15%
Reduced IS rate on first €42,500 of net profit (qualifying companies) — then 25% above that threshold
30%
PFU flat tax on dividends distributed to shareholders from an IS company — applied after IS has already been paid on the profit
0%
Prélèvements sociaux at corporate level — IS structure eliminates them, an important advantage for non-EU/EEA investors paying 17.2% personally
No taper
Capital gains inside an IS company attract full 25% IS with no immobilier taper relief — making this structure less efficient for long-term holders

Commercial Companies for French Meublé: The IS Framework

A SARL (société à responsabilité limitée) or SAS (société par actions simplifiée) subject to IS (corporate tax) is a legitimate and reclassification-safe vehicle for French furnished rental property. Unlike the IR-transparent SCI, a commercial company is designed for commercial activity from the outset — there is no reclassification risk when it engages in meublé rental. Under IS, the company pays corporate tax on its net meublé profits after deducting all allowable charges including amortissement. Income is retained in the company or distributed as dividends — it does not flow through to shareholders automatically.

IS Taxation: How Profits Are Taxed at Corporate Level

IS rates are: 15% on the first €42,500 of net profit (for companies whose turnover does not exceed €10 million and which are at least 75% owned by individuals), and 25% on net profit above €42,500. There are no prélèvements sociaux at the corporate level — an important advantage over direct personal LMNP ownership for non-EU/EEA investors who pay 17.2% social levies personally.

Income level in company IS rate Combined rate (IS + PFU on distribution) vs LMNP personal (20% IR + social levies)
First €42,500 net profit 15% 15% + (85% × 30%) = 40.5% 37.2% non-EU/EEA · 26.5% EU/EEA
Above €42,500 net profit 25% 25% + (75% × 30%) = 47.5% 37.2% non-EU/EEA · 26.5% EU/EEA
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The Comparison Is Not Simple

The table above shows combined IS + PFU rates only if profits are immediately distributed. The real comparison depends on whether profits are retained in the company (deferring the PFU), the landlord's personal tax position in their country of residence, the applicable double-tax treaty, and the intended exit strategy. For non-EU/EEA investors paying 17.2% social levies personally, IS structure can be more efficient on current income. For capital gains, the IS structure eliminates taper relief and is typically less efficient for long-term holders.

Capital Gains Under IS: The Key Disadvantage

The most significant disadvantage of holding French meublé in a SARL/SAS under IS is the capital gains treatment on exit. When the company sells the property, the gain is subject to IS at 25% — no taper relief, no long-term rate reduction. When the after-tax proceeds are subsequently distributed to shareholders, another 30% PFU applies. The combined effective rate on the corporate-level gain can reach 47.5%.

Compare this to LMNP direct ownership: 19% IR + 17.2% social levies (or 7.5% for EU/EEA), reduced to zero after 22/30 years of ownership. For long-term holders, the direct LMNP immobilier regime is dramatically more favourable. For short-term holders (under 5 years), the IS structure may be more competitive, particularly for non-EU/EEA investors. This makes the IS corporate structure better suited to investors who plan to hold for a short to medium term or who intend to reinvest profits within the company rather than distribute them.

SARL vs SAS: Which Corporate Form?

SARL — Société à Responsabilité Limitée
The more commonly used vehicle for family or closely-held meublé operations. Lower compliance cost, simpler governance structure.
  • Limited to 100 shareholders
  • Manager (gérant) governance — simpler structure
  • Lower annual compliance costs
  • Mandatory social contribution for gérant if employed
  • More established case law for property holding
SAS — Société par Actions Simplifiée
Greater flexibility in shareholder agreements and governance — preferred for multi-investor structures and where different share classes are needed.
  • No limit on shareholder numbers
  • President governance — more flexible structure
  • Can create different share classes
  • Better suited to investor/operator structures
  • Higher compliance cost and administrative complexity

Non-Resident Shareholders: Additional Considerations

A non-resident who holds shares in a French SARL or SAS that owns meublé property faces three layers: (1) IS at company level on rental profits; (2) French withholding tax on dividends distributed to non-residents (typically 12.8% under domestic law, potentially reduced by the applicable double-tax treaty); and (3) income tax in the country of residence on dividends received from France. The treaty between France and the country of residence will determine the withholding rate and the credit mechanism. The applicable withholding rate should be verified against the specific treaty before structuring.

SARL/SAS for French Meublé Property: The Essentials
A SARL or SAS subject to IS is a legitimate and reclassification-safe vehicle for meublé property — unlike an IR-transparent SCI, there is no commercial activity trap. The company is designed for commercial activity from the outset.
IS rates: 15% on first €42,500 net profit (for qualifying companies), 25% above. No prélèvements sociaux at corporate level — which can benefit non-EU/EEA investors who pay 17.2% personally. Amortissement is available and deductible.
Profits distributed as dividends attract 30% PFU (flat tax). The combined IS + PFU rate on distributed profits can reach 40.5%–47.5% — compared to 37.2% (non-EU/EEA) or 26.5% (EU/EEA) for direct LMNP ownership.
Capital gains on property sale inside the company attract IS at 25% with no taper relief. The combined IS + PFU rate on gains can reach 47.5% — significantly higher than the LMNP immobilier regime for long-term holders who benefit from taper relief reducing to zero after 22/30 years.
The IS structure is better suited to short-to-medium-term holding or profit reinvestment strategies. For long-term buy-and-hold investment, direct LMNP ownership is typically more efficient due to immobilier taper relief.
Non-resident shareholders face French withholding tax on dividends (typically 12.8% under domestic law, reduced by treaty). The applicable rate and credit mechanism must be confirmed against the specific double-tax treaty before structuring. The SARL is simpler and cheaper for family or closely-held structures; the SAS offers greater flexibility for multi-investor vehicles.
Considering a SARL or SAS for Your French Property?

Our English-speaking French lawyers advise non-resident investors on optimal holding structures for French meublé property, including IS company formation, governance design, and exit planning.

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This article is for general information only. It does not constitute legal advice. Always seek qualified French legal advice.