Sole proprietor: switching from income tax to corporation tax

A sole proprietor (EI) is subject to income tax (IR) by default. They can opt for corporation tax (IS) under one condition: they must be subject to the actual tax regime. This option takes the form of tax treatment similar to that of a single-member limited liability company (EURL), without the need to create a separate company. According to economie.gouv.fr, micro-enterprises are among the businesses that cannot opt for corporation tax.

This page describes the conditions and effects of the option, the corporate income tax rate, and its schedule. It does not quantify the comparison between personal income tax and corporate income tax for your specific situation, does not detail the conditions for deferring capital gains, and does not calculate social security contributions. It also does not address the creation of a company with a contribution of the business, which is covered on a separate page.

What the rule says

A sole proprietor is automatically subject to income tax, whether or not they are a micro-entrepreneur. Their profits fall under the categories of BIC (Industrial and Commercial Profits) or BNC (Non-Commercial Profits).

If subject to the actual tax regime, the business can choose corporate income tax (IS). Since 2022, a sole proprietorship (EI) or a sole proprietorship with limited liability (EIRL) under the actual tax regime can opt for assimilation to a single-member limited liability company (EURL) (or to an agricultural limited liability company (EARL) in the case of agricultural activity). This option is equivalent to opting for corporate income tax.

The option is tax-related. It does not change the legal form of the company: the public service information sheet on transitioning to a company specifies that the entrepreneur can opt for assimilation to the EURL "without switching to a company".

Who can opt

To opt for this status, a micro-entrepreneur must first be subject to a real tax regime. Two paths exist.

• Exceeding the thresholds two years in a row. A single instance of exceeding the threshold does not result in being removed from the micro-enterprise tax regime. However, if the threshold is exceeded twice, the entrepreneur switches to the standard tax regime on January 1st of the following year. For industrial and commercial profits (BIC), the standard tax regime is either simplified or standard; for non-commercial profits (BNC), only the controlled declaration is available (see the glossary on exceeding thresholds in the public service information sheet).
• The option for the actual regime, even without exceeding the thresholds. It is made in writing, dated and signed, addressed to the business tax office (SIE), during the period for filing income tax returns for the year preceding its application.

Leaving the micro regime ends the micro-social regime and the micro-tax regime, and adds accounting obligations.

How does the option ask itself?

The application must be submitted by mail to the tax office (SIE) of the principal establishment. It must include the applicant's surname, first name, business name ("EI"), address, and signature. The website consulted on the administration website does not mention any specific form.

The deadlines. The official pages do not formulate the deadline for requesting the option, nor the deadline for withdrawing it, in the same way. They also differ on whether the option is irrevocable or final. Therefore, this page does not publish any deadlines: these should be verified with the tax office (SIE) before taking any action.

What the option changes

The results

The assets and liabilities are transferred to the balance sheet of the company treated as a single-member limited liability company (EURL).

Capital gains

When opting for corporate income tax, the entrepreneur chooses between two capital gains treatment options: a tax-neutral regime, with deferred taxation, or an immediate taxation regime. The tax authorities' page on opting for corporate income tax adds that this option has the same consequences as ceasing business activity, but that unrealized capital gains and profits subject to deferred taxation are not taxed immediately if certain conditions are met. These conditions are not detailed here; they must be verified before opting.

Your salary

The manager's remuneration is deductible from the company's profit. It is subject to income tax, in the category of wages and salaries.

Other income

Other income derived from the business, which the government website refers to as distributed income, is taxed as investment income. Its tax rate is not discussed on this page.

Social security contributions

Social security contributions owed by the entrepreneur apply to net remuneration. They also apply to distributed income for the portion exceeding 10% of net profit. The rates are not discussed here.

Corporate tax: rates and schedule

The individual entrepreneur who has opted for this will have their profits and professional capital gains taxed under corporate income tax.

The government information sheets indicate that the reduced rate requires a turnover of €10,000,000 or less and fully paid-up share capital held by individuals for at least 75% of the capital requirement. The method for assessing the share capital requirement for a sole proprietor is not addressed here: the conditions for the reduced rate are detailed on a dedicated page and must be verified before claiming this rate.

The calendar, for a financial year ending December 31:

• The statement of results is in principle filed within 3 months of the closing date; for the financial year ending December 31, 2025, the deadline was May 20, 2026; ;
• it bears the number 2065, accompanied by tables 2033-A to 2033-G (simplified regime) or 2050 to 2059 (normal regime); ;
• It is filed electronically: otherwise, a surcharge of 0.2 % of the tax applies, with a minimum of €60; ;
• Corporate income tax is paid in 4 quarterly installments and a balance, due on May 15 of the following year; ;
• No advance payment is due when the corporate income tax is less than €3,000: the tax is then paid in a single payment.

The calendar for the 2026 financial year can be verified on the official service-public document.

Numerical example (fictitious profile)

Situation. A fictitious sole proprietor operates under the actual profit regime and has opted for corporate income tax. Assumptions of the fictitious profile: 12-month fiscal year ending December 31; profit earned in France of €100,000 before any remuneration; fully deductible remuneration; conditions for the reduced rate of 15% of taxable income are assumed to be met, without their application to a real sole proprietor being verified here.

Issue. What corporate income tax (CIT) does the company owe based on the level of remuneration it pays itself?

Strategy. Compare three levels of remuneration: none, €40,000 and €70,000. Corporate income tax is calculated at 15% up to €42,500 of profit, then at 25%.

Result.

In all three cases, the corporate income tax exceeds €3,000, the threshold below which no advance payment is due.

This table does not compare income tax (IR) and corporate tax (IS). It does not include income tax due on remuneration, taxation of distributions, or social security contributions. These items are calculated separately on your tax return. The profile is fictitious. The figures illustrate the calculation of corporate tax. They do not reflect your individual situation.

What changes depending on your situation

• Your current tax regime : the option assumes a real regime.
• The level of profit and the share you wish to leave in the company.
• Your need for personal income : it determines the balance between remuneration and distributions.
• The company's unrealized capital gains : their processing during the option process depends on the conditions to be met.
• Conditions for the reduced rate : revenue, capital and ownership.

No results are guaranteed. The rule depends on your situation; check before deciding.