Transforming an EURL into a SASU: instructions for use

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1. Why transform your EURL into a SASU?

What is a SASU?

SASU is a single-member simplified joint stock company. Its president is the one and only partner, who therefore owns 100% of the shares. This makes it a commercial company that operates very simply, while guaranteeing an easy transition to SAS when another shareholder enters the capital.

☝️ To note: the sole shareholder of a SASU can be a natural person or a legal person. On the other hand, the manager of the EURL can only be a natural person.

It is common to evolve a single-person limited liability company into a SASU in order toanticipate the development of the company on a larger scale. The articles of association of SASU thus provide for the terms of the arrival of new partners, either by a sale of shares or by an increase in capital. The statutes may also provide for a Approval clause to facilitate the entry of new partners and to regulate relationships between partners.

The powers of the sole shareholder of SASU

The sole shareholder has the power to unilaterally take important decisions as long as they are beneficial to the company and taken in accordance with the company's statutes. When the sole partner and the president are two different people, the statutes of SASU define the distribution of decisions related to the operation of the company.

In all cases, it has a:

• Right to information on the last 3 social years to make an informed decision;

• Financial law on dividends in return for its corporate mandate;

• Right to take legal action ;

• Right to contribute to the partner's current account in order to lend money to the company without having to raise capital.

The benefits of transforming into SASU

• No radiation: the direct transformation from one form to another allows the manager to avoid deregistering his company in order to create a new one. Likewise, SASU operates globally like SAS, which simplifies the transition from SASU to SAS in the event of a new change.

• Flexible operation: the transition to SASU allows the manager greater freedom to organize his business, in particular with regard to the entry of new partners or the raising of funds. Thus, opening the company to investors is made easier when the starting company is a simplified joint stock company.

• Limited liability: the liability of the sole shareholder is limited to the amount of his contribution, without putting his personal assets at risk. He is only liable to SASU in the event of a management error.

• Director's social regime: he is considered to be an equivalent employee and as such benefits from excellent social protection (with the exception of unemployment benefits).

• Simplified SASU transmission: there is no risk of blocking the decision with a single partner.

⚠️ Attention, although the operation of the SASU is simple, it is characterized by important legal formalities for creation, accounting obligations and a high rate of social security contributions weighing on the remuneration of the manager.

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2. Transforming your EURL into a SASU: what are the legal, social and fiscal impacts?

Legal impacts of the transformation into a SASU

The transition from an EURL to a SASU involves several transformations within society:

• Updating all documents to indicate the new legal form;

• The shares of EURL become shares of SASU;

• Modification of the management bodies since the manager of the EURL gives way to the president of SASU and the SASU can set up other management bodies (appointment of a Director General for example).

☝️ To note: the spouse of the president of SASU cannot benefit from the status of collaborating spouse; he is an employee or an associate.

Social impacts of the transformation into SASU

The transformation into a SASU also impacts the social regime of the head of the company. The sole associate president of SASU is not more affiliated to the social system for self-employed workers, now known as Social Security for Self-Employed Persons or SSI. The manager becomes Assimilated wage earner and depends on the diet General of social security and pension funds.

This is an important argument for managers who want to benefit from a more protective social status, like that of employees, and thus receive to continue to receive a pay slip in case of remuneration.

⚠️ Attention, this change in legal status leads to a change in the social charges weighing on the remuneration of the company manager. However, you don't pay social security contributions until you get paid.

☝️ To note: However, the dividends paid to the director of SASU are not subject to social security contributions. This can be a way to optimize the manager's income. The sole shareholder of SASU can thus choose not to be paid as president, but to pay himself only dividends.

Fiscal impacts of the transformation into a SASU

Depending on your tax option, the transition from EURL to SASU may result in a change in the tax regime.

• In principle, EURL profits are taxed to the IR directly in the name of the sole shareholder; but an IS option is possible.

• In principle, SASU profits are subject to corporate tax, but a temporary IR option is possible.

In practice, therefore, the tax regime changes from IR to IS, unless you have already opted for corporate tax from the EURL. An income tax option is still possible in SASU within the limit of 5 fiscal years.

⚠️ Attention: a SASU whose shareholder is a legal person, i.e. another company, cannot opt for IR.

☝️ To note: globally, SASU favors dividend distributions. Since 2018, the Single Lump Sum Levy (PFU) has simplified the tax regime for capital income in France and promotes investments. Also known as Flat tax, this tax at a flat rate of 30% applies in particular to dividends and capital gains. In practice, you can nevertheless opt for the progressive income tax schedule if it is more favorable to you than the flat tax.

The rules relating to VAT and other taxes, such as the Territorial Economic Contribution (CET), remain unchanged in the event of transformation. As a reminder, 3 VAT regimes may apply depending on SASU's turnover:

• La basic VAT exemption allows you not to file a VAT return and not to charge VAT to your customers. This regime concerns companies with a turnover of less than €36,800 for services or €91,900 for trade and accommodation activities.

• The Simplified real regime applies to companies whose turnover is between €36,800 and €254,000 for services or between €91,900 and €840,000 for retail and accommodation activities. But the annual VAT amount is limited to €15,000.

• The Real normal regime applies to companies with higher sales.

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3. How do I switch from an EURL to a SASU?

Record a conversion report

La transformation decision From a sole proprietorship with limited liability into a simplified one-person joint stock company, is taken by the sole shareholder. She is recorded in a transformation report, registered for taxes in a period of one month following the signature. As the case may be, it mentions the identity of the transformation commissioner appointed for the operation.

Appoint a transformation commissioner

When the EURL has an auditor, he may draw up a report on the transformation operation, without involving a transformation auditor. He thus statues the Value of the company's assets, before change, and on thegranting of special benefits. Otherwise, the appointment of a transformation commissioner is mandatory (Article L224-3 of the Commercial Code). Its report is available to the partners, then filed with the Registry of the Commercial Court.

☝️ To note: the transformation commissioner is chosen from among the CAC or experts registered on a list established by the courts.

Update company statutes

The transformation of an EURL into a SASU involves a Revise the statutes of the company integrating the new legal and fiscal regime (legal form, object, share capital, corporate name, head office), as well as the applicable regulations. The statutes specify in particular the substitution of president to the former manager and the replacement of the shares by shares.

To help you, remember to consult our SASU status template!

Publish the transformation notice in the Journal of Legal Announcements

The transformation notice must include certain essential information:

• The old legal form of the company, with its corporate name, its share capital, the address of its head office and its RCS registration number;

• The dated decision to transform EURL into SASU;

• The new legal form of the company;

• The identity of the former company manager (manager of the EURL) and the manager (president of SASU) with their name, first name and address;

• The mention of the modification of the statutes made to the Trade and Companies Register of the city of registration.

Submit a file at the one-stop shop

The entire procedure is validated by submitting the transformation file on the One-stop shop for formalities (former CFE). This online counter is accessible fromINPI. It concerns all businesses, regardless of their legal form or activity.

The file is completed within one month following the date of the report and contains the following elements:

• The transformation PV;

• The statutes updated and certified true by the president;

• The transformation form;

• The certificate of publication of legal announcements in a newspaper;

• The report of the transformation commissioner;

• Payment of formality fees at the commercial court registry.

☝️ To note: the choice to transform an EURL into a SASU is not trivial. It is strongly recommended to be accompanied by a professional specialized in corporate law to avoid any pitfalls and to facilitate your procedures. Choosing the right tools is also essential!

Do you want to transform an EURL into a SASU? Check out the tools Axiocap, a subsidiary of Infograft.