You wired 80,000 euros from London or New York to your new French company so it could pay the deposit on the office, fund the first payroll and survive until revenue arrives. Your French accountant booked the transfer as an avance en compte courant, a shareholder current account advance, and told you it was the simplest way to fund the business. A year later you ask for the money back and the answer is confusing: the new manager says the funds are blocked, the accountant warns about tax, and the bank asks for a loan agreement you never signed. This guide explains the full answer in plain English. A compte courant d’associe is the running account in the company’s books that records every advance a shareholder leaves at the disposal of the company on top of share capital, plus any interest, repayments and charges. It is not capital, it is a loan, and French law treats it as one. You will learn when you can demand repayment at any time from abroad, when a written lock-up stops you, what interest you can charge and deduct, and how the French tax administration attacks these loans during an audit.<\/p>\n
Every French acronym in this article is decoded on first use. The Kbis is the official company identity certificate issued by the greffe, the registry of the commercial court. The RCS is the Registre du commerce et des societes, the trade and companies register where your company and its managers are recorded. The INPI, the Institut national de la propriete industrielle, runs the Guichet unique, the single online portal where companies are registered and updated. The SIRET is the fourteen-digit identifier of your French establishment. The BODACC is the Bulletin officiel des annonces civiles et commerciales, the gazette where capital transactions are published. SAS means societe par actions simplifiee, the flexible company form most foreign founders choose. SARL means societe a responsabilite limitee, the traditional limited liability company run by a gerant. IS means impot sur les societes, French corporate income tax. CGI means Code general des impots, the tax code. CMF means Code monetaire et financier, the monetary and financial code. DSN means declaration sociale nominative, the monthly payroll return. With these keys in hand, the rules below read like ordinary business logic backed by hard texts.<\/p>\n
The short answer is yes in principle, unless you signed a paper that says otherwise. French courts treat an ordinary shareholder advance as a loan for an indefinite term, which the lender can call back at any moment. The danger for foreign owners is never the principle, it is the paperwork: a missing agreement makes repayment easy but interest hard, while a signed lock-up or a cash shortage makes repayment legally possible but practically painful. The two sections below separate these situations so you can locate your own case within minutes.<\/p>\n
A shareholder advance is legally a loan of fungible things. Article 1892 of the Civil Code<\/a> defines it in these words: “Le pr\u00eat de consommation est un contrat par lequel l’une des parties livre \u00e0 l’autre une certaine quantit\u00e9 de choses qui se consomment par l’usage, \u00e0 la charge par cette derni\u00e8re de lui en rendre autant de m\u00eame esp\u00e8ce et qualit\u00e9.” Money is the classic consumable thing, so the company that received your euros must return as many euros of the same kind. Because no repayment date was fixed, the loan runs for an indefinite term, and the lender sets the end by demanding payment.<\/p>\n The Cour de cassation, the French supreme court for civil matters, confirmed this in a published ruling of its commercial chamber on 12 February 2025, appeal number 23-17.483, a case about a shareholder who demanded both the price of redeemed shares and the balance of his current account. The Court approved the appeal judges for holding that “sauf stipulation contraire, tout associ\u00e9 \u00e9tait en droit d’exiger \u00e0 tout moment et peu important les motifs de sa demande le remboursement du solde de son compte courant, d\u00e8s lors que l’avance ainsi consentie constituait un pr\u00eat \u00e0 dur\u00e9e ind\u00e9termin\u00e9e”. In plain English: unless the parties agreed otherwise, any shareholder can demand repayment of the credit balance of his current account at any time, for any reason, because the advance is a loan for an indefinite term. The full ruling is published at Cour de cassation, commercial chamber, 12 February 2025, no. 23-17.483<\/a>. For a foreign parent company that never signed a lock-up, this sentence is the whole case: send a written demand, and the company owes the balance.<\/p>\n Three practical consequences follow. First, the demand needs no justification. You do not have to explain why the parent needs the cash, and the French subsidiary cannot answer that the funds are more useful inside the company. Second, the demand should be written, dated and provable from abroad: a registered letter with acknowledgement of receipt to the registered office, doubled by email to the manager with the account statement attached, starts the clock cleanly. Third, the claim is subject to the ordinary five-year limitation for personal actions. Article 2224 of the Civil Code<\/a> provides: “Les actions personnelles ou mobili\u00e8res se prescrivent par cinq ans \u00e0 compter du jour o\u00f9 le titulaire d’un droit a connu ou aurait d\u00fb conna\u00eetre les faits lui permettant de l’exercer.” Eachof your advances starts its own clock, so old dormant balances from the incorporation year can expire while you wait. A yearly statement signed by the manager restarts the discussion and proves the balance.<\/p>\n Direction matters, and foreign founders often confuse the two. When you lend to your French company, you are the creditor and the rule above protects you. When the French company lends to you, the individual shareholder or director, French company law largely forbids it. Article L. 223-21 of the Commercial Code<\/a> states for the SARL: “A peine de nullit\u00e9 du contrat, il est interdit aux g\u00e9rants ou associ\u00e9s autres que les personnes morales de contracter, sous quelque forme que ce soit, des emprunts aupr\u00e8s de la soci\u00e9t\u00e9, de se faire consentir par elle un d\u00e9couvert, en compte courant ou autrement, ainsi que de faire cautionner ou avaliser par elle leurs engagements envers les tiers.” The parallel ban for public limited companies is article L. 225-43 of the Commercial Code<\/a>: “A peine de nullit\u00e9 du contrat, il est interdit aux administrateurs autres que les personnes morales de contracter, sous quelque forme que ce soit, des emprunts aupr\u00e8s de la soci\u00e9t\u00e9, de se faire consentir par elle un d\u00e9couvert, en compte courant ou autrement, ainsi que de faire cautionner ou avaliser par elle leurs engagements envers les tiers.” Note the exception built into both texts: legal entities, personnes morales, are outside the ban. A foreign parent company structured as a legal entity can therefore hold a debit or credit current account that an individual director could never hold. Individuals who let their personal current account go into debit face nullity of the loan plus potential criminal exposure for misuse of company assets, so keep personal drawings and parent-company funding in strictly separate accounts.<\/p>\n Enforcement from abroad follows ordinary civil procedure. If the advance is simply stuck and no tax dispute has started yet, our earlier guide on recovering a stuck shareholder loan from abroad<\/a> covers the pure recovery route, while this article adds the interest, withholding and audit layers. If the French company ignores your registered demand, your lawyer sends a formal notice, mise en demeure, giving a final deadline, then files an action for payment before the commercial court or the judicial court depending on the nature of the parties. Provisional relief exists: when the balance is undisputed because the company’s own accounts show it, the president of the court can order interim payment in refere proceedings within weeks. Attach the wire transfer slips from your foreign bank, the company’s ledger showing the credit, the latest approved accounts, and the unanswered demand letters with postal receipts. Companies that discover the dispute alongside a frozen bank account should coordinate both fronts, as explained in our guide on recovering funds when a French company bank account is frozen or closed<\/a>. And founders still at the setup stage should revisit the complete setup guide for foreign founders, from bank account to Kbis to first hire<\/a>, which shows how to document the first advance before it becomes a dispute.<\/p>\n The words “sauf stipulation contraire”, unless otherwise agreed, in the 2025 ruling carry the entire second half of this article. Parties can agree that the advance stays in the company for a fixed period, and French courts enforce that promise. The classic instruments are the convention de blocage, the lock-up agreement by which the shareholder promises not to demand repayment before a fixed date, and the convention de compte courant, the current account agreement that sets interest, statements and repayment terms. Banks routinely require them before lending to the company: your shareholder funds stay subordinated while the bank loan runs. Tax-driven documents can lock you too: an advance booked as a long-term subordinated loan to strengthen equity for a tender or a visa file will be read as a fixed-term commitment.<\/p>\n A valid lock-up must be written, precise and accepted. It states the blocked amount, the release date or the notice period, the interest during the freeze, and the sanction for early demand. A vague board minute noting that shareholders will leave funds available as long as needed does not meet that test against a lender who never signed it. Conversely, a lock-up you signed with the bank as co-party binds you even when the subsidiary changes manager or ownership. Before demanding repayment, pull the full financing file: the bank loan offer, the subordination letter, the shareholders agreement, and every email where you accepted a freeze. If none names your advance with a date, the default rule of repayment on demand survives, and you can write the demand letter with confidence.<\/p>\n Lock-ups expire, and expiry must be managed. Calendar the release date, then send the demand by registered letter the week it passes, because some agreements renew tacitly if nobody speaks. Where the agreement requires six months notice, send notice early and date it precisely; a premature court action filed during the notice period will be thrown out as premature. Where the company genuinely lacks cash, consider the middle paths French practice offers: a staged repayment schedule, echelonnement, signed by the manager with default interest; a set-off, compensation, against a debt you owe the company such as unpaid capital or a management fee invoice; or a conversion of part of the advance into capital by formal increase, which strengthens the balance sheet but kills future repayment of the converted part. Each path needs a board or shareholder decision, an updated ledger, and a filing where required, because an informal netting discovered during an audit looks like hidden income to both sides.<\/p>\n The cross-border trap is authority. From abroad, you cannot walk into the bank and sign, so give your French lawyer or accountant a written power of attorney limited to the repayment file, and insist that the manager who signs the schedule actually holds signing power on the Kbis extract dated that week. Check the RCS entry online before wiring anything back: a manager removed without publication still binds the company toward third parties in many cases, while a newly appointed manager without publication may lack visible authority toward the bank. If the company is already insolvent, stop and take insolvency advice first: demanding repayment on the eve of a cessation des paiements, the legal date when the company can no longer meet current liabilities with available assets, exposes the payment to claw-back, and the right move becomes filing the claim in the collective proceedings rather than seizing. Our guide on how a foreign parent dissolves and liquidates a French subsidiary<\/a> explains the orderly exit when repayment is no longer realistic.<\/p>\n Repayment gets your principal back, but interest decides whether the operation made economic sense and whether the tax administration leaves you alone. France allows shareholders to charge interest, then caps the deduction, taxes the income, and punishes undocumented arrangements. Foreign lenders face one extra layer: withholding tax and transfer pricing when the lender sits outside France. The two sections below walk through rate and paperwork first, then the cross-border tax stack.<\/p>\n Start with the civil law baseline, which is permissive. Article 1905 of the Civil Code<\/a> states: “Il est permis de stipuler des int\u00e9r\u00eats pour simple pr\u00eat soit d’argent, soit de denr\u00e9es, ou autres choses mobili\u00e8res.” You may charge interest on a money loan. But the rate must be in writing. Article 1907 of the Civil Code<\/a> provides: “L’int\u00e9r\u00eat est l\u00e9gal ou conventionnel. L’int\u00e9r\u00eat l\u00e9gal est fix\u00e9 par la loi. L’int\u00e9r\u00eat conventionnel peut exc\u00e9der celui de la loi, toutes les fois que la loi ne le prohibe pas. Le taux de l’int\u00e9r\u00eat conventionnel doit \u00eatre fix\u00e9 par \u00e9crit.” No written rate means no agreed rate. The Cour de cassation drew the consequence for current accounts in a commercial chamber ruling of 24 May 2017, appeal number 15-27.376, concerning a deposit current account whose balance was said to bear interest at a rate set by one party without any document stating the figure. The Court quashed the appeal judgment with this holding: “alors qu’\u00e0 d\u00e9faut d’\u00e9crit fixant le taux conventionnel, le taux l\u00e9gal est applicable au solde d\u00e9biteur d’un compte courant \u00e0 compter de la date d’ouverture du compte”. In plain English: without a written document fixing the agreed rate, the statutory legal rate applies to the debit balance of a current account from the date the account was opened. The ruling is published at Cour de cassation, commercial chamber, 24 May 2017, no. 15-27.376<\/a>. For foreign parents, the lesson is blunt: sign a one-page loan letter stating principal, rate, calculation base and payment dates before the first interest accrual, or accept the legal rate, which is published twice a year and is usually far below market.<\/p>\n The mirror rule punishes sloppy payers and protects careful ones. Article 1906 of the Civil Code<\/a> provides: “L’emprunteur qui a pay\u00e9 des int\u00e9r\u00eats qui n’\u00e9taient pas stipul\u00e9s ne peut ni les r\u00e9p\u00e9ter ni les imputer sur le capital.” Interest paid without agreement cannot be reclaimed or credited against principal. So undocumented interest paid by the French company is lost money that still counts as taxable income for the recipient, the worst of both worlds.<\/p>\n Tax deduction is where the cap bites. When the French company pays interest to an individual shareholder, article 39, paragraph 1-3 of the General Tax Code<\/a> allows deduction only within this limit: “Les int\u00e9r\u00eats servis aux associ\u00e9s \u00e0 raison des sommes qu’ils laissent ou mettent \u00e0 la disposition de la soci\u00e9t\u00e9, en sus de leur part du capital, quelle que soit la forme de la soci\u00e9t\u00e9, dans la limite de ceux calcul\u00e9s \u00e0 un taux \u00e9gal \u00e0 la moyenne annuelle des taux effectifs moyens pratiqu\u00e9s par les \u00e9tablissements de cr\u00e9dit et les soci\u00e9t\u00e9s de financement pour des pr\u00eats \u00e0 taux variable aux entreprises, d’une dur\u00e9e initiale sup\u00e9rieure \u00e0 deux ans.” This average rate, published quarterly in the Journal officiel, is the ceiling most small companies live under. Deduction also requires fully paid-up capital: if the 1,000 euros of registered capital were never actually wired, no interest is deductible at all until liberation is complete. When the lender is a related company rather than an individual, article 212, paragraph I of the General Tax Code<\/a> adds a second ceiling: “Les int\u00e9r\u00eats aff\u00e9rents aux sommes laiss\u00e9es ou mises \u00e0 disposition d’une entreprise par une entreprise qui est son associ\u00e9e ou par une entreprise li\u00e9e, directement ou indirectement, au sens du 12 de l’article 39, sont d\u00e9ductibles : a) Dans la limite de ceux calcul\u00e9s d’apr\u00e8s le taux pr\u00e9vu au premier alin\u00e9a du 3\u00b0 du 1 du m\u00eame article 39 ou, s’ils sont sup\u00e9rieurs, d’apr\u00e8s le taux que cette entreprise emprunteuse aurait pu obtenir d’\u00e9tablissements ou d’organismes financiers ind\u00e9pendants dans des conditions analogues”. In practice the French subsidiary deducts interest up to the published average rate automatically, and beyond that only with a bank-style comparability file proving an independent lender would have charged that price for the same risk, currency and term.<\/p>\n The audit file that survives has six pieces. One, the signed advance agreement with amount, currency, rate or rate formula, interest dates and repayment terms. Two, proof of the wire and of each interest payment through the bank, never cash. Three, quarterly statements of the current account signed by both sides. Four, the shareholder or board approval of the related-party agreement where required, discussed in the next section. Five, the capital liberation proof from the bank certificate or the Kbis history. Six, the transfer pricing memo when the amounts are material, comparing the rate to independent loans. The impots.gouv.fr documentation on current account interest and the official rate tables, the service-public.fr business guide on shareholder current accounts<\/a> and the INPI Guichet unique filings<\/a> for capital proof together frame what inspectors expect. Interest booked without any of the first three documents is routinely reclassified as a hidden profit distribution, non-deductible with penalties, while the recipient is still taxed on it.<\/p>\n A foreign lender adds three gates to the same loan. The first gate is banking monopoly. Article L. 511-5 of the Monetary and Financial Code<\/a> states: “Il est interdit \u00e0 toute personne autre qu’un \u00e9tablissement de cr\u00e9dit ou une soci\u00e9t\u00e9 de financement d’effectuer des op\u00e9rations de cr\u00e9dit \u00e0 titre habituel.” Habitual lending is reserved to licensed banks. A one-off parent advance to its own subsidiary is occasional, not habitual, and the statute opens an explicit group exception. Article L. 511-7 of the Monetary and Financial Code<\/a> provides that “Les interdictions d\u00e9finies \u00e0 l’article L. 511-5 ne font pas obstacle \u00e0 ce qu’une entreprise, quelle que soit sa nature, puisse” and lists as item 3: “Proc\u00e9der \u00e0 des op\u00e9rations de tr\u00e9sorerie avec des soci\u00e9t\u00e9s ayant avec elle, directement ou indirectement, des liens de capital conf\u00e9rant \u00e0 l’une des entreprises li\u00e9es un pouvoir de contr\u00f4le effectif sur les autres”. A foreign parent controlling its French subsidiary can therefore fund it by treasury loans and current account advances, provided the relationship shows effective capital control and the operations stay inside the group. Document control with the share register and the ultimate beneficial owner filing, and never use the French subsidiary as a conduit to lend onward to unrelated French businesses, which would cross back into the monopoly.<\/p>\n The second gate is the related-party approval, the procedure des conventions reglementees. In a SARL, article L. 223-19 of the Commercial Code<\/a> requires: “Le g\u00e9rant ou, s’il en existe un, le commissaire aux comptes, pr\u00e9sente \u00e0 l’assembl\u00e9e ou joint aux documents communiqu\u00e9s aux associ\u00e9s en cas de consultation \u00e9crite, un rapport sur les conventions intervenues directement ou par personnes interpos\u00e9es entre la soci\u00e9t\u00e9 et l’un de ses g\u00e9rants ou associ\u00e9s.” The meeting votes, the interested party does not vote, and unapproved agreements still bind the company but leave the manager liable for harmful consequences. In an SAS, article L. 227-10 of the Commercial Code<\/a> sets the parallel rule: “Le commissaire aux comptes ou, s’il n’en a pas \u00e9t\u00e9 d\u00e9sign\u00e9, le pr\u00e9sident de la soci\u00e9t\u00e9 pr\u00e9sente aux associ\u00e9s un rapport sur les conventions intervenues directement ou par personne interpos\u00e9e entre la soci\u00e9t\u00e9 et son pr\u00e9sident, l’un de ses dirigeants, l’un de ses actionnaires disposant d’une fraction des droits de vote sup\u00e9rieure \u00e0 10 % ou, s’il s’agit d’une soci\u00e9t\u00e9 actionnaire, la soci\u00e9t\u00e9 la contr\u00f4lant au sens de l’article L. 233-3.” A foreign parent holding more than ten percent of votes, or controlling the SAS shareholder, falls squarely inside. In a single-shareholder company the formality lightens to an entry in the decision register, but the entry must exist. Auditors ask for this report first; its absence turns a clean loan into a governance finding and can support a claim for damages against the manager if the rate was off-market.<\/p>\n The third gate is tax at the border. Interest paid by the French company to a foreign parent may face French withholding tax, retenue a la source, subject to reduction or exemption under the applicable double tax treaty and, inside the European Union, under the interest and royalties directive implemented in French law. The domestic collection mechanics for individuals illustrate the logic: article 125 A, paragraph I of the General Tax Code<\/a> provides that “Les personnes physiques fiscalement domicili\u00e9es en France au sens de l’article 4 B qui b\u00e9n\u00e9ficient d’int\u00e9r\u00eats, arr\u00e9rages et produits de toute nature de fonds d’Etat, obligations, titres participatifs, bons et autres titres de cr\u00e9ances, d\u00e9p\u00f4ts, cautionnements et comptes courants, ainsi que d’int\u00e9r\u00eats vers\u00e9s au titre des sommes mises \u00e0 la disposition de la soci\u00e9t\u00e9 dont elles sont associ\u00e9es ou actionnaires et port\u00e9es sur un compte bloqu\u00e9 individuel, sont assujetties \u00e0 un pr\u00e9l\u00e8vement lorsque la personne qui assure le paiement de ces revenus est \u00e9tablie en France”. For companies, the parallel provisions tax interest paid by a French debtor, then treaties reallocate the right to tax. Before paying interest abroad, obtain the lender’s tax residence certificate, check the treaty article on interest in the exact version in force, file the treaty relief form with the paying agent, and keep proof that the recipient is the beneficial owner. Paying gross without a certificate and hoping the treaty applies is the single most common reassessment in this file.<\/p>\n Transfer pricing closes the triangle. When parent and subsidiary are related, the interest rate must match what independent parties would have agreed, the arm’s length standard. A zero-interest loan from a foreign parent to a profitable French subsidiary can be challenged as an abnormal act of management only in narrow cases, but an excessive rate charged to a French subsidiary to strip profits is challenged routinely: the excess over the arm’s length rate is added back to taxable profit with penalties, and may be reclassified as a deemed distribution subject to withholding. Build the memo before the payment, not after the audit notice: lender credit analysis, group rating, loan term, currency, subordination, guarantees, and at least three comparable independent loans or bonds from the same period. File the country-by-country and master file obligations when thresholds are met, and reconcile the interest in the corporate tax return form 2065 with the ledger. Our corporate tax guide for foreign owners, French corporate tax at 25 percent, branch versus subsidiary and paying on time<\/a>, shows where the interest line sits in the wider IS return, and the foreign tax administration’s own guidance plus the treaty network complete the picture.<\/p>\n A shareholder loan from a foreign parent to a French company is a real loan with real teeth. Without a signed lock-up, you can demand the credit balance at any time for any reason, as the commercial chamber of the Cour de cassation confirmed in February 2025, and the five-year limitation in article 2224 of the Civil Code<\/a> is the only clock that runs against you. With a signed freeze, the paper governs until release, and the disciplined path is notice, schedule, set-off or conversion rather than a premature lawsuit. Interest must be written to exist beyond the legal rate, as the same Court held in May 2017 on the visa of article 1907 of the Civil Code<\/a>, and it is deductible only within the published average-rate ceiling of article 39 of the General Tax Code<\/a> and the related-party ceiling of article 212<\/a>, with fully paid capital as a precondition. Group treasury loans are lawful under article L. 511-7 of the Monetary and Financial Code<\/a>, related-party agreements need their report and vote under article L. 223-19<\/a> or article L. 227-10 of the Commercial Code<\/a>, and cross-border interest needs its residence certificate and treaty form before the wire leaves France. Keep the agreement, the wires, the statements, the approvals and the pricing memo in one file, and the advance that funded the adventure can come home without financing a reassessment.<\/p>\n Send us your shareholder loan agreement or current account statement today: a telephone consultation within 48 hours with a lawyer of the firm to check repayment rights, the deductible interest rate and the withholding position. Call +33 6 46 60 58 22<\/a> or write via the contact page<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":" A foreign parent funded its French subsidiary by shareholder current account advance. This guide explains repayment on demand, lock-ups, deductible interest, withholding tax and audit-proof paperwork.<\/p>\n","protected":false},"author":251031309,"featured_media":16298,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_kj_source_type":"","_kj_official_id":"","_kj_official_url":"","_kj_judilibre_id":"","_kj_jur":"","_kj_lieu":"","_kj_chambre":"","_kj_rg":"","_kj_date":"","activitypub_content_warning":"","activitypub_content_visibility":"","activitypub_max_image_attachments":4,"activitypub_interaction_policy_quote":"anyone","activitypub_status":"federated","footnotes":""},"categories":[80314,80313],"tags":[],"class_list":["post-2121146","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-decryptage","category-doing-business-in-france"],"yoast_head":"\nB. How a written lock-up, repayment schedule or set-off changes the answer<\/h3>\n
II. How do you charge interest and survive a French tax audit on the loan?<\/h2>\n
A. What interest rate can you charge and what paperwork makes it deductible?<\/h3>\n
B. How do withholding tax, transfer pricing and approval rules apply to a foreign lender?<\/h3>\n
Conclusion<\/h2>\n
Need a quick opinion on your case<\/h2>\n