that report line every year, even when nothing changed. A missing vote does not automatically kill the loan, but it hands any challenger — a minority member, a divorcing co-founder, a liquidator — a ready-made argument that the advance was never treated as a real contract. Our analysis of cofounder deadlock and exclusion shows how undocumented money movements become weapons once partners fall out.
In a SAS, the auditor — or the president if no auditor was appointed — presents the report to the shareholders on agreements between the company and its president, its directors, any shareholder holding more than 10 percent of voting rights, or the controlling company of a corporate shareholder: “Le commissaire aux comptes ou, s’il n’en a pas été désigné, le président de la société présente aux associés un rapport sur les conventions intervenues directement ou par personne interposée entre la société et son président, l’un de ses dirigeants, l’un de ses actionnaires disposant d’une fraction des droits de vote supérieure à 10 % ou, s’il s’agit d’une société actionnaire, la société la contrôlant au sens de l’article L. 233-3. Les associés statuent sur ce rapport.” Read it here: Article L227-10 of the Commercial Code. A foreign parent holding 100 percent of the SAS is plainly caught: its loans must go through this vote. Note the consequence the article attaches to a refusal: “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.” The loan survives, but the interested party bears any harm to the company — one more reason to keep the terms visibly arm’s length.
The written agreement is where approval meets proof. Sign it before the funds move, in English with a French version or in bilingual form, and cover at minimum: the lender’s exact identity, the amount and currency, the drawdown mechanics, a fixed or formula interest rate, the term and repayment triggers, early-repayment rights, subordination if the bank requires it, and the governing law. Keep each drawdown on its own dated wire with the agreement’s reference. If you are the sole shareholder and sole director signing both sides, say so in the document and have the approval recorded in the company’s register — signing both sides without a paper trail is precisely what a later challenge will attack. File the agreement with the annual report each year so the chain from wire to vote is unbroken.
Banks read the funding mix before you do. When the subsidiary applies for an overdraft, a lease or a state-guaranteed loan, the bank restates the balance sheet: share capital counts as equity, while a repayable-on-demand shareholder loan counts as short-term debt unless it is blocked or subordinated in writing. Founders who keep capital symbolic and fund everything by demand loan therefore present a company that looks insolvent on paper, and the loan they counted as strength becomes the reason credit is refused. If bank financing is on the roadmap, sign the blocking or subordination letter early, for a fixed period, and tell the bank the loan’s exact terms — the facility that the bank helped design is the facility the bank will respect.
Currency deserves its own clause. Loans from abroad are often denominated in dollars, pounds or dirhams while the subsidiary spends euros. State in the agreement which currency governs, how conversion is calculated on drawdown and repayment, and who bears the exchange difference. Without that clause, a 5 percent currency swing becomes a dispute about whether the company repaid in full — or a quiet foreign-exchange gain the accounts never recorded. Keep multi-currency advances in separate sub-accounts per currency so the ledger tells the story without reconstruction.
Where the company has a single member — a EURL or a SASU owned entirely from abroad — the approval logic does not disappear, it concentrates. The sole shareholder still records the decision, still keeps the report, and still files it in the company’s decision register, because the audience for that paper is not the meeting room but the future reader: the auditor, the incoming investor, the judge. A one-person company with a one-page yearly loan minute passes every review; a one-person company with nothing written down invites the inference that no loan existed. The cost of the minute is nil. The cost of its absence is the whole file.
II. Interest, tax and repayment: making the loan deductible and getting it back
A. Charging interest: the deductible rate cap and the fully-paid-capital condition
Interest is the main tax prize of the shareholder loan: paid by the company, it reduces the taxable profit, whereas a dividend is paid from after-tax profit. But the deduction is capped and conditional, and both limits are set by statute — not by what your home country allows.
The cap sits in the General Tax Code. Deductible are “3° Les intérêts servis aux associés à raison des sommes qu’ils laissent ou mettent à la disposition de la société, en sus de leur part du capital, quelle que soit la forme de la société, dans la limite de ceux calculés à un taux égal à la moyenne annuelle des taux effectifs moyens pratiqués par les établissements de crédit et les sociétés de financement pour des prêts à taux variable aux entreprises, d’une durée initiale supérieure à deux ans.” (Article 39, 1-3° of the General Tax Code). In plain terms: interest paid to shareholders on top of their capital is deductible only up to a market average rate — the yearly average of variable rates banks charge businesses on loans longer than two years. Charge 8 percent when the published average is 4 percent and the excess stays in taxable profit. Check the published average for the year before fixing the rate in the agreement, and reset the rate if the loan runs across years.
The second condition is binary and often missed by foreign founders: “Cette déduction est subordonnée à la condition que le capital ait été entièrement libéré.” (Article 39, 1-3° of the General Tax Code): no deduction at all until the share capital is fully paid up. Recall Article L223-7 of the Commercial Code, which lets SARL founders pay in only one-fifth of cash capital with five years to complete: during those unpaid years, the loan interest is not deductible. Sequence the funding accordingly — complete the capital liberation first, then switch the current account to interest-bearing, and minute both steps. Beyond the rate cap, heavily leveraged structures face a second, overall ceiling on net financial expenses under Article 212 of the General Tax Code, which limits deductible net interest by reference to EBITDA; ordinary operating current accounts rarely hit it, but acquisition debt stacked onto the French subsidiary can. Model the full stack with your tax adviser, including the treaty between France and the lender’s state, before choosing the rate and the leverage — the dividend alternative and its withholding mechanics are compared in our guide to dividends paid abroad and treaty relief.
Interest-free loans deserve a deliberate choice, not a default. Nothing forbids a shareholder from lending at zero percent, and early-stage subsidiaries often do exactly that to preserve cash. But a zero rate should be written, dated and justified — bridge funding for a defined period, convertible into capital on a set trigger — rather than left as the silent product of never discussing interest. Within groups, systematically off-market terms attract transfer-pricing attention in both states: the French company deducts nothing while the foreign lender books nothing, and each administration may ask why related parties dealt on terms strangers would refuse. A rate at or near the published average costs the group little and removes the question entirely. Where the loan will run for years, add a review clause that resets the rate to the current average each calendar year, so the file stays arm’s length without renegotiation.
Think of the funding as a sequence, not a single event. A common path for a subsidiary launched from abroad runs like this: initial capital at a credible level, current-account facility signed alongside the articles, first drawings for the deposit and salaries, capital fully liberated within the first year so interest becomes deductible, rate set by reference to the published average, yearly approval minutes filed with the accounts, partial repayments as revenue lands, and finally either full repayment or conversion of the balance into capital when the subsidiary needs a stronger balance sheet for a lease or a loan. Each step is a one-page document. Together they form the chain that auditors, banks and courts all ask for: money in, terms written, approvals voted, interest capped, money out. Build that chain from the first wire and the shareholder loan stays the simplest instrument in the structure — the one that never generates a dispute because every answer is already on paper.
B. Getting repaid: repayment terms, set-off, and what happens in hard times
A loan is only as good as its repayment. Agree the mechanics up front, while relations are good and the company is solvent, because every repayment dispute happens later under stress — a co-shareholder blocking the wire, a cash crunch, an audit, an insolvency.
Set a real term. An open-ended, repayable-on-demand advance is lawful, but a fixed term with scheduled instalments or a documented rollover each year reads as a genuine debt and behaves like one. Provide for early repayment by the company without penalty: when profits arrive, the subsidiary should be free to clear the account and stop the interest clock. If the bank financing the subsidiary demands it, accept a subordination clause (the shareholder is repaid after the bank) or a temporary blocking agreement (convention de blocage) — but time-limit both, and record the consideration: banks often count a blocked current account as quasi-equity when scoring the file, which is precisely why founders sign them. Never leave a blocking clause open-ended and undated; an account frozen indefinitely starts to look like capital that skipped the capital procedure.
Repayment must follow the same paper trail as the advance: board or shareholder decision noting the amount repaid and the remaining balance, wire with an explicit reference, updated loan ledger. Set-off is common in groups — the subsidiary owes the parent on the loan, the parent owes the subsidiary on an invoice — and French law allows mutual debts to extinguish each other where the conditions are met, but document each set-off in a signed statement rather than netting silently in the accounting software. Silent netting is what makes an auditor ask whether the loan ever really existed.
In hard times, the loan’s nature matters. A shareholder loan is a liability the company owes, and the lender files like other creditors — but it ranks unsecured, behind employees, the tax authorities and secured banks, and a liquidator will examine every late top-up for signs that the company traded on shareholder life support. Advances made when insolvency was already unavoidable, interest stripped out while suppliers went unpaid, or a sudden repayment to the parent weeks before the filing invite challenge. The defence is the same file you built in good times: signed agreement, arm’s-length rate within the tax cap, yearly approvals, real wires with references, repayments minuted. If the subsidiary slides toward cessation des paiements (inability to meet current liabilities with available assets), stop all repayments to related parties and take advice immediately — a well-documented loan survives scrutiny, but only if the last months look as clean as the first. Our walkthrough of subsidiary insolvency and director liability from abroad explains the 45-day declaration duty and the personal risks that attach to late action.
One final boundary. This guide covers lending to your company; moving yourself to France, drawing a salary from the subsidiary, or taking dividends instead of interest are separate analyses with their own tax and social-security arithmetic. Decide the funding first, document it, approve it yearly, keep the capital fully paid so the interest stays deductible — and the current account remains what it should be: the adjustable, repayable, tax-efficient bridge between your funds abroad and your company’s needs in France.
Conclusion
The shareholder loan is the foreign founder’s most flexible funding tool in France, and the most punished when improvised. Capital gives you membership and permanence; the current account gives you speed and repayment — at the price of paperwork. Approve the advance under the right procedure, Article L223-19 of the Commercial Code for the SARL and Article L227-10 of the Commercial Code for the SAS. Keep the rate within the published average under Article 39, 1-3° of the General Tax Code, and only once the capital is fully paid up. Repay on documented terms, minute every movement, and freeze related-party repayments at the first sign of insolvency. Built that way from abroad, the loan does exactly what you hired it for: putting cash to work in France today and coming home, with interest, tomorrow.