Your French subsidiary needs cash and you live abroad. The salaries, the office rent and the first supplier invoices are due in Paris, while the money sits in the account of your parent company in London, New York, Dubai or Singapore. The fastest solution looks obvious: wire funds from the parent to the French company and sort out the paperwork later. That shortcut is exactly where foreign groups lose money. A transfer with no written agreement can be reclassified by the French tax administration, interest paid to the parent can be partly non-deductible, and a loan signed by the wrong person can be challenged by a minority shareholder or an auditor. French law gives you a clean, well-tested instrument for this situation: the shareholder loan, known in France as the compte courant d’associ\u00e9, the current-account advance by which a shareholder leaves funds at the disposal of its company on top of its share capital. This guide explains, for a foreign parent company doing business in France, how to fund a French SAS (soci\u00e9t\u00e9 par actions simplifi\u00e9e, the simplified joint-stock company most foreign founders choose) or SARL (soci\u00e9t\u00e9 \u00e0 responsabilit\u00e9 limit\u00e9e, the limited liability company) from abroad: which instrument to use, who is allowed to lend, which corporate approvals the loan needs, how much interest the French subsidiary can deduct, and how to get the money back. Every decisive rule below is quoted from the statute that states it, with an official Legifrance link, so you can forward this page to your accountant and act without guessing.<\/p>\n
A shareholder loan, or compte courant d’associ\u00e9, is an advance of funds that a shareholder leaves or makes available to its company in addition to its share of the capital. The French General Tax Code describes exactly this mechanism when it deals with the deductibility of interest: Article 39 of the French General Tax Code<\/a> covers “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.” In plain English: interest paid to shareholders on sums they leave at the company’s disposal, on top of their capital stake, whatever the company form, is deductible only up to a reference rate equal to the yearly average of the average effective rates charged by banks and finance companies on variable-rate business loans with an initial term above two years. That single sentence already tells you three things: the instrument exists in every company form including the SAS and the SARL, it can bear interest, and the interest deduction has a ceiling you must check before wiring.<\/p>\n Foreign groups use shareholder loans for three practical reasons. First, speed: a loan is a contract between the parent and the subsidiary, signed in a day, while a capital increase requires a shareholders’ decision, a new filing with the Guichet unique (the single online company-registration portal that replaced the old centres de formalit\u00e9s), registration by the greffe (the clerk’s office of the commercial court), an updated Kbis (the Kbis is the official identity certificate of a French company, issued by the greffe), and publication in the BODACC (the Bulletin officiel des annonces civiles et commerciales, the official gazette of civil and commercial announcements). Second, reversibility: a loan is repaid on its contractual schedule, while capital taken out again means a formal capital reduction with its own procedure. Third, remuneration: unlike a dormant capital contribution, a loan can pay interest to the parent, and that interest is a deductible charge for the French subsidiary within the caps explained in Part II. If your subsidiary instead needs a permanent reinforcement of its equity, for example because losses have eaten more than half of its share capital, a loan alone will not fix the balance sheet, and you should read our guide on half-year capital loss and recapitalisation<\/a> alongside this page. For a first overview of the whole set-up chain, from bank account to Kbis to VAT, see our pillar guide on setting up a company in France as a foreign founder<\/a>.<\/p>\n A shareholder loan is not the only way to move money, and you should pick the instrument deliberately. A straight capital contribution at incorporation, documented by the deposit certificate and then the Kbis, was covered in our guide on share capital deposit and release of blocked funds<\/a>. A later capital increase works the same way and suits permanent funding. A bank loan from a French bank is a third route but takes longer for a newly formed subsidiary with no French track record. The shareholder loan sits in the middle: faster than equity, simpler than a bank file, and repayable. The rest of this guide assumes you chose the loan, whether a one-off bridge before a capital increase or a standing current-account facility that the parent tops up as the subsidiary grows.<\/p>\n One vocabulary point before going further, because every French document you will sign uses these terms. The compte courant d’associ\u00e9 is the shareholder’s current account in the company’s books: the ledger account on which the parent records each advance and each repayment. An avance en compte courant is a single payment into that account. The taux de r\u00e9f\u00e9rence is the reference rate published quarterly by the French tax administration that applies the Article 39 formula above. The commissaire aux comptes, abbreviated CAC, is the statutory auditor who certifies the accounts of larger companies and reports on related-party agreements. Keep these four terms in mind; your accountant, your auditor and the greffe will all use them.<\/p>\n France reserves lending to licensed institutions. Article L. 511-5 of the French 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.” Lending on a habitual basis is therefore forbidden to anyone who is not a bank or a finance company, and the same article adds: “Il est, en outre, interdit \u00e0 toute personne autre qu’un \u00e9tablissement de cr\u00e9dit de recevoir \u00e0 titre habituel des fonds remboursables du public ou de fournir des services bancaires de paiement.” A foreign parent company is not a French bank, so you must never present its advances as a lending activity. A documented, one-off or facility-based shareholder advance to your own subsidiary, recorded as a compte courant d’associ\u00e9, priced with interest and repaid on schedule, is a shareholder transaction with your own company, not a banking business offered to the public. Paper it that way from day one: a written loan agreement signed before the money moves, a wire transfer whose reference mentions the agreement date, and entries in both companies’ books that mirror each other.<\/p>\n The written agreement is not a formality; it is the document the tax inspector, the auditor and a future buyer will all ask for. French civil law requires the price of money to be written down: Article 1907 of the French Civil Code<\/a> provides that “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.” Interest is either legal or contractual, contractual interest may exceed the legal rate whenever the law does not forbid it, and the contractual rate must be set in writing. An undocumented advance therefore pays no contractual interest as far as a court is concerned, while a signed agreement with a stated rate locks in the remuneration both sides agreed. Your agreement should state the amount and currency, the fixed or formula-based rate with its reference, the term and repayment schedule, early-repayment rights, the governing law, and the corporate approvals obtained on the French side, which Part II details.<\/p>\n Do not confuse the shareholder loan with the separate regime for loans between independent businesses. French law also allows certified commercial companies to grant short-term loans to small and mid-sized businesses with which they have genuine economic links: Article L. 511-6 of the French Monetary and Financial Code<\/a> covers “des pr\u00eats \u00e0 moins de trois ans \u00e0 des microentreprises, des petites et moyennes entreprises ou \u00e0 des entreprises de taille interm\u00e9diaire avec lesquelles elles entretiennent des liens \u00e9conomiques le justifiant”, meaning loans under three years to micro, small, medium or mid-cap companies with which the lender has justifying economic links. That regime carries its own certification, reporting and cap conditions and suits trade partners, not a parent funding its own subsidiary. Your route as a foreign shareholder is the compte courant d’associ\u00e9 plus the corporate approvals and tax caps below, which are simpler and designed for exactly your situation.<\/p>\n In practice, sign the agreement before the first euro moves, even when the parent owns 100 percent of the French company. Wholly owned subsidiaries feel safe skipping paperwork, and that is precisely where files are weakest when the administration later asks questions: no date, no rate, no maturity, and a current-account balance that grows year after year with no repayment. A one-page agreement with amount, rate, term and signatures, approved on the French side as Part II explains, costs an hour and protects the deductibility of every euro of interest. If several advances are planned, use a master facility agreement with a ceiling and add each drawdown as a dated schedule, rather than a chain of informal emails.<\/p>\n A loan from the foreign parent to the French subsidiary is a related-party agreement, called a convention r\u00e9glement\u00e9e, and French company law puts it to a shareholder vote. In an SAS, the most common vehicle for foreign founders, Article L. 227-10 of the French Commercial Code<\/a> states: “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.” The auditor, or the president if no auditor was appointed, therefore reports to the shareholders on agreements between the company and its president, its managers, any shareholder holding more than 10 percent of voting rights, or the controlling company of a corporate shareholder. A foreign parent holding, say, 80 or 100 percent of the SAS is plainly caught, so its loan agreement goes into that report and the shareholders vote on it. The same article continues: “Les associ\u00e9s statuent sur ce rapport. Les conventions non approuv\u00e9es, produisent n\u00e9anmoins leurs effets, \u00e0 charge pour la personne int\u00e9ress\u00e9e et \u00e9ventuellement pour le pr\u00e9sident et les autres dirigeants d’en supporter les cons\u00e9quences dommageables pour la soci\u00e9t\u00e9.” Shareholders vote on the report, and even an unapproved agreement still produces its effects, with the interested party and possibly the president and managers bearing any harmful consequences for the company. The loan survives a negative vote, but the liability shifts to the people who pushed it through, which is why you want the approval voted cleanly, with the interested shareholder abstaining in practice and the file kept with the meeting minutes.<\/p>\n In a SARL the mechanism is nearly identical. Article L. 223-19 of the French Commercial Code<\/a> provides: “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 manager, or the auditor if one exists, presents to the meeting, or attaches to the documents sent for a written consultation, a report on agreements between the company and any of its managers or shareholders. And the article adds: “L’assembl\u00e9e statue sur ce rapport.” The meeting votes on the report. So whether your French company is an SAS or a SARL, the path is the same: disclose the parent loan in a written report, have the shareholders vote, and archive the report with the resolutions. If your subsidiary is instead a French SA (soci\u00e9t\u00e9 anonyme, the public-limited form with a board of directors), the control happens before signature: Article L. 225-38 of the French Commercial Code<\/a> requires that “Toute convention intervenant directement ou par personne interpos\u00e9e entre la soci\u00e9t\u00e9 et son directeur g\u00e9n\u00e9ral, l’un de ses directeurs g\u00e9n\u00e9raux d\u00e9l\u00e9gu\u00e9s, l’un de ses administrateurs, 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 , doit \u00eatre soumise \u00e0 l’autorisation pr\u00e9alable du conseil d’administration.” Any such agreement must receive the prior authorisation of the board of directors, with reasons showing the company’s interest including the financial terms. Foreign groups sometimes house the French business in an SA for governance reasons; if that is your case, get the board authorisation first, not after the wire.<\/p>\n The mirror situation deserves a warning, because founders living abroad often mix the two directions. Money flowing from the French company back to an individual founder or manager as a personal loan is not a convention r\u00e9glement\u00e9e to be voted; it is void. Article L. 223-21 of the French Commercial Code<\/a> states: “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.” Any loan by the company to its individual managers or shareholders, any overdraft in current account or otherwise, and any guarantee of their personal commitments is forbidden on pain of nullity of the contract. The ban targets individuals, “autres que les personnes morales”, so your foreign parent company as a legal entity lending to the subsidiary is outside it, but you as a person borrowing from your SARL are inside it, and the contract would be void. The parallel ban for the SA form reads the same: Article L. 225-43 of the French Commercial Code<\/a> provides that “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.” Keep the flows straight: the parent company may lend to the French subsidiary with approvals and interest; the French subsidiary may not lend to you personally, and repayments to you must follow the routes in Section B.<\/p>\n For the foreign founder managing from abroad, the practical sequence is therefore: sign the parent-to-subsidiary loan agreement, file it for the auditor if the company has one, table the related-party report at the next shareholders’ meeting, vote it, and keep the agreement, the report and the minutes together. If you are both the foreign parent’s representative and the French subsidiary’s president, disclose the conflict in writing and have the decision recorded; the interested-party logic of the articles above applies to you twice over. Groups that run several French entities should repeat the approval in each borrowing company rather than assuming one group-level signature covers all: each French debtor votes its own conventions.<\/p>\n Interest on the parent loan is deductible for the French subsidiary, but three caps stack on top of each other and you must test all three. The first cap is the shareholder-loan rate ceiling of Article 39 quoted in Part I: deductible interest stops at the reference rate, the yearly average of bank variable rates for business loans over two years. The same article adds a condition founders often miss: it makes the deduction conditional on the share capital being fully paid up (Article 39 of the French General Tax Code<\/a>). If you incorporated with partly unpaid capital, a frequent set-up when the founder wires the balance later, interest on the parent’s current-account advances is not deductible at all until the capital is fully released. Before paying interest, check the Kbis-era file: was the subscribed capital fully paid on subscription or later, and is the release recorded? Our guide on capital deposit and blocked funds<\/a> walks through that verification. Paying the balance of the capital first, then paying interest, is often the cheapest sequence.<\/p>\n The second cap applies because your lender is a related party. Article 212 of the French General Tax Code<\/a> states: “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”. Interest on sums left at a company’s disposal by its shareholder or a related company is therefore deductible up to the Article 39 reference rate or, if higher, up to the rate the borrowing company could have obtained from independent banks in similar conditions. This is your escape hatch when you pay the parent above the reference rate: gather contemporaneous bank quotes or offers for a comparable standalone loan to the French subsidiary and keep them with the tax file, so the higher rate is evidenced as a market rate rather than asserted. Without that proof, the reference rate is the ceiling.<\/p>\n The third cap is global and hits profitable, debt-heavy subsidiaries: the net-finance-charge ceiling. Article 212 bis of the French General Tax Code<\/a> provides: “Les charges financi\u00e8res nettes support\u00e9es par une entreprise non membre d’un groupe, au sens des articles 223 A ou 223 A bis , sont d\u00e9ductibles du r\u00e9sultat fiscal soumis \u00e0 l’imp\u00f4t sur les soci\u00e9t\u00e9s dans la limite du plus \u00e9lev\u00e9 des deux montants suivants : 1\u00b0 Trois millions d’euros ; 2\u00b0 30 % de son r\u00e9sultat d\u00e9termin\u00e9 dans les conditions du II.” Net finance charges of a company outside a French tax group are deductible only up to the higher of 3 million euros or 30 percent of the adjusted result. Below 3 million euros of annual net interest, most young subsidiaries are untouched; above it, model the ceiling before increasing the parent loan, because the excess carries forward under its own mechanics rather than disappearing. Interest on your shareholder loan counts in those net finance charges, so a large acquisition loan from the parent can hit this wall even when the rate itself is market. The interaction with the French corporate tax return, advance payments and penalties is detailed in our guide on corporate tax rate, advance payments and filing<\/a>, which your accountant should read together with this page.<\/p>\n Getting the money back follows the loan schedule, and that simplicity is the point. Repayment of principal under a documented shareholder loan is not a dividend: it needs no shareholder vote on distributable profits, no dividend paperwork, and no meeting beyond the original loan approval. Execute repayments by wire with a reference to the agreement and the instalment, mirror the entries in both companies, and have the French subsidiary’s books show the current-account balance falling to match. Keep the loan distinct from dividends in every document: calling a repayment a dividend, or a dividend a repayment, confuses the tax treatment on both sides of the border. If the subsidiary cannot repay on time, sign a dated amendment extending the maturity rather than letting the balance sit unexplained; an evergreen, never-repaid current account invites the question whether the advance was really a loan, and you want a written answer ready. Before the first interest payment to the non-resident parent, ask your adviser to check the applicable tax treaty between France and the parent’s country and any European rules on cross-border interest, so the payment leaves France with the correct paperwork and the correct complete documentation. Finally, remember the boundary from Section A: repay the parent company as lender under the contract, but never route the cash as a personal loan to yourself as an individual manager, because that contract would be void.<\/p>\n Funding your French subsidiary from abroad through a shareholder loan works well when the paperwork mirrors the money. Choose the loan deliberately over a capital increase when you need speed and reversibility, sign a written agreement with a stated rate before the first wire, keep the advance as a shareholder transaction rather than a lending activity, put the related-party report to the shareholder vote in your SAS or SARL, or get the prior board authorisation in an SA. Then test the three interest caps in order: the Article 39 reference rate with fully paid-up capital, the Article 212 related-party ceiling with bank evidence for any higher market rate, and the Article 212 bis wall at 3 million euros or 30 percent of the adjusted result. Repay under the contract, document each instalment, and never confuse repayment with dividends or with a personal loan to yourself. Do this and the parent-to-subsidiary loan becomes what it should be: the quiet, deductible, repayable fuel of your French business. If the file is already messy, with undocumented wires, unpaid capital or an unvoted agreement, fix it this quarter with your accountant using the articles quoted above, because a documented loan file is the cheapest tax insurance a foreign group operating in France can buy.<\/p>\n","protected":false},"excerpt":{"rendered":" Your parent company holds the cash and your French subsidiary needs it. This guide explains the shareholder loan (compte courant d’associ\u00e9): written agreement, banking monopoly, SAS and SARL approvals, the three interest-deduction caps, and repayment from abroad.<\/p>\n","protected":false},"author":251031309,"featured_media":16376,"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-2151302","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-decryptage","category-doing-business-in-france"],"yoast_head":"\nB. Is Your Foreign Parent Allowed to Lend? The Banking Monopoly and the Written Loan Agreement<\/h3>\n
II. What Caps, Approvals and Tax Limits Apply Before You Get the Money Back?<\/h2>\n
A. Which Corporate Approvals Does a Parent-to-Subsidiary Loan Need in an SAS or SARL?<\/h3>\n
B. How Much Interest Can Your French Subsidiary Deduct, and How Do You Get Repaid?<\/h3>\n
Conclusion<\/h2>\n