Moving a sole trader business to corporate tax — electing to be treated as an EURL
As a sole trader, whether or not you are under the micro-enterprise regime, you are AUTOMATICALLY subject to personal income tax, in the industrial and commercial profits or the non-commercial profits category. To become subject to corporate income tax there is only one route: electing to be TREATED AS AN EURL (single-member limited liability company) — and that election is open only if you fall under an actual taxation regime. The application is made by a simple LETTER to the business tax office for your main establishment, stating your surname, first name, the description "Entrepreneur individuel" or "EI", your address and your signature. It must be notified BEFORE THE END OF THE 3rd MONTH of the financial year. The election to be treated as an EURL is irrevocable; but you may renounce corporate income tax until the month preceding payment of the first corporate tax instalment of the 5th financial year following the one in which you elected.
Up to date for 2026 — verified on September 12, 2026Official procedure, no printed formGuide: about 20 min
Deadlines
- Before the end of the 3rd month of the financial year
- The election to be treated as an EURL must be notified before the end of the 3rd month of the financial year of activity. That is the only window: after that date, the business stays on personal income tax for the year.
- Until the month preceding the 1st corporate tax instalment of the 5th year — renunciation
- Renunciation of corporate income tax may be made until the month preceding payment of the first corporate tax instalment of the 5th financial year following the one in which the election to be treated as an EURL was made.
- The assimilation election itself is irrevocable
- The election to be treated as an EURL is irrevocable. Renunciation concerns corporate income tax, within the period above — the two are not the same thing.
Documents to prepare
- Current taxation regime: the election requires an actual regime, simplified or normal
- Letter on plain paper stating surname, first name, the description "Entrepreneur individuel" or "EI", address and signature
- Contact details of the business tax office for the place of the main establishment
- Opening date of the financial year, which sets the end of the 3rd month — never 31 March by default
- Balance sheet of the sole trader business: assets and liabilities to be transferred to the balance sheet of the business treated as an EURL
- Decision between the tax neutrality regime (deferral of capital gains) and immediate taxation
- For a renunciation: name, address, place of the principal establishment where different, and the financial year concerned
No form is attached to this procedure: the link leads to the official page that describes it.
What this page gives you
The guide above and the link to the official site. ActioFin does not produce any document for this page: whatever you fill in or file is done on the official medium.
Who this applies to
- A sole trader under an ACTUAL taxation regime — simplified or normal — who may choose to be taxed under corporate income tax
- A sole trader who wants to separate the tax position of their business from their own: the assimilation creates a tax personality distinct from theirs
- Someone who wants to be paid a salary taxed as employment income rather than taxed on the whole profit of their activity
- Someone who wants the rules specific to corporate income tax on loss carry-forward and capital gains
- A sole trader already treated as an EURL who wishes to go back on corporate income tax, within the renunciation period
- CANNOT elect as things stand: a sole trader under the MICRO tax regime — micro-BIC or micro-BNC —, the election being open to those under an actual taxation regime
Worked example
Example: a craftsman under the simplified actual regime switching to corporate tax, and the two dates that matter
A craftsman trades as a sole trader under the simplified actual taxation regime: he is therefore automatically subject to personal income tax, in the industrial and commercial profits category, on the taxable profit generated by his activity. He wishes to move to corporate income tax. Only one route is open to him: electing to be treated as an EURL. His financial year opening on 1 January, he must notify his election before the end of the 3rd month, that is before 31 March. He sends a letter to the business tax office for his main establishment, stating five items: his surname, his first name, the description "Entrepreneur individuel" or "EI", his address and his signature. The effects are immediate and far-reaching. His sole trader business is no longer subject to personal income tax; its assets and liabilities are transferred to the balance sheet of the business treated as an EURL; the assimilation creates a tax personality distinct from his own, with the rules specific to corporate income tax on loss carry-forward and capital gains. He must then choose between two regimes for the capital gains arising from the operation: the TAX NEUTRALITY regime, which defers taxation of the gains arising from the cessation of the business under personal income tax and from the transfer of his estate to the business treated as an EURL, or the IMMEDIATE TAXATION regime for those gains. On the income side, his remuneration is now taxed as employment income, and his income other than remuneration as investment income. On the social security side, he remains subject to self-employed contributions on his net remuneration — after deducting his compulsory personal social contributions and his actual expenses, and increased by optional premiums and contributions — and he is also subject to them on the portion of distributed income above 10 % of his net profit. Were he to change his mind, he could renounce corporate income tax until the month preceding payment of the first corporate tax instalment of the 5th financial year following the one of his election.
How to fill it in, step by step
- Check your current taxation regime: electing for corporate income tax requires you to be under an actual taxation regime, simplified or normal. A sole trader under the micro tax regime — micro-BIC or micro-BNC — is not in that position.
- Measure the tax consequences before electing: your sole trader business will no longer be subject to personal income tax, its assets and liabilities will be transferred to the balance sheet of the business treated as an EURL, and it will fall under the rules specific to corporate income tax on loss carry-forward and capital gains.
- Anticipate the treatment of capital gains: after the operation, you will choose between the tax neutrality regime, which defers taxation of the gains arising from the cessation of the business under personal income tax and from the transfer of the estate to the business treated as an EURL, and the immediate taxation regime for those gains.
- Anticipate the treatment of your remuneration: it will be taxed as employment income, and your income other than remuneration as investment income.
- Anticipate your contributions: you will remain subject to self-employed social contributions on your net remuneration, and you will also be subject to them on the portion of distributed income above 10 % of your net profit.
- Draft the application on plain paper and send it by post to the business tax office your business belongs to, that of the place of the main establishment.
- Include in that letter the five required items: your surname, your first name, the description "Entrepreneur individuel" or "EI", your address and your signature.
- Notify the election BEFORE THE END OF THE 3rd MONTH of the financial year of activity: that is the only window.
- Bear in mind that the election to be treated as an EURL is irrevocable.
- If you finally wish to renounce corporate income tax, do so until the month preceding payment of the first corporate tax instalment of the 5th financial year following the one of the election, stating the name of your business, its address, the place of its principal establishment where it differs from the address, and the financial year to which the renunciation applies.
The form, line by line
- Description
- To be stated in the election letter: "Entrepreneur individuel" or "EI".
- Receiving office
- The business tax office your business belongs to, that is the one for the place of the MAIN ESTABLISHMENT.
- Notification date
- Before the end of the 3rd month of the financial year of activity. The financial year, not the calendar year — the deadline therefore follows your closing date.
- Tax neutrality regime
- It defers taxation of the gains arising from the cessation of the business under personal income tax and from the transfer of the sole trader's estate to the business treated as an EURL.
- Immediate taxation regime
- The alternative: the gains arising from the operation are taxed straight away, with no deferral.
- Portion of distributed income above 10 % of net profit
- The threshold above which distributed income is itself subject to self-employed social contributions.
- Contents of the renunciation
- Four items: the name of the business, the address, the place of the principal establishment where it differs from the address, and the financial year to which the renunciation applies.
Good to know
- There is no cerfa form for this election: it is an application by LETTER to the business tax office, whose official page lists the five required particulars.
- Being treated as an EURL creates a TAX PERSONALITY DISTINCT from your own: that is the heart of the mechanism, and what explains all the consequences that follow.
- Electing for corporate income tax does NOT create a company: the sole trader remains a sole trader, and is merely treated as an EURL for tax purposes, under article 1655 sexies of the French tax code.
- The election and the renunciation do not bear on the same thing: the election to be treated as an EURL is irrevocable, whereas the renunciation concerns corporate income tax and is exercised within a specific period.
- Remuneration shifts to employment income, which changes the base taxable to personal income tax — and income other than remuneration falls under investment income.
- Self-employed social contributions are computed on NET remuneration: after deducting compulsory personal social contributions and actual expenses, and increased by optional premiums and contributions.
- Distribution does not escape contributions: the portion of distributed income above 10 % of net profit is subject to them.
- Three articles of the French tax code frame the operation: article 1655 sexies for being treated as an EURL, article 151 octies for gains realised on a contribution to a company, and article 151 octies D for the deferral and suspension of taxation of capital gains.
Common mistakes
- Believing one can elect for corporate income tax from the micro tax regime: the election is open to a sole trader under an actual taxation regime.
- Looking for a cerfa form: the application is made by letter to the business tax office.
- Sending the application to the personal tax office or another service: it is the business tax office for the place of the main establishment that has jurisdiction.
- Omitting one of the five required particulars — surname, first name, description "Entrepreneur individuel" or "EI", address, signature.
- Counting the 3 months from 1 January where the financial year does not match the calendar year: the period runs on the FINANCIAL YEAR.
- Notifying after the end of the 3rd month of the financial year: the election is then not valid for that year.
- Confusing the irrevocability of being treated as an EURL with an inability to renounce corporate income tax: renunciation remains open until the month preceding payment of the first corporate tax instalment of the 5th financial year following the one of the election.
- Forgetting to choose between tax neutrality and immediate taxation of the gains arising from the cessation under personal income tax and the transfer of the estate.
- Forgetting that distributed income is subject to self-employed social contributions above 10 % of net profit.
- Drafting an incomplete renunciation: it must state the name of the business, the address, the place of the principal establishment where it differs from the address, and the financial year to which it applies.
Frequently asked questions
Can a sole trader be taxed under corporate income tax?
Yes, but by only one route: electing to be treated as a single-member limited liability company (EURL). As a sole trader, whether or not you are under the micro-enterprise regime, you are automatically subject to personal income tax; the election for corporate income tax is open if you fall under an actual taxation regime.
Does a company have to be created?
No. The sole trader business is TREATED as an EURL for tax purposes, under article 1655 sexies of the French tax code. That assimilation creates a tax personality distinct from yours, with the rules specific to corporate income tax, in particular on loss carry-forward and capital gains.
How is the application made?
By letter to the business tax office your business belongs to, that of the place of the main establishment. The letter must state your surname, your first name, the description "Entrepreneur individuel" or "EI", your address and your signature.
What is the deadline for electing?
The election to be treated as an EURL must be notified before the end of the 3rd month of the financial year of your activity.
Is the election reversible?
The election to be treated as an EURL is irrevocable. However, you may finally decide to renounce corporate income tax: that renunciation may be made until the month preceding payment of the first corporate tax instalment of the 5th financial year following the one in which you elected to be treated as an EURL. It must state the name of your business, its address, the place of its principal establishment where different from the address, and the financial year to which it applies.
What happens to the business's capital gains?
The election entails the transfer of the sole trader business's assets and liabilities to the balance sheet of the business treated as an EURL. The trader then chooses between two regimes: the tax neutrality regime, which defers taxation of the gains arising from the cessation of the business under personal income tax and from the transfer of the estate to the business treated as an EURL, and the immediate taxation regime for those gains.
How is the owner's remuneration taxed after the election?
Remuneration is subject to personal income tax as employment income. Income other than remuneration is subject to personal income tax as investment income.
And social security contributions?
You are subject to self-employed social contributions on your net remuneration, that is after deducting your compulsory personal social contributions and your actual expenses, that remuneration being increased by optional premiums and contributions. You are also subject to them on the portion of distributed income above 10 % of your net profit.
Go further
Compute the related amounts
Official sources
- entreprendre.service-public.gouv.fr — Entrepreneur individuel : passer de l'impôt sur le revenu (IR) à l'impôt sur les sociétés (IS) (verified 21 February 2026, Entreprendre Service Public / Direction de l'information légale et administrative): automatic liability of the sole trader to personal income tax in the BIC or BNC category, under an actual or micro tax regime; availability of the election to those under an actual taxation regime and the single route — being treated as an EURL; creation of a distinct tax personality and application of the rules specific to corporate income tax on loss carry-forward and capital gains; exit from personal income tax, transfer of assets and liabilities to the balance sheet of the business treated as an EURL and choice between a tax neutrality regime with deferral of capital gains and an immediate taxation regime; taxation of remuneration as employment income and of other income as investment income; self-employed social contributions on net remuneration after deducting compulsory personal contributions and actual expenses, increased by optional premiums and contributions, and on the portion of distributed income above 10 % of net profit; application by letter to the business tax office of the place of the main establishment and the five required particulars (surname, first name, description "Entrepreneur individuel" or "EI", address, signature); notification before the end of the 3rd month of the financial year of activity; irrevocability of the election to be treated as an EURL; possibility of renouncing corporate income tax until the month preceding payment of the first corporate tax instalment of the 5th financial year following the one of the election, and the four particulars of the renunciation; references to the French tax code, articles 1655 sexies, 151 octies and 151 octies D — September 12, 2026
- entreprendre.service-public.gouv.fr — Donation de l'entreprise individuelle à un membre de la famille (verified 21 February 2026): filing obligations of a sole trader business according to its profits taxation regime — income return no. 2031 for BIC, no. 2035 for BNC and no. 2065 for corporate income tax —, and the obligation to file electronically in EFI mode on the impots.gouv.fr professional account or the portailpro.gouv.fr account, or in EDI mode, paper forms no longer being accepted: these are the obligations that change after the election for corporate income tax — September 12, 2026
Guide and document provided for information purposes only; they do not constitute personalised legal or tax advice. Check the recipient organisation's requirements and consult a professional if needed.